Commodity Futures Trading Commission v. Walsh, 618 F.3d 218 (2d Cir. 2010) (certifying questions to New York Court of Appeals) and Commodity Futures Trading Commission v. Walsh, 17 N.Y.3d 162 (June 23, 2011) (answering certified questions) and Commodity Futures Trading Commission v. Walsh, et al., ___ F.3d ___, 2011 WL 4090758 (2d Cir. Sept. 15, 2011) (vacating the injunctions based on the law as set forth by the New York Court of Appeals)

Pending appeal involves issues of first impression regarding the scope of the relief defendant doctrine and availability of the bona fide purchaser for value defense to an ex-spouse of the defendant in a securities fraud disgorgement proceeding. Making new law, the New York Court of Appeals found that (1) fraud proceeds are “marital property” under section 236 of the New York Domestic Relations Law, available for distribution upon the termination of a marriage, and (2) an innocent spouse who receives such proceeds in good faith pursuant to an arms-length divorce for fair consideration acquires ownership of that property superior to the rights of the original property owners.

The United States Court of Appeals for the Second Circuit confirmed the decision of the New York Court of Appeals and vacated the injunctions imposed by the federal District Court.

United States v. Surgent, 2009 WL 2525137 (E.D.N.Y. Aug. 17, 2009).

In a ground-breaking 57-page opinion, District Judge John Gleeson brilliantly reasoned through first impression issues of the legitimacy of so-called ‘money judgment forfeitures’ and the government’s burden of proof in criminal forfeiture ancillary proceedings under Rule 32.2 of Federal Rules of Criminal Procedure and 21 U.S.C. § 853(n).