November 2013 Ponzi Scheme Roundup

The volume of news stories reported in November 2013 in Ponzi scheme cases remained high. Below is a summary of the activity reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not...

Does a Ponzi Scheme Finding Preclude Money Laundering Charges?

In U.S. v. Simmons , 2013 U.S. App. LEXIS 24617 (4th Cir. Dec. 11, 2013) [ an enhanced version of this opinion is available to lexis.com subscribers ], the Fourth Circuit overturned convictions on money laundering charges in connection with money that the defendant moved as part of his Ponzi scheme....

Ponzi Scheme Victims: Are Courts Looking Under Rocks for Reasons to Bar Recovery?

Ponzi Scheme Victims: Are Courts Looking Under Rocks for Reasons to Bar Recovery? What is the defrauded investor to do? Defrauded out of their retirement savings, home equity, and lines of credit, investors often only have litigation claims against third parties to redress their losses. Most people...

December 2013 Ponzi Scheme Roundup

The year ended with lots of news in Ponzi scheme cases. Below is a summary of the activity reported for December 2013. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying...

How Much Control Does a Trustee Have in a Ponzi Scheme Case?

Consider three recent events in the Bernard Madoff Ponzi scheme case, which demonstrate a certain unevenness and perhaps even inconsistency in the authority vested in the trustees who are administering these types of cases. Trustees act under the authority of the Bankruptcy Code or the Securities Investor...

Jumping Through Hoops to Get Trustee Standing in Ponzi Scheme Cases

In Ponzi scheme cases, the issue of trustee standing to bring third party claims can be very challenging. The Supreme Court has made clear that a trustee may pursue the debtor’s claims against third party defendants, but may not pursue creditors’ claims. Caplin v. Marine Midland Grace Trust...

January 2014 Ponzi Scheme Roundup

2014 began with a continued, but unfortunate, strong showing of activity in Ponzi scheme cases. Below is a summary of the activity reported for January 2014. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s...

How to Calculate Penalties for Financial Institutions in Ponzi Scheme Cases

The Ponzi Scheme Blog’s JANUARY POLL asked how fines should be calculated for financial institutions engaged in wrongful conduct in Ponzi schemes. While much has been written recently about banks being “too big to jail,” they are clearly not too big to fine. But how do government agencies...

Expanded Scope of Ponzi Scheme Presumption Upheld on Appeal

Over the past few years, we’ve watched as courts have expanded and retracted the use of the Ponzi scheme presumption. One of the broader expansions of the presumption resulted from a decision in the Thomas Petters Ponzi scheme in Stoebner v. Ritchie Capital Management, L.L.C. ( In re Polaroid Corp...

February 2014 Ponzi Scheme Roundup

Below is a summary of the activity reported for February 2014. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it. Barbra Alexander , 66, of California, was convicted...

Backstreet Boys, Bankruptcy Trustee Set For Trial Over $3 Million Claim

A trial date has been set for a $3 million dispute between former boy band the Backstreet Boys (the "Band") and the bankruptcy trustee for the Band's former manager, Lou Pearlman, who is currently serving a 25-year prison sentence for operating a $300 million Ponzi scheme. The Band, which...

March 2014 Ponzi Scheme Roundup

Below is a summary of the activity reported for March 2014. The reported stories reflect: 18 guilty pleas or convictions in pending cases; about 60 years of newly imposed sentences for Ponzi schemers; 9 newly discovered schemes involving over 1,000 victims and over $207 million; and an average age of...

Tiger Woods Foundation Faces $500,000 Clawback Suit From Stanford Receiver

The court-appointed receiver overseeing recovery of assets for Allen Stanford's massive $7 billion Ponzi scheme has filed a lawsuit seeking the return of more than $500,000 donated by Stanford to charitable organizations headed by golfer Tiger Woods. Ralph Janvey, the court-appointed receiver, filed...

April 2014 Ponzi Scheme Roundup

Below is a summary of the activity reported for April 2014. The reported stories reflect: 9 guilty pleas or convictions in pending cases; over 85 years of newly imposed sentences for Ponzi schemers; 11 newly discovered schemes allegedly involving over 700,000 victims and nearly $1.2 billion; and an average...

Court Suspends TelexFree Bankruptcy, Grants Motion To Transfer Venue To Massachusetts

In a ruling earlier today, a Nevada Bankruptcy court dealt a severe blow to efforts by a consortium of companies accused of operating a massive Ponzi and pyramid scheme by ruling that the pending bankruptcy cases would be suspended and ultimately transferred to Massachusetts, where pending state and...

Hopelessly Confused SLUSA Issues for Ponzi Scheme Victims Following Troice?

As reported in The Ponzi Scheme Blog , the Supreme Court recently issued an important decision further defining the boundaries of SLUSA – the Securities Litigation Uniform Standards Act of 1998. Chadbourne & Park LLP v. Troice , 2014 U.S. LEXIS 1644 (Feb. 26, 2014) [ an enhanced version of...

May 2014 Ponzi Scheme Roundup

Below is a summary of the activity reported for May 2014. The reported stories reflect: 9 guilty pleas or convictions in pending cases; over 95 years of newly imposed sentences for Ponzi schemers; at least 9 newly discovered schemes allegedly involving over $96 million; and an average age of 51 for the...

Can You Get Taxed on the Nothingness of a Ponzi Scheme Account?

In a case arising out of the Bernard Madoff Ponzi scheme, the United States Tax Court recently considered whether federal estate tax must be paid on the amount identified on the Madoff account statement at the time of the death of the decedent account holder, or whether no tax is owed because the account...

Eleventh Circuit Decides Important Ponzi Scheme Issues

The Eleventh Circuit issued an opinion this week that has to make receivers happy. See Wiand v. Lee , 2014 U.S. App. LEXIS 10154 (11th Cir. Jun. 2, 2014) [ an enhanced version of this opinion is available to lexis.com subscribers ]. Fraudulent transfer claims are most often the bread and butter of a...

June 2014 Ponzi Scheme Roundup

Below is a summary of the activity reported for June 2014. The reported stories reflect: 7 guilty pleas or convictions in pending cases; over 137 years of newly imposed sentences for Ponzi schemers; at least 8 newly discovered schemes allegedly involving over $147 million; and an average age of approximately...

Can a Receiver and a Trustee, Who Are the Same Person, Settle with Himself?

Thomas J. Petters’ $3.65 billion Ponzi scheme has raised all kinds of interesting legal issues, the most recent of which involves the interplay between Thomas Petters’ individual receivership estate and the bankruptcy of Petters’ companies. David Kelley was first appointed as the receiver...

Rothstein Ponzi Scheme: A Settlement, Finally

The intersection of bankruptcy and forfeiture proceedings can lead to considerable fighting over the assets that were once in the possession and control of the perpetrator. The recent filing of a motion to approve a settlement in the hard fought battle over forfeited assets in connection with the Scott...

July 2014 Ponzi Scheme Roundup

Below is a summary of the activity reported for July 2014. The reported stories reflect: 10 guilty pleas or convictions in pending cases; over 20 years of newly imposed sentences for people involved in Ponzi schemes; at least 8 newly discovered schemes allegedly involving over $440 million and over 25...

The Problem with Multiple Accounts in Ponzi Scheme Clawback Actions

Can different but related account holders offset losses in one account against gains in another account? Can a husband and wife with separate accounts offset losses in one account against gains in the other? When there is a family trust, can the trustee and beneficiary offset gains in the trust account...