## Facts

- Federal National Mortgage Association (Fannie Mae) sued Olympia Mortgage Corporation (Olympia) arising from alleged mortgage-related misconduct.
- Olympia entered receivership and, through its receiver, asserted crossclaims against insiders and affiliated entities to recover assets and impose personal liability.
- Olympia was insolvent during the relevant period, at least from December 31, 1997, and possibly throughout its existence.
- While insolvent, Olympia made transfers to entities affiliated with shareholder Samuel Pinter (the Entity Defendants), which Olympia alleged provided no equivalent value in return.
- Olympia sought partial summary judgment avoiding the transfers as constructively fraudulent under New York Debtor and Creditor Law (DCL) § 273 and sought to pierce Olympia’s corporate veil to hold Pinter personally liable for Olympia’s obligations, including an amount tied to the Fannie Mae consent judgment.
- Olympia also requested entry of partial final judgment under Federal Rule of Civil Procedure 54(b).

## Issues

1. Whether Olympia was entitled to summary judgment under DCL § 273 by showing insolvency at the time of the transfers and lack of fair consideration from the Entity Defendants.
2. Whether, as a matter of New York law, Pinter so dominated Olympia and used that control to commit a wrong causing creditor injury that the court should pierce the corporate veil and impose personal liability.
3. Whether the court should enter partial final judgment under Rule 54(b) on the constructive fraudulent transfer and veil-piercing rulings.

## Decision

- Granted Olympia partial summary judgment against the Entity Defendants on the DCL § 273 constructive fraudulent transfer claims.
- Granted summary judgment piercing Olympia’s corporate veil as to Samuel Pinter and held him personally liable; the court directed judgment against him in the amount of $44.8 million.
- Denied Olympia’s motion for entry of partial final judgment under Rule 54(b).

## Legal Principles

- Under former New York DCL § 273, a conveyance by an insolvent debtor made without fair consideration is constructively fraudulent; actual intent to defraud is not required.
- “Fair consideration” requires an exchange of reasonably equivalent value and good-faith circumstances; transfers lacking legitimate value to the debtor may be avoided.
- Under New York veil-piercing doctrine, the moving party must show (1) complete domination of the corporation as to the transaction at issue and (2) use of that domination to commit a fraud or wrong that injured the party seeking relief.
- Veil piercing is an equitable remedy applied to prevent misuse of the corporate form to defeat legitimate creditor claims.
- Rule 54(b) certification is disfavored where resolved claims are intertwined with remaining claims and parties and would risk piecemeal appellate review.

## Conclusion

The court held that transfers from an insolvent mortgage lender to shareholder-affiliated entities were constructively fraudulent under DCL § 273 and could be avoided, and it pierced the corporate veil to impose personal liability on the dominating shareholder based on asset diversion that harmed creditors; however, it refused to enter partial final judgment because the case involved overlapping, unresolved matters.


Fed. Nat'l Mortg. Ass'n v. Olympia Mortg. Corp., 792 F. Supp. 2d 645 (E.D.N.Y. 2011)