Black v. Unibank

Case: 25-50986 Document: 52-1 Page: 1 Date Filed: 08/25/2026

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit ____________ FILED August 25, 2026 No. 25-50986 ____________ Lyle W. Cayce Clerk Securities and Exchange Commission, Plaintiff, versus Roy W. Hill; Et al., Defendant, Albert (Tre) C. Black, III, Receiver—Appellee, versus UniBank, Movant—Appellant.

______________________________ Appeal from the United States District Court for the Western District of Texas USDC No. 6:23-CV-321 ______________________________ Case: 25-50986 Document: 52-1 Page: 2 Date Filed: 08/25/2026

No. 25-50986

Before King, Smith, and Ramirez, Circuit Judges.

Jerry E. Smith, Circuit Judge.

UniBank provided secured loans to certain investors in a Greentech startup called Clean Energy Technology Association, Inc. (“CETA”). The SEC soon brought an enforcement action against the founder and CEO of CETA alleging that he was operating it as a Ponzi scheme and immediately moving for an equitable receivership under Albert Black (the “Receiver”).

In a related court action in the State of Washington, the investors sued Uni- Bank for fraud and negligence, but UniBank won summary judgment based on no showing of duty. Meanwhile, in this action, the Receiver recom- mended that the district court equitably distribute pro rata shares of the remaining funds less the losses due to fraud. The district court adopted the Receiver’s report and recommendation (“R&R”) and issued an order (here- inafter the “Order”) denying UniBank’s objection seeking to uphold its pri- ority in distributions from the receivership estate.

Finding error, we vacate the Order and remand for further proceedings.

I.

An equitable receivership is the mirror image of bankruptcy: Whereas bankruptcy creates a debtor estate to protect the going-concern value of a business and the debtor from collection actions, a receivership establishes a court-appointed trustee as a neutral fiduciary, in the face of fraud or insol- vency, to manage a company’s assets and operations for the recovery of the creditors. Receiverships are sometimes established in the looming shadow of bankruptcy but also come before this court in the context of the SEC’s enforcement actions against Ponzi schemes.

This case addresses such a Ponzi scheme. Starting around December 2019, Texas attorney Roy Hill, the founder and CEO of CETA, began to Case: 25-50986 Document: 52-1 Page: 3 Date Filed: 08/25/2026

No. 25-50986 solicit investment on the premise that he owned patented Carbon Capture Units (“CCUs”) that would distill coal and capture natural gas from gas well operations. CETA conducted a series of Regulation D private placement debt offerings giving investors the opportunity to purchase one or more CCUs and promising them a stream of payments derived from the revenue from such CCUs. CETA initially underwrote parts of its own loans before turning to the U.S. Small Business Administration (“SBA”) loan program designed to encourage lending to new and underserved small businesses.

In 2021 and 2022, CETA, headquartered in Fairfield, Texas (in the Waco Division), began to shift this leverage strategy from providing match- ing loans to its own investors to taking out loans from the SBA via UniBank, a commercial bank in the State of Washington. During that period, several wealthy individuals and entities (the “Investors”) approached UniBank to take out loans of $1 to 3 million to buy interests in CETA. The Investors and UniBank worked together to take out these allegedly fraudulent loans offi- cially purporting to start small businesses, nominally buying interests in CETA’s CCUs, but in reality buying nothing but a phantom interest in a Ponzi scheme.

UniBank secured its loans to the Investors against the distributions of purported profits from CETA. UniBank perfected its security interests— secured by the distributions of revenue from the nonexistent CCUs— according to UCC Article 9, nominally rendering it a secured creditor able to pursue liens against the Investors.

The underlying proceeding is the fraud enforcement action brought by the SEC alleging that CETA operated as a classic Ponzi scheme, paying returns to older investors from the funds provided by new investors. On May 3, 2023, the SEC filed an emergency action against the defendants Hill, CETA itself, Eric Shelly, and Eric Shelly’s entity Freedom Impact Consult-

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No. 25-50986 ing, LLC, which was the vehicle conducting the private securities placements in cooperation with CETA (collectively, the “Defendants”).

The SEC alleged that, beginning in December 2019, Defendants raised at least $155 million from more than 500 individuals nationwide through offerings tied to purported CCUs sold by CETA for use in oil and natural gas wells, as to which Defendants made material misrepresentations about patented technology, high‑profile customers such as ExxonMobil, and consistent 10% quarterly returns. An SEC forensic analysis of CETA bank records showed there were no revenues, but only circular flows of investor funds from which the returns to investors were actually paid. The SEC alleged that Defendants used CETA’s offerings as a “vehicle to steal inves- tors’ money.”

At the outset of the grand case, the SEC moved to freeze CETA’s assets and appoint a receiver on the same day it filed its complaint. The dis- trict court granted the motion and appointed the Receiver, explaining, The appointment of a receiver in this action is necessary and appropriate for the purposes of marshaling and preserving all assets of the Defendants (‘Receivership Assets’) that: (a) are attributable to funds derived from investors of the Defendants; (b) are held in constructive trust for the Defendants; (c) were fraudulently transferred by the Defendants; and/or (d) may otherwise be includable as assets of the estates of the Defendants.

The Receiver then issued quarterly reports, determining by the fourth quar- ter of 2023 that the receivership estate included approximately $66 million in cash and that CETA’s technology was neither in commercial use nor viable. Accordingly, the Receiver recommended distributing the cash. The Receiver compiled claims and, in the first quarter of 2025, reported approved claims showing $252 million invested, with an aggregate net cash loss of $142 million.

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The Receiver classified all investor claims into a single group, reason- ing that all representations made to investors were substantially similar and that all had contributed funds into a commingled Ponzi scheme. Rather than determine claims by priority under the dubious CETA contracts, the Re- ceiver proposed an equitable distribution by net cash losses. He spelled out his reasoning: In regard to the methodology, the Receiver could, on the one hand, determine claims according to the individual contractual rights es- tablished between CETA and the Investors and/or project entities in the documents executed by those parties. On the other hand, the Investor Claims could be adjusted equitably based upon net cash losses incurred. Whether to adjust claims based upon the contracts or based upon their underlying equitable nature depends upon whether the claims arise from a fraudulent scheme, and, to a lesser extent, whether the claims arise from a Ponzi scheme. In Ponzi schemes, the Fifth Circuit has approved the use of the net cash loss methodology to evaluate claims.

This was the “Proposed Distribution Report” (citing United States v. Dur- ham, 86 F.3d 70, 73 (5th Cir. 1996) (approving a net cash loss or pro rata dis- tribution); SEC v. Forex Asset Mgmt., 242 F.3d 325, 331 (5th Cir. 2001) (same)).

In UniBank’s recitation of the facts, it insists that it was not a party to the SEC’s enforcement action, but merely a lender to the Investors who bought interests in CETA. On February 27, 2025, UniBank submitted a let- ter providing “formal notice to the receiver that any distribution payments from the receivership estate to the [Investors] must be directed to UniBank,” which the Receiver construed as an objection to his motion for an interim distribution of payments to the Investors.

On March 7, 2025, the district court entered an order authorizing the Receiver to liquidate CETA’s assets and effect a distribution thereof by Case: 25-50986 Document: 52-1 Page: 6 Date Filed: 08/25/2026

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(i) providing notices to each claimant of the approved amounts, (ii) providing them an opportunity to object, and (iii) referring any disputes to the court for determination. On June 20, 2025, the Receiver filed his Third Claims Report, distributing on a pro rata basis, given the lack of sufficient funds to pay each claim in full, and thereby impairing UniBank’s secured claim and perfected lien. Whereas UniBank reported a net loss of $13,417,914.77, it was allocated a distribution of $2,531,905.80, or about 19% of its claim.

On July 10, 2025, the Receiver then issued an R&R responding to Uni- Bank’s earlier claim objection (the “Receiver Objection Report”). The Re- ceiver offered an extended explanation of the nature of the Ponzi scheme, which we find helpful to understanding CETA’s scheme, especially given the Receiver’s role as a fiduciary of all the victims and an agent of the district court.

For the highlights, CETA offered investments secured by fictitious CCU units and paying out dividends from revenues associated with those units. Initially, CETA would loan the investors matching funds partly so they could leverage and receive greater tax benefits from taking deductions for the depreciation on the CCUs. Later on, many investors instead used allegedly fraudulent SBA loans procured through UniBank. SBA loans are guaranteed by the federal government, reducing the risk for a commercial bank such as UniBank. UniBank is even a preferred lender, such that its SBA loans do not have to receive advance approval. But SBA loans are not permitted for the purpose of investing in the business of another.

The Receiver reported that UniBank’s employee Wan Kim (“Kim”) and others approved SBA loans used in CETA’s Ponzi scheme, as well as at least two other Ponzi schemes (a certain “ATM scheme” and another “WaterStation vending machine scheme”), which all would have been regu- latory violations of UniBank’s status as an SBA-preferred lender. The Case: 25-50986 Document: 52-1 Page: 7 Date Filed: 08/25/2026

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Receiver therefore recommended that UniBank’s objection be overruled and that its claim be aggregated with all other victim claims.

The Receiver also pointed out that the CETA loan program, which had outside investors fund 40% of a CCU and CETA provide a matching loan for 60%, conspicuously resembles the “UniBank CO2 Pipeline Loan Pro- gram,” under which an outside investor funded a portion of the purchase price of a CCU and UniBank provided a matching SBA loan for the remainder.

As CETA went down in flames, the Investors launched a parallel set of suits in the U.S. District Court for the Western District of Washington, and then in Washington state court, to reject UniBank’s secured or lien rights against them (this latter the “Washington court action”). On June 29, 2023, while the Receiver was aggregating and administering claims against CETA, the Investors initiated the first lawsuit in the Western District of Washington against UniBank, accusing it of fraudulent and negligent misrepresentation, violations of the Washington Securities Act and Washington Consumer Pro- tection Act, and a federal RICO violation. Bowman v. UniBank, No. 2:23-cv- 971-JCC (W.D. Wash.). That federal court dismissed the RICO charge and dismissed the case for otherwise lacking jurisdiction.

On October 31, 2023, the Investors then refiled their claims in Wash- ington state court (hereinafter the “Washington court”). Bowman v. UniBank, No. 23-2-07972-31 (Snohomish Cnty. Sup. Ct.) (pending). Uni- Bank posits that the records of that state court proceeding show that none of the individual Investors first learned of CETA through UniBank and that they all prepared their own SBA loan application materials, despite sworn testimony stating that UniBank provided loan documents and that certain Investors relied upon UniBank to ensure that the CCU transaction qualified for SBA loan status.

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Following the Receiver’s Proposed Distribution Report, supra, Uni- Bank filed an objection purporting to be a limited special appearance solely for the purpose of alerting the Western District of Texas to the existence of its “perfected liens” and the parallel Washington court action. The Receiver issued his R&R in the face of that objection essentially reasoning that pro rata plans making distributions in proportion to the net losses of Ponzi scheme victims are plainly within the discretion of a district court to approve.

On August 22, 2025, UniBank filed a lengthy response to the R&R on its objection, supra, protesting that the Receiver was asking the district court to void its security interests and distribute collateralized funds back to the Investors (and away from UniBank’s secured interest), thereby nullifying its lien rights. UniBank mustered evidence from the Washington court action1 to attempt to prove its good faith—alleging that the Investors were indepen- dent actors and were negligent in their participation in CETA’s Ponzi scheme. UniBank contended that it retained its perfected security interests on any distributions from the receivership estate to the Investors and that the Receiver could not void or reorder state law lien priorities, such that Uni- Bank’s secured loans entitled it directly to the Investors’ distributions, rather than through any second-order downstream action.

UniBank variously added objections to the effect that the district court could not adjudicate the merits of its state law rights when it had only made a special appearance attempting to limit any consent to personal jurisdiction; that it required an adversary proceeding to adjudicate those state law liens; and that the Receiver had failed to meet his evidentiary burden. UniBank also suggested that the district court should hold its ruling in abeyance pend- ing the resolution of the Washington court action, calling upon the judicial Case: 25-50986 Document: 52-1 Page: 9 Date Filed: 08/25/2026

No. 25-50986 doctrines of abstention, full faith and credit, and comity.

On August 29, 2025, the Receiver issued a reply to UniBank’s re- sponse, theorizing that UniBank was trying to obtain a prejudgment attach- ment, and arguing that the secured status of UniBank’s loans could be dis- regarded and impaired on the theory that contracts entered into in a Ponzi scheme are void. The Receiver astutely pointed out that, by asking the Wes- tern District of Texas to send the money to the Washington court, UniBank would attain the ability to pursue the Investors and get a full recovery rather than being treated pari passu with the other victims of the Ponzi scheme. (These are also the ultimate stakes of this appeal—whether UniBank gets only a pro rata distribution or, instead, gets to have the Investors’ slice of cake.) In arguments prefiguring those briefed before this court, the Receiver also asserted that there were neither abstention nor Full Faith and Credit problems where nothing in the Washington court action had resolved any question before the district court.

On November 18, 2025, the district court entered the Order, over- ruling UniBank’s objections, adopting the R&R as its own opinion and order, and ordering the Receiver to effect distributions to the Investors and Uni- Bank based on pro-rata net cash losses. UniBank filed an emergency motion to stay the Order on December 1, 2025, and the district court issued such a stay on December 10, 2025.

This appeal follows as collateral review of the Order overruling Uni- Bank’s objection to the Receiver’s motion to approve the distribution plan.

UniBank raises jurisdiction issues, challenges the adequacy of the district court’s procedure, and questions the district court’s authority to impair its security interests and perfected liens.

We vacate the Order solely for failure of the district court to satisfy the requirements of due process, given the Order’s one-paragraph adoption Case: 25-50986 Document: 52-1 Page: 10 Date Filed: 08/25/2026

No. 25-50986 of the Receiver’s cursory analysis in his R&R on UniBank’s objection with- out sufficient tracing of facts and law. We express no view on the ultimate merits on remand.

II.

This court has jurisdiction over this appeal per the collateral-order doctrine. 2 This court reviews a district court’s orders in connection with “supervising an equity receivership” for abuse of discretion, including orders related to a distribution plan. 3 Under the abuse of discretion standard, we “review[ ] factual findings for clear error and legal conclusions de novo.” Cloud v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 162 F.4th 527, 530 (5th Cir. 2025). We will not disturb a district court’s decision if it “used its discretion in a logical way to divide the money.” Durham, 86 F.3d at 73. Indeed, a district court that is fashion- ing relief in an equity receivership has “broad powers and wide discretion.”

SEC v. Basic Energy & Affiliated Res., Inc., 273 F.3d 657, 668 (6th Cir. 2001). 4 Finally, as to comity, this court reviews de novo “both the preclusive effect of a prior judgment . . . and the application of collateral estoppel,” such as the proper application of the Full Faith and Credit Clause. OneBeacon Am. Ins.

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Co. v. Barnett, 761 F. App’x 396, 399–400 (5th Cir. 2019).

III.

UniBank raises a flurry of issues, which the Receiver recharacterizes.

As UniBank would frame them, they are as follows: (1) Whether the district court’s one-paragraph order adopting the Receiver Objection Report frustrates appellate review and requires vacatur and remand. (2) Whether a federal receivership court may override a non-party creditor’s secured interest to effect a pro-rata distribution to the creditor’s borrowers, where the creditor lent to those investors directly. (3) Whether the district court’s relief violated due process, whether through a failure by the Receiver to carry his evidentiary burden—including as to UniBank’s participation in the Ponzi scheme or the SBA loan requirements—or through the district court’s failure to provide sufficient procedure to adjudicate the liens’ validity or priority. (4) Whether the district court’s order violated any of (i) personal jurisdiction law; (ii) the abstention doctrine; or (iii) the Full Faith and Credit Clause.

The Receiver breaks down some of the bigger issues, multiplying them to (1) Whether the district court’s decision is clear enough to allow for review. (2) Whether the district court was required to transfer the money to the Washington court. (3+4) Whether the district court afforded UniBank due process, including by declining to follow the federal Bankruptcy Rules.

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(5+6+7) Whether the district court violated any of (i) personal juris- diction law; (ii) the abstention doctrine; (iii) Full Faith and Credit as to the Washington court’s decision that UniBank owed no duty of care to the Investors. 5 (8) Whether the district court was required to determine whether UniBank defrauded the Investors in order to decide upon a pro rata distribution. (9) Whether the district court could consider the fact that UniBank was making allegedly fraudulent SBA loans in determining whether it was a victim of the Ponzi scheme.

* * * * * We start with the preliminary jurisdictional issues and then get to the due process question.

Regarding the frustration of or basis for appellate review, the district court’s adoption of the R&R is so obvious as to be disposed of in one sen- tence: It is standard practice for district courts to adopt the reports of mag- istrate judges, which also applies to receivers. 6

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The authorities adduced by UniBank do not disturb this view: In SEC v. Barton, 72 F.4th 573, 579 (5th Cir. 2023), we addressed a situation where the district court had issued two motions in a receivership proceeding, such that this court held that the reasoning of the second and later motion could not buttress the reasoning of the first, earlier, and unconnected motion.

Here, the R&R seamlessly feeds into the district court’s denial order, so whatever is within scope of the Report is the factual and analytical basis— whether strong or weak—of the order.

Meanwhile, Technical Fabricators 7 merely sets out the standard that for an equitable subordination within bankruptcy, the bankruptcy court must make specific findings and conclusions for the three prongs of (1) inequitable conduct; (2) injury; and (3) consistency of equitable subordination with the other goals of the Bankruptcy Code. Here, there is not precisely an equitable subordination so much as the distinct equitable remedy of disbursing Ponzi scheme funds on a pro rata basis—the remedy is restitution, not subord- ination—and the Order also adopted the Receiver’s reasoning on each of the analogous prongs. 8 IV.

As to the jurisdictional limits, we preliminarily address whether the district court violated any of the doctrines of personal jurisdiction, absten-

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No. 25-50986 tion, or full faith and credit. It did not.

A. Personal Jurisdiction Personal jurisdiction does not apply where an equitable receivership adjudicates distributions from an in rem proceeding, and especially not where a plaintiff brings himself into court—as distinguished from being dragged in.

UniBank purports to be a non-party making a limited appearance to defend its duly-perfected state law security interests. It complains that the district court lacked personal jurisdiction to determine its rights in Washington be- cause all its affairs were there such that a district court in Texas lacked minimum contacts. UniBank demands reversal on that ground.

This argument is meritless. A district court supervising an equity receivership exercises in rem jurisdiction: “[T]he receiver collects and dis- tributes only assets of the entity in receivership,” and “the district court’s in rem jurisdiction [implies] that the court may not exercise unbridled authority over assets belonging to third parties to which the receivership estate has no claim.” Stanford Int’l Bank, 927 F.3d at 841 (second emphasis added). An equity receiver lacks the authority “to terminate the third-party claims against a settling party [participating in the bankruptcy estate] that are uncon- nected to the res establishing jurisdiction.” Id. at 843.

This receivership estate controls the funds it would purport to distribute—the district court grabbed the CETA cash res back in May 2023— and UniBank brings what is essentially a priority claim within that estate.

Moreover, the Receiver is correct that the alternative remedy of interplead- ing funds to the Washington court would represent a species of affirmative relief, 9 as distinguished from UniBank’s doing nothing and then separately Case: 25-50986 Document: 52-1 Page: 15 Date Filed: 08/25/2026

No. 25-50986 pursuing state-law liens against the individual Investors. The distribution ab re is what is at stake in the district court’s order—and had UniBank stood back, it could have, and might still, separately pursue its state-law liens against the individual Investors.

Instead, by appearing before the court to demand affirmative relief, UniBank has implicitly consented to jurisdiction or waived any objection thereto. 10 Moreover, UniBank is essentially bringing arguments on the Case: 25-50986 Document: 52-1 Page: 16 Date Filed: 08/25/2026

No. 25-50986 merits of the ‘lien impairment’ theory and asserting the priority of its claim, compounding its implied consent. In the alternative, it may have established minimal contacts sufficient for specific jurisdiction through its participation in Roy Hill’s fraud routing through Texas. 11 Either way, it cannot credibly limit itself to the tiny salient of a refusal of personal jurisdiction. 12 B. Abstention The district court did not need to abstain where the Colorado River Case: 25-50986 Document: 52-1 Page: 17 Date Filed: 08/25/2026

No. 25-50986 factors weighed in its favor. We review for abuse of discretion the district court’s decision whether to abstain, and we exercise de novo review to the extent that the decision turns on an interpretation of law. Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 649–50 (5th Cir. 2000). 13 “Under Colorado River, a district court may abstain from a case only under ‘exceptional circumstances.’” 14 Federal courts defer to parallel state court proceedings “only . . . where the order to the parties to repair to the state court would clearly serve an important countervailing interest.” Colo. River, 424 U.S. at 813 (quoting Cnty. of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188–89 (1959)). This court identifies such countervailing inter- ests, “based on considerations of ‘[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.’” African Methodist Episcopal Church v. Lucien, 756 F.3d 788, 797 (5th Cir. 2014) (quoting Colo. River, 424 U.S. at 817). Yet abstention remains the exception from “the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.” Colo. River, 424 U.S. at 817 (cita- tions omitted).

In determining whether to abstain, we identify “wise judicial admin- istration,” id. at 818, through six factors, which must clearly favor abstention: 1) assumption by either court of jurisdiction over a res, 2) relative Case: 25-50986 Document: 52-1 Page: 18 Date Filed: 08/25/2026

No. 25-50986 inconvenience of the forums, 3) avoidance of piecemeal litigation, 4) the order in which jurisdiction was obtained by the concurrent forums, 5) to what extent federal law provides the rules of decision on the merits, and 6) the adequacy of the state proceedings in pro- tecting the rights of the party invoking federal jurisdiction.

African Methodist Episcopal, 756 F.3d at 798 (citing Stewart, 438 F.3d at 491).

The equity receivership has assumed jurisdiction over the res of the receivership estate, while the Washington court lacks control over the res.

That may suffice to trigger our “virtually unflagging obligation” to provide relief within our jurisdiction. Colo. River, 424 U.S. at 817. Assuming we need look any further, we can point out that federal equity receivership law pro- vides the rule of decision, authorizing the district court’s discretion to adopt a pro rata distribution plan from the receivership estate of a Ponzi scheme reflecting the common victim status of the claimants. Durham, 86 F.3d at 73, discussed infra. Additionally, the pro rata distribution plan avoids piecemeal litigation over priorities, as administration of the res is centralized before the district court—and the district court got it first, before the Washington court action was initiated 15—but beyond this, it is unclear that the district court’s order snuffs out residual state law lien claims by UniBank against the individ- ual Investors, discussed momentarily.

C. Full Faith and Credit Nothing in the Order decision overrode the Washington court’s sum- mary judgment on the lack of relevant duty from UniBank to the Investors within the Investors’ negligence claim against UniBank. UniBank posits that the Order― adopting the Receiver’s view that UniBank should be treated as a victim pari passu with the individual Investors― disregards the preclusive Case: 25-50986 Document: 52-1 Page: 19 Date Filed: 08/25/2026

No. 25-50986 effect of the Washington court’s partial summary judgment to UniBank dis- missing the individual Investors’ negligence claim with prejudice for a lack of duty running from UniBank to the Investors. But that issue is orthogonal to the question whether UniBank was a victim of the Ponzi scheme, which informs the equitable relief of the pro rata distribution plan.

This full faith and credit objection fails.

V. We turn to whether the district court denied UniBank due process either through failing to require the Receiver to meet his evidentiary burden or through adjudicating property rights in a summary proceeding. On the second basis, there was such a due process violation. The district court’s terse, one-paragraph order adopting the Receiver’s R&R―which itself of- fered only a cursory analysis rebutting UniBank’s objections―was insuffici- ent to comport with the minimum standards of due process. And UniBank has plausibly suggested that it could better have defended itself in a more plenary proceeding—even just an evidentiary hearing—addressing the 9,100 pages of Washington court record that UniBank had introduced.

A. The Burden Starting with the evidentiary burden: UniBank posits that the district court committed error by flipping the burden of proof. UniBank complains that the Receiver submitted the R&R with minimal citations to evidence.

The difficulty is that the Receiver was familiar with the course of events fol- lowing the SEC’s enforcement action and had submitted a series of quarterly reports compiling claims and calculating losses 16 such that the assertions in Case: 25-50986 Document: 52-1 Page: 20 Date Filed: 08/25/2026

No. 25-50986 the final report can be traced to that large body of evidence. The same prob- lem exists where UniBank introduces 9,100 pages of evidence from the Washington court while providing minimal record citation to support its position that Wan Kim and UniBank were innocent and were misled by the individual Investors.

UniBank is right that the movant—ultimately the Receiver, in moving for an interim distribution from the estate—bears the burden of proof, rather than the objector. SEC v. Torchia, 922 F.3d 1307, 1318 (11th Cir. 2019). The case is close, given that the Receiver has submitted a series of quarterly reports that are incorporated into, and provide support for, his recitation of events in the R&R. The Receiver fails to provide line-by-line citations, which we revisit below. But this may not be fatal where the district court was familiar with his ongoing quarterly reports and where we review the Order denying the objection only for abuse of discretion.

UniBank’s theory that the Receiver introduced new evidence in his reply to UniBank’s response to the R&R on the claim objection is, however, meritless. First, the emails were already within the record. Second, it was UniBank itself that introduced those numerous emails and purported to rely on them in its objection motion response—UniBank is upset that it trips over its own rake.

In sum, while this issue is close, and tighter record citations would be desirable from both sides, the district court did not invert the evidentiary bur- den in this equitable proceeding on a sprawling record. The necessary facts were in evidence, and through the several quarterly reports it appears that the district court was familiar with the complex fact pattern. Additionally, the Receiver acts as a fiduciary of the public interest, such that the usual sus- picion of two adversarial accounts portraying night-and-day versions of the facts may not properly inform this proceeding. On the Receiver’s telling, the Case: 25-50986 Document: 52-1 Page: 21 Date Filed: 08/25/2026

No. 25-50986 effect of UniBank’s objection would be to give it a “prejudgment attach- ment” or to elevate its claim in the victim hierarchy over that of the individ- ual Investors, while the Receiver works to maximize the recovery of all the victims and to execute the will of the SEC in protecting financial markets.

B. The Proceedings UniBank advances the idea that the district court’s use of streamlined procedures in denying UniBank’s objection to the R&R solely on the basis of the submitted briefing materials, and without conducting an evidentiary hear- ing or even its own formal fact-finding, violated the Due Process Clause’s requirement of “notice and a meaningful opportunity to be heard.” 17 UniBank contends that an adversary proceeding was required, analogizing to bankruptcy. “[T]he district court has broad powers and wide discretion to deter- mine relief in an equity receivership,” which “derives from the inherent powers of an equity court to fashion relief.” 18 Yet this flexibility must still meet the minimum standards of due process. 19

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We find the analogy to bankruptcy persuasive: Courts often look to the related context of bankruptcy when decid- ing cases involving receivership estates. The district court here acknowledged that the purpose of bankruptcy receiverships and equity receiverships is essentially the same—to marshal assets, preserve value, equally distribute to creditors, and, either reorgan- ize, if possible, or orderly liquidate.

Stanford Int’l Bank, 927 F.3d at 840–41 (cleaned up) (citation omitted). In particular, Federal Rule of Bankruptcy Procedure 7001(b) 20 applies as a per- suasive but nonbinding example.

Equity receiverships historically preceded Chapter 7-style liquida- tions. 21 Given the “shared legal heritage” between equitable receiverships and bankruptcy and the fact that “federal equity receiverships were the predecessor to Chapter 7 liquidations and Chapter 11 reorganizations,” 22 the bankruptcy rules suggest a presumption of legitimacy for the procedures of equity receiverships. Indeed, there is plausibly some preemptive scope where Congress authorizes a body of bankruptcy procedure on top of the equitable receivership foundation. 23 But given that the standards of due pro-

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No. 25-50986 cess can be satisfied in multiple ways, and in light of the inherent flexibility of equitable proceedings, 24 we decline to say that these two regimes are coextensive. Let’s put it this way: The Bankruptcy Rules of Procedure are one way to skin this cat.

The Eleventh Circuit faced similar fact patterns in SEC v. Elliott and SEC v. Torchia, which we find instructive as regards the summary nature of these proceedings.

In Elliott, a receiver appointed to manage distributions from the estate of a Ponzi scheme employed summary proceedings to resolve disputes over claims of the estate. 953 F.2d at 1566. The Eleventh Circuit held that sum- mary proceedings are within the discretion of an equitable court, stating, “a district court does not generally abuse its discretion if its summary proce- dures permit parties to present evidence when the facts are in dispute and to make arguments regarding those facts.” Id. at 1567. The court added that, to establish abuse, “appellants must show how they were prejudiced by the summary proceedings and how they would have been better able to defend their interests in a plenary proceeding.” Id. The court concluded that the district court had abused its discretion with respect to a claim of fraudulent transfer where one party had requested a hearing, intervention, and limited discovery, but the district court had refused to grant any hearing on the dis- puted facts. Id. at 1568.

_____________________ Civ. P. 2 (“There is one form of action — the civil action.”); compare Note, Equity & the Power of Procedural Supervision, 137 Harv. L. Rev. 1443–46 (2024) (discussing the Rules Enabling Act of 1934), with Pub. L. 88-623, § 1 (Oct. 3, 1964, 78 Stat. 1001) (codified at 28 U.S.C. § 2075) (“Bankruptcy rules,” providing for the Supreme Court to prescribe uniform rules of procedure, and stating “All laws in conflict with such rules shall be of no further force or effect . . . .”).

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In Torchia, the court faced a due process claim against a receiver’s summary proceedings which was quite similar to UniBank’s current claim.

There, certain participants in a life insurance Ponzi scheme had purchased direct interests in the underlying life insurance policies, and so sought pri- ority over a receiver’s proposed pro rata distribution plan. Torchia, 922 F.3d at 1312. The court laid out its standard that “[s]ummary proceedings gener- ally afford due process, and the district court does not abuse its discretion, so long as the investors are permitted ‘to present evidence when the facts are in dispute and to make arguments regarding those facts,’” but that “such pro- ceedings are inadequate ‘when [the objecting investors are] deprived of a full and fair opportunity to present their claims and defenses.’” Id. at 1316 (quot- ing Elliott, 953 F.2d at 1567). The court summarized the district court’s pro- ceedings as follows: These determinations by the receiver and the orders entered by the district court were made without giving the [investors] suffici- ent notice and/or a meaningful opportunity to be heard. Even after the investors were given notice of the receiver’s determinations and the district court’s orders, the district court continued to use summary proceedings in adjudicating their claims and defenses.

For example, as far as we can tell, the district court never expressly addressed the argument of [the appellants] that their interests were superior to those of the receiver. Instead, it merely pointed to the receiver’s conclusion that [the Ponzi scheme vehicle] ser- viced the policies using comingled funds.

Id. at 1317.

While appealing to the totality of the circumstances, the court in Tor- chia specifically faulted (i) the receiver for not connecting his methodology of calculating the life insurance losses to specific evidence and (ii) the district court for citing a previous order and failing to adjudicate the appellants’ claims and defenses while merely adopting the receiver’s order. Id. at 1318.

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It concluded, “We hold only that due process required the district court to more fully adjudicate the [investors’] claims and defenses.” 25 Distilling the Elliott and Torchia analyses, we can say that a district court supervising an equity receivership does not abuse its discretion where it affords a minimum of due process by (1) permitting the objector to present evidence when the facts are in dispute and to make arguments on those facts, (2) expressly adjudicating the objector’s claims and defenses or adopting the receiver’s determination thereof, and (3) minimally tracing conclusions of fact to evidence or requiring the receiver to do so. The problem here is that the district court rested entirely on the Receiver’s laurels, and the Receiver doubly failed to overcome the objector’s claims or adequately trace conclu- sions of fact to record evidence.

As to the claims, the Receiver offered minimal analysis in his R&R, stating, “UniBank was not making an SBA loan, and the adapted SBA loan documents cannot credibly be separated from the integrated set of revised CETA offering documents prepared by Kim, Zook, and Hill, which the UniBank Investors executed in order to invest in the CETA Ponzi scheme.”

Then after UniBank’s fulsome response asserting its state law property rights of contract and perfected lien, the Receiver reiterated this cursory analysis in his reply, stating, As for UniBank’s attempt to distance the loans from the overall CETA offering, it is simply impossible to say the UniBank loans Case: 25-50986 Document: 52-1 Page: 26 Date Filed: 08/25/2026

No. 25-50986 are anything other than a part of the bundle of contracts that Uni- Bank Investors entered into in order to invest in the Ponzi scheme.

Obviously, they cannot be characterized as small business loans.

Perhaps recognizing the complexity, the Receiver even suggested in the reply that an evidentiary hearing could be conducted on those disputed facts, rec- ommending, [I]f the Court believes it is relevant just how deeply UniBank’s employees were involved in shaping the CETA contracts into supposed SBA loans, there is ample evidence that they were was [sic] deeply involved. If the Court determines there are factual disputes that require resolution, then the Court, under the above- cited procedural authorities, may decide to conduct an eviden- tiary hearing.

Yet instead of conducting any such hearing after UniBank had introduced 9,100 pages of evidence pertaining to its alleged property rights, the district court merely adopted the Receiver’s concise analyses. Indeed, where the Receiver now argues that UniBank fails to show how it was “prejudiced by the summary proceedings” or “how [it] would have been better able to de- fend [its] interests in a plenary proceeding,” SEC v. Sharp Cap., Inc., 315 F.3d 541, 547 (5th Cir. 2003) (quoting Elliott, 953 F.2d at 1567), this point lacks merit where it was the Receiver himself who suggested that an eviden- tiary hearing could be appropriate. His analyses provide minimal factual trac- ing and depend only on his version of the record—regardless of whether it was a great version or a poor version.

In response, UniBank plausibly shows that it may have been preju- diced under Elliott and Sharp Capital by its inability to challenge any formal factual findings on 9,100 pages of record through, e.g., an adversarial evi- dentiary hearing. And this is not merely a silent procedural violation, as there would be significant monetary harm in “erroneous deprivation” of Uni- Bank’s interests. Mathews, 424 U.S. at 335. UniBank also asserts that it Case: 25-50986 Document: 52-1 Page: 27 Date Filed: 08/25/2026

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“would have been better able to defend [its] interests in a plenary proceed- ing,” Elliott, 953 F.2d at 1567, by specifically claiming that it would defend the legitimacy of its loans, such as they are, and by pointing to its alleged successes in the parallel proceedings in the Washington court (where Uni- Bank is content with its process).

Taken together, the district court failed expressly to adjudicate the objector’s claims, and the Receiver’s adopted analysis failed adequately to determine them.

* * * * * One might object that this recommended holding is inconsistent with our view of the burden of evidence, supra. But meeting the burden of persua- sion is a question of fact for the district court, reviewed for plain error. 26 Questions of due process, by contrast, are legal questions reviewed de novo. 27 While the Receiver’s impressionistic gloss of the facts adopted by the district court does not leave us with the “definite and firm conviction that a mistake has been committed,” 28 the distinct question of whether the district court’s adoption of that characterization without any evidentiary hearing comports Case: 25-50986 Document: 52-1 Page: 28 Date Filed: 08/25/2026

No. 25-50986 with due process offers us greater latitude for review. This is a case in which the standard of review has bite.

Finally, we do not reach the issue of whether the district court could— as UniBank insists it could not—impair the state law security interests in approving the distribution plan. UniBank submits that “[A] receiver ap- pointed by a federal court takes property subject to all liens, priorities, or privileges existing or accruing under the laws of the state.’” 29 UniBank naturally prefers that the Receiver convey the funds to Washington.

We observe that the district court purported to render the security interests and related contracts void and that that posture is distinct from taking property into the receivership estate subject, e.g., to a tax lien or with two tiers of loans, one secured by receivables and the other general unsecured credit. 30 If the Receiver was correct that UniBank’s secured interest emerged from the fraudulent SBA loans—as through Wan’s and Sunny Kim’s (two of UniBank’s key employees directing SBA loans) (1) actively working to make the CETA loans SBA compliant, (2) working closely with the central conspirators Hill and Zook as well as other CETA employees to facilitate that nominal compliance, (3) walking through the advantageous tax assets of accelerated depreciation on the nonexistent real assets, (4) con- ducting diligence on the project, and (5) even knowingly participating in two Case: 25-50986 Document: 52-1 Page: 29 Date Filed: 08/25/2026

No. 25-50986 other Ponzi schemes—then the district court would plainly be within its equitable powers to recognize those basic facts of life. 31 The loans would be entirely unsecured by fictious CCUs. And we doubt that the Receiver even purports to extinguish them, as distinguished from merely disregarding any priority they might enjoy in treating all the victims’ claims pari passu.

VI.

In sum, at this stage of the case, we credit UniBank’s argument on due process and hold that the summary proceedings provided insufficient process to UniBank. The Order is VACATED, and this matter is REMANDED for reconsideration or other proceedings consistent with the minimal require- ments of due process in a flexible—but not infinitely malleable—equitable proceeding. But we emphasize that we place no limitation on what pro- ceedings the district court may employ on remand or on what matters or issues it may consider. And we surely make no suggestion as to what rulings the district court may or should issue, either regarding UniBank’s culpability or any other matter. 32