Full opinion text
OPINION SWEET, District Judge. Carl H. Loewenson, Jr. (“Loewenson”), the court-appointed receiver (the “Receiver”) for defendant Credit Bancorp, Ltd. and related entities (collectively, “Credit Bancorp”) has moved for an order declaring that Credit Bancorp’s customers have priority over the United States (the “Government”) and the States for payment from certain property (the “Protected Property”) that is either currently in the receivership estate or is anticipated will be brought into that estate, pursuant to 28 U.S.C. § 2410(a)(1) and 28 U.S.C. § 1340, and declaring that in notifying the Court and the United States of the potential for tax liability the Receiver has discharged his obligations pursuant to 31 U.S.C. § 3713(b) and may not be held liable for effectuating a court-ordered plan of partial distribution of assets in the receivership estate. For the reasons set forth below, the motion is granted in part and denied in part. Prior Proceedings This action commenced on November 17, 1999, with the filing of a complaint by the Securities and Exchange Commission (the “SEC”) against Credit Bancorp and its principals. The Court appointed Loewen-son as Fiscal Agent for Credit Bancorp by order of November 23,1999, and appointed him as Receiver for Credit Bancorp by order of January 21, 2000 (the “Order Appointing Receiver”). The Order Appointing Receiver directed the Receiver inter alia to marshal Credit Bancorp’s assets. The order also directed the Receiver not to sell any securities and not to return to Credit Bancorp customers any securities or other assets deposited with Credit Bancorp, or into an account in the name of Credit Bancorp, without further order of this Court. The Government was brought into this action in its capacity as the Internal Revenue Service (the “IRS”) on November 8, 2000, when an initial motion (the “November 8 Motion”) by the Receiver for a determination of priority was served on the Office of the United States Attorney for the Southern District of New York. By opinion dated November 29, 2000, SEC v. Credit Bancorp, Ltd., 2000 WL 1752979 (S.D.N.Y. Nov.29, 2000) [hereinafter, “Credit Bancorp X”], opinion dated January 19, 2001, SEC v. Credit Bancorp, 129 F.Supp.2d 263 (S.D.N.Y.2001), and order dated January 19, 2001, the Court approved a plan of partial distribution of the receivership assets. The plan provides for what is in essence a pro rata return of customer-deposited property to the Credit Bancorp customers, either in the form of their deposited property, i.e., securities (where that property is under the Reeeiver’s control), or in the form of cash or replacement securities (where the deposits were stolen, are missing, or are in securities accounts not under the Receiver’s control). The plan requires customers to whom deposited securities are returned to make a cash “Undertaking” payment. The Undertaking proceeds are to be used to pay or secure Credit Baneorp’s margin debts, to make a distribution to customers whose deposits were converted, and to provide for the ongoing cash needs of the Receivership. Implementation of the plan is subject to either a stipulation or an order by this Court granting the relief requested in the instant motion. Subsequent to the filing of the November 8 Motion, the Receiver and the Government began negotiations regarding the subject of Credit Bancorp’s tax liability, and the motion was ordered off the calendar on February 7, 2001. On February 28, 2001, the Receiver and the Government entered into a stipulation and order (the “Stipulation”) which resolved certain tax matters but left others unresolved. In the Stipulation, the Government agreed not to assert a federal tax lien for any tax “owed by Richard Blech or any other defendant” against the assets to be distributed pursuant to the plan of partial distribution. The Government further agreed that the Receiver would not be personally liable as a consequence of proceeding with the plan for such tax liability accruing before the Receiver's appointment on January 21, 2000. The Government specifically reserved its right, however, to assert a tax lien or to assert priority as to income generated by estate assets after January 21, 2000 (the “Post-Receivership Income”), any future insurance proceeds, any securities held in accounts in the name of Credit Bancorp that are not specifically identifiable as customer-deposited securities, and any asset, property, or rights to property of defendant Richard Jonathan Blech (“Blech”). The Government also reserved its right to seek to hold the Receiver personally liable for tax liability based on such income or assets. By motion of March 1, 2001 (the “March 1 Motion”) the Receiver renewed the motion for a determination of priority with respect to those not resolved by the Stipulation. Submissions were received, and the matter was marked fully submitted on March 28, 2001. Facts The following facts are gleaned from the declarations, exhibits, and other submissions to the Court. These submissions include inter alia extensive evidence regarding the operations of Credit Bancorp. Credit Bancorp operated a fraudulent investment or “Ponzi” scheme prior to the filing of this suit by the SEC. Credit Ban-corp solicited customers to deposit securities, cash, and other assets with the promise of a return in the form of a “custodial dividend” based upon a percentage of the market value of the deposits or, in the case of certain customers, to invest the customers’ cash and mutual funds at above-market rates in mutual funds to be managed by Credit Bancorp. Credit Bancorp represented to customers that it engaged in “riskless arbitrage” trading. At least two hundred customers took Credit Bancorp up on this offer of a “riskless” investment opportunity. The marketing materials distributed by Credit represented and the underlying contracts entered into between Credit Bancorp and the customers provided that deposits were to be held in trust under the control of a designated trustee and were insured by Lloyds of London. Customers were specifically advised that the deposits were not the property of Credit Bancorp and that creditors of Credit Bancorp would have no recourse to the property. Typically, customers executed two documents when they placed their deposits with Credit Bancorp: (1) a Credit Facility Agreement (the “CFA”); and (2) a Trustee Engagement Letter (the “Trustee Letter”). Both of these documents provided that the deposits would be held in trust, that equitable title remained with the customer, and that Credit Bancorp’s sole interest in the deposit was as collateral in the event the customer borrowed from Credit Bancorp. Thus, a model CFA, included in Credit Bancorp’s marketing materials, specifically provided that Credit Bancorp had a security interest in the “collateral” to be held by the “Trustee,” Model CFA ¶ 2.5, and that the Trustee would not “at any time sell, trade or otherwise dispose of the Collateral, except as expressly authorized” in the agreement, id. ¶ 4.1. Under the model CFA, Credit Ban-corp had a security interest in the collateral only to “secure the repayment of an ‘Advance,’ ” which is defined as a payment to the customer from Credit Bancorp under the “credit facility.” Id. ¶¶ 2.4, 2.5. Only twelve Credit Bancorp customers are indebted to Credit Bancorp for a loan made pursuant to this arrangement. The model Trustee Letter conformed in all material respects with the model CFA. Under the Trustee Letter, the “Trustee” was specifically “engaged” with regard to the transaction set forth in the Credit Facility Agreement. Model Trustee Letter at 1. The letter stated: “As the signing officer for all Credit Bancorp Ltd. trustee accounts, I represent on behalf of Credit Bancorp Ltd. and myself that the securities, as held by me in the account, are not an asset of Credit Bancorp Ltd.” Id. The Trustee Letter further provided that: These securities are to be held in a Credit Bancorp Ltd. account and may not be sold or otherwise disposed of except as provided for in the [Credit Facility Agreement]. In the case of a creditor claim against Credit Bancorp and an attempt to seize the securities, I am instructed to immediately return the securities to you. At no time am I to release the securities to any third party. As the securities are being delivered as collateral for the implementation of the credit facility with Credit Bancorp, title is held by you. Id. Although certain details of the CFA and Trustee Letter differed from customer to customer as the result of individual negotiations, they share the following essential elements: (1) they created an express trust; (2) the customer deposits were to be held in accounts in which the designated trustee was the sole signatory; and (3) Credit Bancorp was not to receive any property interest in the deposit, except where loans were extended by Credit Ban-corp to the customer, in which case the deposit was to serve as collateral. The model CFA provided that Credit Bancorp would “maintain its insurance coverage under [certain enumerated policies] ... which provide insurance coverage of the Collateral.” Model CFA ¶ 4.3. The CFA also contained the following assignment provision: In the event of a loss of the Collateral, in whole or in part, any proceeds remitted to CBL from any insurance claims, in whole or in part, which are the subject of this transaction, are hereby assigned by Credit Bancorp to [the customer], This assignment, although no loss has occurred or is expected to occur, is hereby declared to be part of the consideration for [the customer] entering into this Agreement. Id. ¶ 4.5. Credit Bancorp did not honor the promises made in the CFA or Trustee Letter, or the representations made to the Bob Mann customers. Securities deposited by customers were pledged as collateral for margin loans from various brokerage houses or even sold outright. Cash deposited by the Bob Mann customers was immediately converted and directed to a Credit Bancorp account with Credit Suisse in Geneva (the “Credit Suisse account”). By the time the complaint in this action was filed Credit Bancorp had dissipated tens of millions of dollars of its customers’ assets. Consistent with the classic structure of a Ponzi scheme, funds in the Credit Suisse account and the proceeds of margin loans from Credit Bancorp’s brokerage accounts were used for payments to customers in the form of custodial dividends, loans secured by customer deposits, and the return of deposited funds. These monies were also used for Credit Bancorp operating expenses, Credit Bancorp investments, options trading, and Blech’s personal expenses. In a declaration submitted by Kenneth B. Lynch (“Lynch”), who was at one time outside general counsel for Credit Ban-corp, Lynch recounts conversations with Blech in which Blech described his use of funds held in Credit Bancorp accounts for his personal needs and described the source of these funds as being customer deposits or the proceeds of loans secured by those deposits: [Blech told Lynch that Blech took] funds from CBL’s accounts, including funds from deposits by CBL’s customers, for his own personal use ... [that Blech] variously used funds from customer deposits or from the proceeds of loans secured by customer deposits ... for ... personal needs ... [that] CBL’s investments in the Bahia Vista Hotel, the Montecristo yacht, CBL Worldkey, and the University of Southern Europe ... came from ... funds in Credit Ban-corp’s accounts ... [and] that the funds in CBL’s accounts came from customer deposits and from the proceeds of loans secured by customer accounts. Lynch Decl. ¶¶ 9-11. The receivership estate includes assets spread out over two continents in a variety of forms, including securities held in accounts in the name of Credit Bancorp or the Receiver, a money market account at Citibank in New York containing the proceeds of the sale of customer securities by the Receiver, interests in the University of Southern Europe in Monaco and Hotel Bahia Vista in France, and the Montecris-to, a yacht moored on the French Riviera. The cash assets and potential future cash receipts of the receivership are: (1) approximately $9 million in proceeds from the sale, pursuant to this Court’s order of June 23, 2000, of 900,000 shares of the common stock of Centigram Communications Corporation (“Centigram”) to Centigram, a Credit Bancorp customer; (2) the proceeds, if any, from the third-party action instituted by the Receiver against Credit Bancorp’s insurers (the “Coverage Action”), which is currently pending before this Court; and (3) proceeds from the Undertaking to be paid by those customers seeking the return of their deposited securities under the plan of partial distribution. The Receiver has not yet obtained control over certain assets, namely, securities and cash located in Europe (the “European Assets”) in accounts with European financial institutions that do not recognize the Receiver’s authority, and assets which Blech has claimed are his personal property- The partial distribution plan relies on assets and income presently within the Receiver’s control, the Undertaking payments, and the European assets, to fund the distribution. These assets and income are not sufficient to make the customers whole. The Undertaking payment is presently estimated at approximately 30% of the current market value of the customer’s deposit. Thus, the plan affords the customers a recovery rate of approximately 70%. Credit Bancorp maintained corporate offices in California, New Jersey, and Kentucky. At the time this action commenced, assets held by Credit Bancorp were located in California, Maryland, Nebraska, New York, and New Jersey, as well as Switzerland, the United Kingdom, and Canada. There are presently no federal or state tax liens against Credit Bancorp or the receivership. Discussion I. The Property As To Which The Receiver Seeks Imposition Of A Constructive Trust And The Effect Of This Remedy The Receiver seeks a determination that the following property is subject to a constructive trust in favor of the Credit Bancorp customers and is therefore unavailable to pay any tax liability of Credit Bancorp: (1) customer-deposited assets in accounts in the name of Credit Bancorp; (2) interest and dividends earned on those assets; (3) proceeds from the wrongful sale, misappropriation, or margining of customer-deposited assets; (4) assets acquired by Credit Bancorp or Blech with customer-deposited assets, proceeds from those assets, or the pledging of any of those assets; (5) proceeds from the sale of customer-deposited assets during the course of the receivership; (6) customer Undertakings made pursuant to the plan of partial distribution and any securities or other assets acquired by the Receiver with the proceeds of such Undertakings; and (7) any insurance proceeds recovered for the loss of customer-deposited assets (collectively, the “Protected Property”). The Protected Property includes virtually all of the assets in the receivership estate and much of the property that it is anticipated will be delivered to the Receiver, either by operation of the plan of partial distribution or through the Receiver’s marshalling activities. The federal Debt Priority Statute, 31 U.S.C. § 3713, and the federal Lien Priority Statute, 26 U.S.C. § 6321 et seq., provide the federal government with priority over other claimants as to the payment of debts, including tax debts, owed by a debt- or. See 31 U.S.C. § 3713(a)(1) (according priority to a claim of the United States under enumerated circumstances); 26 U.S.C. § 6321 (according priority to lien of the United States, except as otherwise provided in 26 U.S.C. § 6323). If the Protected Property is subject to a constructive trust in favor of the Credit Bancorp customers, as urged by the Receiver, then Credit Bancorp has no property interest in these assets. See Part III. A., infra. The Receiver and the Government concur that under these circumstances the Protected Property could not be applied to satisfy the tax liability of Credit Bancorp or, to put it another way, the customers’ claim to that property would take priority over the claim of the United States. See Gov’t Mem. at 23; see generally Kennebec Box Co. v. O.S. Richards Corp., 5 F.2d 951, 952 (2d Cir.1925). II. Subject Matter Jurisdiction A. The Jurisdictional Bar On Actions Seeking To Restrain The Assessment Or Collection Of Federal Taxes The Government contends that this Court lacks subject matter jurisdiction to grant the relief requested by the Receiver due to the jurisdictional limits imposed by the Declaratory Judgment Act, 28 U.S.C. § 2201, as well as by the Anti-Injunction Act, 26 U.S.C. § 7421. The Declaratory Judgment Act provides in relevant part: In a case of actual controversy within its jurisdiction, except with respect to Federal taxes ..., any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration .... 28 U.S.C. § 2201(a) (emphasis added). The Anti-Injunction Act states in relevant part that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” 26 U.S.C. § 7421(a). Thus, according to the Government, subject matter jurisdiction is lacking because (1) the relief sought is “with respect to Federal taxes,” 28 U.S.C. § 2201(a), (2) the relief sought is purely declaratory, and (3) no exception to the jurisdictional bar applies. The instant action involves an equity receivership. However, while a district court has “broad powers” and “wide discretion” to fashion relief in an equity receivership, see, e.g., SEC v. Elliott, 953 F.2d 1560, 1566 (11th Cir.1992), a court cannot expand its jurisdiction by creating a receivership, see Orth v. Transit Inv. Corp., 132 F.2d 938, 945 (3d Cir.1942); First Nat’l Bank in Albuquerque v. Robinson, 107 F.2d 50, 54 (10th Cir.1939). Therefore, it must be ascertained whether there is an independent basis for subject matter jurisdiction over the Receiver’s motion that does not run afoul of the jurisdictional bar. B. Subject Matter Jurisdiction Under The Quiet Title Provision Of 28 U.S.C. § 2410(a)(1) The Receiver maintains that subject matter jurisdiction over this motion exists pursuant to the quiet title provision of 28 U.S.C. § 2410, and 28 U.S.C. § 1340. Section 2410 is not itself a jurisdictional statute but, rather, pertains to whether the United States has waived sovereign immunity with respect to the matter at issue, and provides in relevant part: [T]he United States may be named a party in any civil action or suit in any district court, ... to quiet title to ... real or personal property on which the United States has or claims a mortgage or other lien. 28 U.S.C. § 2410(a)(1). Section 1340 is a jurisdictional statute, and provides that the district courts “shall have original jurisdiction of any civil action arising under any Act of Congress for providing internal revenue ....” 28 U.S.C. § 1340. Section 1340 provides a basis for subject matter jurisdiction over actions against the United States to quiet title pursuant to § 2410(a)(1). See, e.g., Aqua Bar & Lounge, Inc. v. IRS, 539 F.2d 935, 937 (3d Cir.1976). The Receiver contends that the motion for a determination of priority is proper under § 2410(a)(1) because, in seeking a determination that the customers have an interest in the Protected Property that takes priority over a lien interest by the Government, he is seeking to “quiet title” to that property. 28 U.S.C. § 2410(a)(1). The Government has not challenged the Receiver’s contention that, if sovereign immunity has been waived with respect to this motion under § 2410(a)(1), then there is subject matter jurisdiction under § 1340. See 28 U.S.C. §§ 2410(a)(1), 1340. Rather, the Government’s position is that § 2410(a)(1) does not apply to the motion and, therefore, the Receiver cannot rely on this provision to escape the jurisdictional bar imposed by the Declaratory Judgment Act and the Anti-Injunction Act. The jurisdictional bar imposed by the Declaratory Judgment and Anti-Injunction Acts is directed at suits whose “objective ... [is] to restrain the assessment and collection of taxes .... ” Alexander v. “Americans United”, 416 U.S. 752, 760, 94 S.Ct. 2053, 40 L.Ed.2d 518 (1974) (analyzing Anti-Injunction Act). The Supreme Court has instructed that “the principal purpose of ... [the jurisdictional bar is] the protection of the Government’s need to assess and collect taxes as expeditiously as possible with a minimum of preenforcement judicial interference .... ” Bob Jones Univ. v. Simon, 416 U.S. 725, 736, 94 S.Ct. 2038, 40 L.Ed.2d 496 (1974) (analyzing Anti-Injunction Act). The jurisdictional bar promotes this congressional policy by forcing “a person whose sole claim is that a federal tax assessment was not valid in fact and law must ‘pay first and litigate later.’ ” Falik v. United States, 343 F.2d 38, 41 (2d Cir.1965) (citations omitted) (analyzing § 2410(a)(1) and Declaratory Judgment Act). Section 2410(a)(1) does not constitute a waiver of sovereign immunity with respect to challenges to the merits of the federal government’s tax assessment or lien. See, e.g., Progressive Consumers, 79 F.3d at 1232-33 (Section 2410(a)(1) does not encompass actions seeking to extinguish federal tax liens as invalid); Aqua Bar, 539 F.2d at 938 (Section 2410 does not permit suit by taxpayer to “challenge merits of the tax assessment underlying the lien”); Falik, 343 F.2d at 41 (same). However, § 2410(a)(1) does serve as a waiver of the United States’ sovereign immunity with respect to disputes concerning the priority of competing liens. See, e.g., Progressive Consumers, 79 F.3d at 1232-33 (“[S]ection 2410(a)(1) controversies encompass disputes concerning both the ‘validity and priority of liens’ as distinguished from actions seeking ‘their extin-guishment’ ....”) (citation omitted); Johnson, 836 F.2d at 946 (plaintiff sought relief which “would seem to fit within our earlier definition of a section 2410 quiet title action, to wit: a determination that a tax lien does not exist, has been extinguished, or is inferior in rank”) (emphasis in original); ContiMortgage Corp. v. United States, 109 F.Supp.2d 1038, 1041 (D.Minn.2000) (“As the Plaintiff in the present matter is seeking a declaration of the priority of its mortgage over the United States’ tax lien, subject matter jurisdiction is proper pursuant to 28 U.S.C. § 2410(a)(1).”). Suits to determine lien priority under the quiet title provision of § 2410 are not barred by the Declaratory Judgment or Anti-Injunction Acts. See Progressive Consumers, 79 F.3d at 1234 (Declaratory Judgment Act does not bar quiet title action seeking determination of lien priority); Johnson, 836 F.2d at 948 (neither Declaratory Judgment nor Anti-Injunction Act bar quiet title suits that do not contest merits of underlying assessment); Aqua Bar, 539 F.2d at 940 (same); McEndree v. Wilson, 774 F.Supp. 1292, 1297 (D.Colo. 1991) (§ 2410(a)(1) provides exception to Declaratory Judgment Act jurisdictional bar); see also Harrell v. United States, 13 F.3d 232, 234 (7th Cir.1993) (Anti-Injunction Act does not bar § 2410 challenge to government’s method of collecting assessments). The Government maintains, however, that the Receiver’s characterization of his motion as merely relating to the priority of liens is inaccurate. Citing “Americans United”, 416 U.S. 752, 94 S.Ct. 2053, 40 L.Ed.2d 518, and Bob Jones Univ., 416 U.S. at 725, 94 S.Ct. 2038 the Government maintains that the Receiver’s real “objective ... [is] to restrain the assessment and collection of taxes,” “Americans United”, 416 U.S. at 760, 94 S.Ct. 2053 since what the Receiver seeks is “advance assurance,” Bob Jones Univ., 416 U.S. at 738, 94 S.Ct. 2038 that Credit Bancorp’s tax liabilities cannot be collected from the receivership estate. Indeed, avers the Government, the Receiver “would not be interested in obtaining the declaratory and injunctive relief requested,” “Americans United”, 416 U.S. at 761, 94 S.Ct. 2053 if this were not his purpose. The reduction of the pool of possible assets available for collection by the government, however, is precisely the result in the cases that have found lien priority challenges to fall within § 2410(a)(1), since a finding that the moving party’s lien is superior to the government’s lien necessarily means that the assets available to the government to satisfy any tax assessment or collection are decreased. See, e.g., Progressive Consumers, 79 F.3d at 1232; Johnson, 836 F.2d at 945-46; ContiMortgage Corp., 109 F.Supp.2d at 1041. “Admittedly, any challenge to the validity of a federal tax lien and sale indirectly interferes with the tax collection process which [the Declaratory Judgment Act and the Anti-Injunction Act] are designed to protect from undue litigation outside the Tax Court.” Aqua Bar, 539 F.2d at 940. Nonetheless, § 2410(a)(1) permits litigants to seek declaratory relief against the government regarding the priority of competing liens. See id. Moreover, neither “Americans United” nor Bob Jones Univ. involved § 2410(a)(1) or a declaration involving the priority of liens. See “Americans United”, 416 U.S. at 756-57, 94 S.Ct. 2053 (litigant sought declaration that IRS’s administration of statute was erroneous or unconstitutional); Bob Jones Univ., 416 U.S. at 738-41, 94 S.Ct. 2038 (university sought declaration that non-profit status erroneously revoked by IRS). Thus, while a general lesson may be drawn from these cases that courts should carefully evaluate whether a litigant is in fact seeking to restrain tax assessment or collection, regardless of how the litigant characterizes its efforts, the analysis in these cases does not apply to the instant dispute. The Government also relies on the Second Circuit’s decision in Falik, 343 F.2d 38, in which the court rejected the taxpayer’s contention that her suit was a quiet title action that was not barred under the Declaratory Judgment Act. Id. at 42. In Falik, however, the taxpayer sought to remove a tax lien on her home because, she argued, she did not owe the taxes underlying the lien. See id. at 39. Thus, she was questioning the validity of the underlying assessment rather than seeking a determination of lien priority. See id. at 42. Similarly, in Laino v. United States, 633 F.2d 626 (2d Cir.1980), also cited by the Government, the taxpayer sought to enjoin the government’s tax collection effort on the basis that the assessment “lacked any basis in fact,” id. at 628, and was “null and void,” id. at 626. Thus, these cases merely illustrate the difference between claims that challenge the assessment and collection of taxes and claims that do not, but do not apply here. Indeed, Falik specifically recognized that suits involving the priority of liens are authorized, pursuant to § 2410(a)(1). See 343 F.2d at 42. The Receiver does not dispute that Credit Bancorp may owe substantial federal tax liability. What the Receiver seeks, however, is a determination regarding who holds property interests in the Protected Property. Thus, the Receiver has not challenged an underlying tax assessment or collection effort but, rather, seeks a determination regarding the priority of competing liens and, under the authorities just discussed, there is subject matter jurisdiction over this motion. The Government also objects, however, that the Receiver cannot rely on § 2410(a)(1) because the Government has not actually made an assessment and does not presently have a lien on the receivership estate. Therefore, according to the Government, the United States neither “has nor claims a lien,” 28 U.S.C. § 2410(a)(1), on the Protected Property. It is a “basic rule of statutory interpretation [to] avoid reading statutory language in a way that would in any way make some of its provisions surplusage.” United States v. Martinez-Santos, 184 F.3d 196, 204 (2d Cir.1999). Under the plain language of the statute, to “claim” a lien must be different than to “have” one, as both possibilities are expressed. See 28 U.S.C. § 2410(a)(1). Yet the Government’s argument reduces the meaning of “has or claims a lien” to “has ... a lien.” Since there is no dispute that the Government does not have a lien on the receivership estate, the question is whether it “claims” one within the meaning of the statute. The Government points out that in all of the § 2410(a)(1) cases relied upon by the Receiver, a federal tax lien had been asserted. See Progressive Consumers, 79 F.3d at 1230; Johnson, 990 F.2d at 42; Johnson, 836 F.2d at 942; ContiMortgage Corp., 109 F.Supp.2d at 1040; Stackhouse v. Morgan, No. 2:99 CV 1537, 1999 WL 1427759, at *1 (E.D.Va. Dec. 15, 1998); Sandclay Trucking v. Free Piping, No. 95-702-CIV-ORL-18, 1996 WL 511673, at *1 (M.D.Fla. June 24, 1996). Unsurprisingly, none of these cases addressed the meaning of the “claims a ... lien” terminology. In Mongelli v. Mongelli, 849 F.Supp. 215 (S.D.N.Y.1994), which comes the closest to the facts of this case, the court held that § 2410(a)(1) did not apply because the government had only a “potential lien” on the defendant’s property rather than an actual one. Id. at 219. The decision does not discuss the “claims ... a lien” language, however, and there is no indication that any of the parties raised this portion of the statute to the court. See id. at 218-19. Thus, Mongelli is not persuasive authority for the proposition that a lien must actually be in place in order to § 2410(a)(1) to apply. The Government also relies on Bradley, Arant, Rose & White v. United States, 802 F.2d 1323, 1325 (11th Cir.1986), and Stewart v. United States, 242 F.2d 49 (5th Cir.1957). Bradley fails to address the specific statutory language at issue here and is distinguishable on its facts. See 802 F.2d .at 1325 (§ 2410(a)(1) does not apply to assets in which the United States has an ownership interest, as compared with a lien interest). Stewart merely stated generally that “§ 2410(a)(1) ... applies only to suits relating to government liens .... ” 242 F.2d at 50 n. 2. Therefore, these cases do not warrant the conclusion that the present lack of a lien means that § 2410(a)(1) does not apply. It is another basic canon of statutory interpretation that “unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.” Harris v. Sullivan, 968 F.2d 263, 265 (2d Cir.1992) (internal quotation marks and citation omitted); see United States v. Dauray, 215 F.3d 257, 260 (2d Cir.2000) (when interpreting statute’s plain meaning court “consider[s] the ordinary, common-sense meaning of the words”). Section 2410 does not provide a definition of the term “claims,” or explain the difference between having and claiming a lien. See 28 U.S.C. § 2410(a)(1). Nor has a definition of this term elsewhere in the tax code been identified by the parties or this Court. As the term is not “otherwise defined,” the Court must look to its ordinary meaning. The ordinary meaning of the verb “to claim” is “to assert; to urge; to insist.” Black’s Law Dictionary at 247 (6th 3d.1990). Thus, to claim something falls short of actually having it. Although no tax liability has yet been assessed against Credit Bancorp, there is a potential that a substantial assessment will be made in the future. This potential is far from speculative. After negotiations between the Receiver and the Government, and the entry of the Stipulation, the Government specifically reserved its rights to assert a tax lien or to assert priority as to certain receivership assets, including but not limited to the Posfi-Receivership Income. While the Government avers that the Receiver’s predictions of the potential Credit Bancorp tax liability are exaggerated, it is apparent that the Government contemplates that some tax liability will result from the assets not included in the Stipulation. Moreover, the practical effect of the Government’s position is much the same as would be the effect of an actual lien in that the Receiver cannot implement the partial distribution plan until the issue of the Government’s right to these assets is resolved. “Jurisdictional grants waiving sovereign immunity are ordinarily interpreted narrowly.” Roco Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292, 1295 (2d Cir.1990) (citing United States v. Sherwood, 312 U.S. 584, 590, 61 S.Ct. 767, 85 L.Ed. 1058 (1941)). It is neither necessary, nor would it be wise, to attempt to determine the outer contours of the meaning of “claims ... a lien,” that is, the threshold of government conduct, or some other criterion, that would trigger application of this term. The conclusion that the circumstances of this case fall within that term, however, is supported by the statutory language, interpreted in light of applicable rules of statutory construction and the case law. Moreover, application of the quiet title provision to this case comports with the policy goals underlying that provision. See Johnson, 836 F.2d at 944 (discussing legislative history of quiet title provision and observing that it was enacted “in response to the recognized need for a way to force disputes over government tax liens to resolution, rather than leaving the United States in complete control of the timing”) (internal quotation marks and citation omitted). Therefore, there is subject matter jurisdiction over the Receiver’s motion for a determination of priority, pursuant to 28 U.S.C. § 2410(a)(1) and 28 U.S.C. § 1340. The Receiver also maintains that subject matter jurisdiction exists under the exception to the jurisdictional bar set forth in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 6-7, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962) (exception to bar where it is “clear that under no circumstances could the government ultimately prevail” and “equity jurisdiction otherwise exists”); see also Laino v. United States, 633 F.2d 626, 629 (2d Cir.1980), as well as the exception set forth in South Carolina v. Regan, 465 U.S. 367, 378, 104 S.Ct. 1107, 79 L.Ed.2d 372 (1984) (jurisdictional bar does not “apply to actions brought by aggrieved parties for whom [Congress] has not provided an alternative remedy”). Jurisdiction having been found on other grounds, however, these alternative bases will not be addressed. C. Subject Matter Jurisdiction Over The Receiver’s Request For Relief Regarding His Personal Liability In addition to seeking a determination of priority, the Receiver has moved for a declaration that he has satisfied his obligations under the Federal Debt Priority Statute, 31 U.S.C. § 3713(b), and therefore that he may not be held personally liable for tax liabilities incurred by Credit Ban-corp or the receivership on account of his discharging this Court’s orders, including by implementing the partial distribution plan. The Government contends that, while the Federal Debt Priority Statute does not refer to taxes as such, the declaratory relief sought is “with respect to Federal taxes,” 28 U.S.C. § 2201(a), and therefore the Court lacks subject matter jurisdiction. The Government does not provide much detail for its view that this second form of relief “relates to federal taxes.” However, the Government’s position can be understood based on its citation to Botta v. Scanlon, 314 F.2d 392, 393-94 (2d Cir.1963), in which the Second Circuit held that a suit seeking to restrain the United States from collecting a penalty assessment under § 6672 of the tax code was barred by the Anti-Injunction Act. See id. In Botta, the plaintiffs maintained that § 6672 penalty assessments are not taxes and, therefore, that the jurisdictional bar did not apply. See 314 F.2d at 393. However, in light of the fact that under § 6672 the penalty imposed is equal to the amount of the unpaid tax, the court held that the penalty provision was “simply a means for ensuring that the tax is paid,” id. at 393, so that collection of the penalty “[could] no more be prevented by injunction than could the original tax,” id. at 394. Applying this reasoning here, it seems that the Government’s contention is that § 3713(b), by imposing personal liability on the receiver, is simply a means for ensuring that any tax owed by the Credit Bancorp estate is paid, so that collection of this tax from the Receiver cannot be barred anymore than can the assessment of the tax. Although the Government has not mentioned it, the Anti-Injunction Statute also expressly references “suits to restrain assessment or collection ... of ... the amount of the liability of a fiduciary under section 3713(b) of title 31, United States Code ....” 26 U.S.C. § 7421(b)(2). No authority has been identified which addresses whether a motion such as the one here is subject to the jurisdictional bar against suits seeking to restrain the assessment or collection of taxes. However, the nature of the dilemma facing the Receiver here was noted in Johnson, 836 F.2d 940, which involved a motion for a determination of priority under § 2410(a)(1). In Johnson, the Fifth Circuit held that the jurisdictional bar did not apply to an action by an estate executor seeking a determination of lien priority, including a federal tax lien, under § 2410(a)(1). See id. at 946-47. In so holding, the court observed that “[without a judicial determination of rights in the property, the executor faces the prospect of steering a precarious course between the Scylla and Charybdis of potentially competing ... disbursement obligations,” id. at 947, and “[i]t seems clear that in carrying out his disbursement obligations, the executor, in the absence of a judicial declaration of priorities, may be unable to act without subjecting himself to an unacceptable risk of liability,” id. at 947 n. 16 {citing 31 U.S.C. § 3713(b)). The case does not indicate, however, that the executor separately requested declaratory relief regarding his obligations under § 3713(b). One theory for jurisdiction over the Receiver’s motion is that the issue of whether he has satisfied his obligations under § 3713(b) is inseparable from the issue of lien priority under § 2410(a)(1). In Johnson, the court concluded that the “precarious course” faced by the executor, 836 F.2d at 947, supported the exercise of jurisdiction over his § 2410 action so that he could obtain the protection of a “judicial declaration of priorities,” id. at 947 n. 16. Thus, implicitly, the court recognized that the effect of finding jurisdiction under § 2410(a)(1) would be to protect the executor from the dangers he would otherwise face under § 3713(b) — assuming, of course, that he complied with the judicially determined priorities. See id. In this case, the Receiver seeks to make that implicit protection explicit. Therefore, this situation is different from the one in Botta, 314 F.2d 392, and there is subject matter jurisdiction to consider the Receiver’s request for relief as to his personal liability. The Receiver has also proposed that there is no alternative means for resolving the potential conflict between implementing the partial distribution plan and the incurrence of extraordinary personal liability, so that- the Regan exception applies. See Regan, 465 U.S. 367, 104 S.Ct. 1107, 79 L.Ed.2d 372. In Regan, the Supreme Court articulated a second exception to the injunction prohibition, in addition to the one set forth in Williams Packing, according to which the prohibition does “not ... apply to actions brought be aggrieved parties for whom [Congress] ... has not provided an alternative remedy.” Id. at 378, 104 S.Ct. 1107. The Regan exception is very difficult to satisfy. In the case itself, the plaintiff, because of its posture in relation to the challenged tax provision, quite literally lacked any means of obtaining an adjudication of that challenge other than an injunctive suit. See 465 U.S. at 378-80, 104 S.Ct. 1107. Moreover, the Supreme Court took note that it had rejected arguments that the injunction prohibition does not apply where the only alternative remedy is a refund action — even where a refund action is not “adequate” as a practical matter because the taxpayer, under the circumstances, will suffer irreparable injury by having to pay first and seek a refund later. Id. at 376, 104 S.Ct. 1107 (citations omitted). The Receiver points out that the Government has failed to suggest any alternative remedy and avers that he knows of no way other than this motion to challenge the potential for his personal liability. The Receiver has not addressed the issue of refund suits. The Receiver’s concern, of course, is his ability to challenge this potential liability before he is put in the position of having incurred it. The question is whether under these circumstances there is no alternative remedy within the meaning of Regan, 465 U.S. 367, 104 S.Ct. 1107, 79 L.Ed.2d 372. It will be assumed arguendo that the Receiver, like any one else, could “pay first and litigate later.” Falik, 343 F.2d at 41. In that sense, there is an alternative remedy, i.e., a method by which the Receiver could ultimately obtain adjudication of his claim. As the Johnson court observed, this is an untenable position for the fiduciary of an estate such as a receiver or executor. 836 F.2d at 947. This is a special type of case. It is the court that imposed the receivership, and the court that appointed the Receiver. If the Receiver cannot obtain review of his motion regarding personal liability then he has two choices. He can implement the partial distribution plan as presently structured, but at the risk of extraordinary personal liability. Or he can set aside reserves from the receivership funds to provide for the eventuality that this personal liability will come to pass, and to cover that liability. Neither of these courses of action is tenable. Thus, the effect of not affording the Receiver a way to have the personal liability issue determined at this stage would be to bring the receivership and any partial distribution under the receivership to a halt. The available alternatives are thus not merely inadequate as a practical matter but defeat the very purpose of the receivership. Therefore, applying Regan to the facts of this case leads to the conclusion that there is subject matter jurisdiction under the Regan exception. Jurisdiction having been found for the reasons set forth above, the Receiver’s contention that there is also subject matter jurisdiction over his request for § 3713 relief under Williams Packing will not be addressed. III. The Ripeness Of The Dispute As To The “Unmarshalled Assets” The Government contends that the Receiver’s motion is not ripe insofar as it relates to “unmarshalled assets,” and therefore may not be considered. The Receiver responds that neither his motion nor the question of ripeness turns on the distinction between marshalled and un-marshalled assets. Ripeness is a constitutional prerequisite to the exercise of jurisdiction by federal courts. See Nutritional Health Alliance v. Shalala, 144 F.3d 220, 225 (2d Cir.1998). “In evaluating whether a declaratory judgment action is ripe, we consider (1) the fitness of the issues for judicial review, and (2) the injury or hardship to the parties of withholding judicial consideration.” Id. (citing Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), overruled on other grounds, Califano v. Sanders, 430 U.S. 99, 105, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977)). “The ripeness doctrine’s ‘basic rationale is to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements.’ ” Gary D. Peake Excavating Inc. v. Town Bd. of the Town of Hancock, 93 F.3d 68, 72 (2d Cir.1996) [hereinafter “Peake Excavating ”] (quoting Abbott Labs., 387 U.S. at 148, 87 S.Ct. 1507). The Government defines the unmarshalled assets as (1) assets claimed by Blech as his personal property but found to have been purchased or maintained, at least in part, with Credit Ban-corp funds (the “Blech Assets”), see S.E.C. v. Credit Bancorp VI, 2000 WL 968010, at *15-*19, and (2) any proceeds recovered under Credit Bancorp’s insurance policies. Gov’t Mem. at 19. According to the Government, the issue of priority as to these assets is not fit for review because many documents and records belonging to Credit Bancorp are in Europe and presently out of reach, rendering the factual record incomplete. Moreover, the Government maintains, neither the Receiver nor the Credit Bancorp customers will suffer hardship if review is not obtained at this juncture because the unmarshalled assets are not part of the partial distribution plan. The Protected Property is defined according to its source rather than according to whether it is currently within the Receiver’s control. The definition corresponds to the principle that whether a constructive trust may be imposed over any or all of the property depends on the source of that property. •See Part III.A., infra, Whether to impose a constructive trust issue does involve factual questions. However, with respect to the insurance proceeds, as further explained herein, the determinations needed to resolve the Receiver’s motion are primarily legal in nature and further factual development would not aid in their resolution. See Able v. United States, 88 F.3d 1280, 1290 (2d Cir.1996) (constitutional challenge to statute was “ready for judicial determination” because presented issues that were “primarily legal, and not factual, in nature”). Thus, this issue is fit for review. As for the Blech Assets, factual questions do come to the fore. As discussed later in this opinion, see Part IV.B.l, infra, the record is not sufficiently developed. With respect to the issue of hardship, the Receiver has expended and must continue to expend substantial customer-deposited resources if he is to recover insurance proceeds from the Credit Bancorp insurers. If review were not obtained until after these efforts were concluded, and if at that point it were determined that the Government has priority over the customers as to those assets, the resulting hardship to the customers would be severe because significant receivership assets would have been expended in vain from the Receiver’s and customers’ perspective. See Peake Excavating, 93 F.3d at 72 (developer of landfill could challenge ordinance prior to expending funds on developing landfill where ordinance could restrict operation of landfill because “[i]f we [the court] uphold the ordinance, Peake will be able to cut his losses by halting his efforts to obtain a ... permit; if we invalidate the ordinance, Peake can continue with the ... permitting process, knowing that obtaining the ... permit would not be in vain”). Under these circumstances, the Receiver, acting on behalf of the customers, need not “ ‘await the consummation of threatened injury to obtain preventative relief.’ ” Valmonte v. Bane, 18 F.3d 992, 999 (2d Cir.1994) (quoting Pennsylvania v. West Virginia, 262 U.S. 553, 593, 43 S.Ct. 658, 67 L.Ed. 1117 (1923)). Thus, this is more than a mere “abstract disagreement,” and the matter is ripe for review. There is a similar type of hardship with respect to the Blech Assets, in that the Receiver has expended significant assets attempting to marshal these assets, and must expend more if he is to continue those efforts. However, the hardship is less and, as explained herein, the factual record is not adequately developed. Therefore, this issue is not ripe for review. The Government concedes that the issue of whether taxes owed on income generated from receivership assets since the appointment of the Receiver, and whether the Receiver has satisfied his obligations under 31 U.S.C. § 3713, are ripe. IV. The Determination Of Priority A. The Law Governing The Determination Of Priority And Imposition Of A Constructive Trust “The threshold question ... in all cases where the Federal Government asserts its tax lien, is whether and to what extent the taxpayer had ‘property’ or ‘rights to property to which the tax lien could attach.” Aquilino v. United States, 363 U.S. 509, 512, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960). Thus, the determination of whether the United States may assert priority over the customers as to the Protected Property for payment of any potential tax liability on the part of Credit Bancorp is a two-step inquiry. First, the nature of the taxpayer’s interest in the property must be determined, which is done by looking to state law. See United States v. National Bank of Commerce, 472 U.S. 713, 722, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985). Second, federal law is applied to determine whether the state law right constitutes attachable property under the federal statutes. See National Bank, 472 U.S. at 722, 105 S.Ct. 2919. The “general rule” under both state and federal choice of law rules is that “the law of the situs of the property, and therefore the trust, governs [the] determination” of whether property in the possession of a debtor is held in constructive trust. Howard’s Appliance, 874 F.2d at 93-94 (applying New York choice of law rules in analogous bankruptcy proceeding context) (citing Collier on Bankruptcy ¶ 544.02 at 544-13 to 544-14 (explaining that “the tendency of the courts is to treat the law of the situs of property at the commencement of the case as governing”)); but see Morson v. Second Nat’l Bank of Boston, 306 Mass. 588, 29 N.E.2d 19, 20-21 (1940) (where property was in form of shares rather than “ordinary tangible chattel,” court applied law of state of incorporation rather than situs of stock certificates to determine validity of transfer). Under the laws of the five states in which Credit Bancorp assets were located at the time this action commenced — New York, New Jersey, Nebraska, Maryland, and California — assets are subjective to a constructive trust when “a party ... is holding property under such circumstances that in equity and good conscience he ought not to retain it.” Counihan v. Allstate Ins. Co., 194 F.3d 357, 361 (2d Cir.1999) (internal quotation marks and citation omitted) (applying New York law); see ESI, Inc. v. Coastal Power Prod. Co., 995 F.Supp. 419, 436 (S.D.N.Y.1998) (applying New York law); In re DeLauro, 207 B.R. 412, 415 (Bankr.D.N.J.1997) (applying New Jersey law and stating, “[generally all that is required to impose a constructive trust is a finding that there was some wrongful act, usually, though not limited to, fraud, mistake, undue influence ... which has resulted in a transfer of property”) (internal quotation marks and citation omitted); Wait v. Cornette, 259 Neb. 850, 612 N.W.2d 905, 911 (2000) (applying Nebraska law and stating, “[a] constructive trust is imposed when one has acquired legal title to property under such circumstances that he or she may not in good conscience retain the beneficial interest in the property. In such a situation, equity converts the legal titleholder into a trustee holding the title for the benefit of those entitled to the ownership thereof’); Edwards v. Gramling Eng’g Corp., 322 Md. 535, 588 A.2d 793, 801 (1991) (applying Maryland law and stating, “[e]quity creates [a constructive trust] where a person holding title to a property is subject to an equitable duty to convey it to another person on the ground that he would be unjustly enriched if he were permitted to retain it”); Cal. Civ.Code § 2224 (“One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the things gained, for the benefit of the person who would otherwise have had it.”); Cal. Civ.Code § 2223 (“One who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner.”); In re Advent Mgmt. Corp., 178 B.R. 480, 486 (B.A.P. 9th Cir.1995), aff'd, 104 F.3d 293 (9th Cir.1997) (applying California law). The imposition of a constructive trust does not mean that the beneficiary of the trust actually owns the stolen property—rather, the constructive trust is a remedy intended to protect a person with greater rights in property from a person who, though in actual possession of the property, has a lesser right to it. See William R. Fratcher, V Scott On Trusts § 462 at 303-05 (4th ed.1989) [hereinafter “Scott On Trusts ”] (“Where ... the person who fraudulently receives or possesses himself of trust property is converted ... into a trustee, the expression is used for ... describing the nature and extent of the remedy against him, and it denotes that the parties entitled beneficially have the same rights and remedies against him as they would be entitled to against an express trustee who had fraudulently committed a breach of trust.”) (internal quotation marks and citation omitted). A constructive trust is a powerful remedy, as it cuts off the rights of general creditors as well as the rights of the United States, notwithstanding the Federal Debt Priority statute, 31 U.S.C. § 3713(a)(1). See, e.g., United States v. Paige, No. 81-2066, 1985 WL 2335, at *5 (D.D.C. July 30, 1985) (IRS could not assert tax lien as to property held by embezzler but subject to constructive trust in favor of embezzler’s victim); United States v. Fontana, 528 F.Supp. 137 (S.D.N.Y. 1981) (same, applying New York law); Trustees of the Clients’ Sec. Fund of the Bar v. Yucht, 243 N.J.Super. 97, 578 A.2d 900, 908 (1989) (same, applying New Jersey law); Brown v. Coleman, 318 Md. 56, 566 A.2d 1091, 1097 (1989) (same, applying Maryland law); FTC v. Crittenden, 823 F.Supp. 699, 704 (C.D.Cal.1993) (same, applying California law). The claimant to a constructive trust must establish the facts giving rise to the trust by clear and convincing evidence. See Caballero v. Anselmo, 759 F.Supp. 144, 147 (S.D.N.Y.1991) (applying New York Law); Taylor v. Fields, 178 Cal.App.3d 653, 224 Cal.Rptr. 186, 194 (1986) (applying California law); Peninsula Methodist Homes & Hosps. v. Cropper, 256 Md. 728, 261 A.2d 787, 793 (1970) (applying Maryland law); ProData Computer Servs. v. Ponec, 256 Neb. 228, 590 N.W.2d 176, 181 (1999) (applying Nebraska law); Gray v. Bradley, 1 N.J. 102, 62 A.2d 139, 140 (1948) (applying New Jersey law). “It is hornbook law that before a constructive trust may be imposed, a claimant to a wrongdoer’s property must trace his own property into a product in the hands of a wrongdoer.” United States v. Benitez, 779 F.2d 135, 139 (2d Cir.1985). “The owner may follow and recover the property or its proceeds as long as it has not been transferred to a bona fide purchaser.” Carter, 1981 WL 1953, at *10. In cases involving Ponzi schemes, courts have taken a broad view of the constructive trust remedy, and the tracing requirement, in order to effectuate the goal of returning to the victims of the fraud their stolen property or proceeds of that property. For example, in Benitez, 779 F.2d 135, the Second Circuit held that it was reasonable to impose a constructive trust on assets held by a Ponzi scheme perpetrator (and order a pro rata distribution to the victims) even though the assets were “not traceable,” id. at 140, to the victims’ property, based on circumstantial evidence from which it could be inferred that these assets were derived from the fraud, see id. at 141; see also United States v. Schwimmer, 968 F.2d 1570, 1584 (2d Cir.1992) (“To the extent this Court tolerated a very relaxed tracing standard in Benitez, it was with an eye to permitting the District Court to exercise this general, victim-compensation function, without being hampered by strict definitions of property rights.”). Similarly, in Carter, the IRS objected that its tax lien took priority over the fraud victims in part on the theory that each victim was required to trace its specific funds to the specific assets seized to satisfy that lien. See 1981 WL 1953, at *4. The Court rejected this argument, imposed a constructive trust in favor of the victims as a whole, and concluded that a federal tax lien could not attach to the trust property. See id. at *8-*9. B. Application Of The Governing Law To The Protected Property In violation of the CFAs and Trustee Letters, the assets deposited by the Credit Bancorp customers were not held in trust. Rather, these assets were misappropriated, either by conversion of the property itself or by subjecting that property to liens securing margin loans that were then used for purposes inconsistent with the CFA and Trustee- Letter. Moreover, the CFA and Trastee Letter specifically provided that the customer deposits were not the property of Credit Bancorp and that title to the property did not pass to Credit Bancorp. These are the type of circumstances under which imposition of a constructive trust has been found warranted. See Benitez, 779 F.2d at 139-40 (affirming imposition of constructive trust on assets of Ponzi scheme in favor of victims where perpetrator falsely represented funds would be used as down payments for loans, and noting result would be same under either New York or federal common law); Carter, 1981 WL 1953, at *8-*9 (imposing constructive trust on assets of perpetrator of Ponzi scheme in favor of victims where perpetrator represented assets would be held in trust, applying California law); see also, e.g., Dennis v. United States, 372 F.Supp. 563, (E.D.Va.1974) (swindler’s personal assets, seized by authorities, subject to constructive trust for benefit of victim and not to IRS levy for taxes owed by swindler). The Government maintains, however, that certain categories of the Protected Property, namely, the Blech Assets and the insurance proceeds, are not subject to a constructive trust because they are not sufficiently traceable to customer deposits. 1. The Blech Assets With respect to the Blech Assets, the Government contends that the evidence must show, but does not, that the Blech Assets were acquired solely with customer-deposited assets — as compared with being acquired in part with such assets, or being merely maintained with such assets. Therefore, the Government avers, the customers may be entitled to a different remedy, such as an equitable lien, but not to a constructive trust, with respect to these assets. See generally Scott on Trusts §§ 468, 512 (where wrongdoer uses funds to maintain or improve property, victim entitled to equitable lien but not constructive trust). The documentary evidence demonstrates the flow of funds held by Credit Bancorp into the Credit Suisse account and out of that account into Blech’s personal accounts' — -and the use of funds from the Credit Suisse account and Blech’s personal accounts to purchase or maintain, in whole or in part, the Blech Assets. The Government avers, however, that the evidence also shows that at least some of these assets were acquired with funds of unknown origin. In support of this contention the Government points to, for exam-pie, records indicating that in the period prior to September 24, 1998, the only customer-traceable deposit into the Credit Suisse account was for an amount that was far less than the expenditures on the Blech assets made during that same period. The Government also points out that the Receiver, in submissions made in connection with the Coverage Action, has stated as an undisputed fact that Credit Bancorp engaged in certain legitimate business activities — which might, by implication, be a source of funds other than the customer deposits. The Lynch Declaration provides additional evidence that Blech Assets were purchased — not just in part, and not merely maintained — with customer deposits or with funds that derive from those deposits. The declaration describes a