Securities Expert Witness Testimony Allowed in Ponzi Scheme Litigation

Summary: Securities Expert Witness testimony is allowed as the judge determined that “Ponzi schemes” is an allowed topic for expert witness testimony.

Facts:  This case (Hafen v. Howell et al – United States District Court – District of Utah – February 23, 2023) involves a Receiver’s action against the defendants to recover assets obtained from an alleged Ponzi scheme related to rare coins.  In order to support a motion for summary judgment, the plaintiff hired Securities Expert Witness Jonathan O’ Hafen to provide expert witness testimony.  The defendant’s have filed a motion to exclude this expert from testifying.

Discussion: The defendants claim that Mr. Hafen’s report should be excluded because Mr. Hafen does not qualify as a “Ponzi scheme” expert and that his expert witness testimony is inadmissible and improper.

The court ruled that “Ponzi schemes” can be a topic for expert witness testimony and pointed to case opinions where this type of testimony could be relevant and helpful to the trier of fact.

Also, the court opined that Mr. Hafen has recovered tens of millions of dollars for investment fraud victims and has specialized knowledge of Ponzi schemes from his representation of those defrauded by investment schemes.  Thus, the court ruled that Mr. Hafen is qualified to provide an expert opinion on the subject of Ponzi schemes.

In addition, the court ruled that Mr. Hafen may not reach any legal conclusions of whether the defendants in this case amounted to a Ponzi scheme, but he will be allowed to offer his expert opinion on the mechanics of Ponzi schemes.

Conclusion:  The motion to exclude the expert witness testimony of Jonathan O’ Hafen is denied.