United States Securities and Exchange Commission v. Borland

Background

The Securities and Exchange Commission moved for an order declaring certain liens asserted by Copper Leaf, LLC and McLoughlin Construction Corp. unenforceable against 43 North Haven Way, Sag Harbor, New York. The property was included in a preliminary injunction entered in 2018 that froze the assets of the defendants and relief defendants. In May 2024, the court appointed Christopher Ritchey as liquidation agent to sell the property.

Copper Leaf’s Judgment Liens

Copper Leaf had obtained a civil judgment against Brent Borland for $10,235,711.93 after he defaulted in a prior related proceeding. Copper Leaf filed transcripts of that judgment and a later attorneys’ fee award with the Suffolk County Clerk under New York Civil Practice Law and Rules § 5018(b). Under New York law, those filings could create liens against real property owned in the judgment debtor’s name.

The property’s record title, however, was held by “Alana Marie LaTorra Borland, as Trustee of the 43 N. Haven Way Revocable Trust.” Brent Borland’s name appeared on the judgment transcripts, but the record owner’s name did not. Applying New York’s strict approach to judgment liens, the court concluded that a judgment against Brent Borland did not create a lien on property held in the trust’s name. The court assumed that Brent Borland had caused the property to be placed in his wife’s name to further a fraud and agreed that he beneficially owned the property, but held that those facts did not change the lien result.

The court therefore ordered and declared that Copper Leaf had no valid enforceable lien encumbering 43 North Haven Way. It also stated that the competing title searches did not affect the lien’s legal effectiveness under New York law.

McLoughlin Construction Corp.’s Mechanics Lien

McLoughlin Construction Corp. filed a mechanics lien in 2022 and correctly identified the record owner as “Alana Marie LaTorra Borland, as Trustee of the 43 N. Haven Way Revocable Trust.” McLoughlin did not respond to the SEC’s motion. The lien would have expired one year after filing under New York Lien Law § 17. Although McLoughlin obtained a one-year extension, the extension ran from April 28, 2023, and the court found that the lien had expired under the extension order.

Because the SEC’s application did not identify any further extension, the court determined that the application concerning McLoughlin’s lien was moot—that is, there was no live dispute for the court to resolve concerning that expired lien.

Order

The court ordered and declared that Copper Leaf had no valid enforceable lien on the property and that McLoughlin Construction Corp.’s Suffolk County lien had expired insofar as the SEC’s application showed, making the SEC’s application regarding that lien moot. The SEC may file a copy of the order with the Suffolk County Registrar-Recorder/County Clerk. The court retained jurisdiction for all purposes.