Five Weeks Until Pitchers and Catchers Report, Eight Weeks Until Lawyers Report - Madoff Judge Confirms Mid-March Trial For Trustee's Claims Against Mets' Owners

Judge Jed S. Rakoff this week denied the request of Irving Picard, the trustee of Bernard L. Madoff Investment Securities LLC ("BLMIS") , to pursue an immediate appeal of Judge Rakoff's recent decision to dismiss most of the counts set forth in Picard's adversary proceeding against...

Madoff Trustee Agrees To $162M Settlement With New York Mets’ Owners

NEW YORK - (Mealey's) The owners of Major League Baseball's New York Mets and the liquidation trustee of Bernard L. Madoff Investment Securities LLC (BLMIS) agreed on March 19 to a $162 million settlement of claims relating to the defendants' alleged profiting from Madoff's massive...

Madoff Trustee Agrees To $162M Settlement With New York Mets’ Owners

NEW YORK - (Mealey's) The owners of Major League Baseball's New York Mets and the liquidation trustee of Bernard L. Madoff Investment Securities LLC (BLMIS) agreed on March 19 to a $162 million settlement of claims relating to the defendants' alleged profiting from Madoff's massive Ponzi...

Wall Street Journal Talks with “The Ponzi Book” Co-Author Kathy Bazoian Phelps about Madoff-NY Mets Settlement

The Wall Street Journal's Bankruptcy Beat blog yesterday featured a conversation with bankruptcy attorney Kathy Bazoian Phelps of Danning, Gill, Diamond & Kollitz, LLP, co-author of the The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes and author of the The Ponzi Blog , about the...

Stockbroker Safe Harbor Defense in Ponzi Schemes Remains Unresolved Following Picard v. Katz Settlement

The stockbroker defense in § 546(e) of the Bankruptcy Code creates a safe harbor for recipients of certain types of transfers and can bar fraudulent transfer claims brought by a trustee. In Picard v. Katz , this was a $1 billion issue, and one that will now not go up on appeal due to the settlement...

Fraudulent Transfer Claim Meets Forfeiture Proceeding in Ponzi Scheme Case

It occasionally happens that a trustee seeks to avoid a debtor's prepetition transfer of property as a fraudulent transfer and that property is also subject to a government forfeiture proceeding. In that event, can the trustee still follow the familiar path and file an adversary proceeding in...

New Florida Law May Protect Charities Against Ponzi Scheme Clawback Claims

Last Friday, Florida Governor Rick Scott signed HB 95. This bill amends § 726.109 of the Florida Statutes by adding this broad defense to a claim to avoid a charitable contribution as a fraudulent transfer: "The transfer of a charitable contribution that is received in good faith by a...

Fourth Circuit Makes New Fraudulent Transfer Law

Determined not to hold a securities brokerage firm liable for fraudulent transfers in a Ponzi scheme case, the Fourth Circuit recently pushed the boundaries of fraudulent transfer law to affirm the lower court's dismissal of the trustee's claims against it. Grayson Consulting, Inc. v. Wachovia...

The Victim Balancing Act in the Petters Ponzi Scheme Case Continues

The unique circumstances of Ponzi schemes require careful consideration to mete out justice in unwinding them and in redressing the injuries to defrauded victims. Investors who got out early were often paid back in full, plus some. Other investors who invested later may have received little to nothing...

The Ponzi Scheme Presumption: Equal Application to Investors, Employees and Charities?

The Ponzi scheme presumption can establish that a transferor made a transfer of property with the actual intent to hinder, delay, or defraud creditors of the debtor. See Phelps and Rhodes, The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes , § 2.03[1] (citing cases). Some courts have...

U.S. High Court Will Not Hear Bankruptcy Case Dealing with Fraudulent Transfers

WASHINGTON, D.C. — (Mealey's) The U.S. Supreme Court on Oct. 7 refused to hear a case in which the 10th Circuit U.S. Court of Appeals had affirmed that fraudulently transferred property is not part of a bankruptcy estate until it is recovered ( Eric C. Rajala v. Robert H. Gardner, et al , No...

Judge Slams Bankruptcy Trustee’s Suit to Recover Parochial School Tuition Payments

A parochial elementary school and high school were recently sued in the U.S. Bankruptcy Court for the Eastern District of New York by Robert Geltzer, a bankruptcy trustee. The suits, Geltzer v. Our Lady of Mt. Carmel-St. Benedicta School and Geltzer v. Xavarian High School , were brought in an effort...

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...

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...

Attacking LBO Payouts as State Law Fraudulent Transfers

by Barbara Shreero The United States Bankruptcy Court for the Southern District of New York (the “Court”) in Weisfelner v. Fund 1 (In Re Lyondell Chemical Co.) , 2014 Bankr. LEXIS 159 (Bankr. S.D.N.Y. Jan. 14, 2014) [ an enhanced version of this opinion is available to lexis.com subscribers...

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...

U.S. Supreme Court Refuses to Hear Creditor’s Case Alleging Sale Violated Rights

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today denied certiorari in a bankruptcy case in which a creditor alleged that actual fraudulent conveyance of a debtor’s assets was committed during the bankruptcy sale because his claim against the bankruptcy estate was not preserved...

11th Circuit Clarifies "Property of Debtor" Issue, Opens Door To Prejudgment Interest In Clawback Suits

Editor's note: Author Jordan Maglich currently serves as counsel to the Receiver in the below case. The opinions contained herein represent his opinion only, and do not represent the views of his law firm or the Receiver. The Eleventh Circuit Court of Appeals issued an opinion that, for the first...

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...

Ponzi Scheme Trustee’s Claws Do Not Always Reach Overseas

Bankruptcy trustees often sue to avoid and recover fraudulent transfers pursuant to the provisions of the Bankruptcy Code. These are often referred to as “clawback” actions. Transfers of property of a debtor may be avoided pursuant to section 548 and may be recovered from the initial transferee...

No More Ugly American: Judge Refuses to Allow Madoff Trustee to Pursue Foreign Indirect Investors

by Ben Feder Judge Jed S. Rakoff of the Southern District of New York last week ruled that the U.S. Bankruptcy Code does not permit a bankruptcy trustee to recover foreign transfers [ an enhanced version of this opinion is available to lexis.com subscribers ]. Specifically, Judge Rakoff refused to...

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...

Illinois Estate Planning: Protecting Clients' Assets from Bankruptcy Without Running Afoul of the Uniform Fraudulent Transfer Act

One primary goal of estate planners is protecting clients' assets from the claims of creditors before a potential claim arises, without running afoul of the Uniform Fraudulent Transfer Act. The following EIA explores the role of Illinois estate planners in protecting client assets, while adhering...

In $322 Million Petters Clawback Settlement, No Collection 'Til 2020

The court-appointed trustee overseeing recovery efforts for victims of Thomas Petters' $3.65 billion Ponzi scheme announced a $322 million settlement with two hedge funds accused of receiving hundreds of millions in so-called "false profits" derived from the scheme. The trustee, Doug Kelley...

Fifth Circuit's Bankruptcy Opinions from October 2014

It's been a slow month in the Fifth Circuit, my home Circuit, with just two bankruptcy-related opinions. This month's cases involve a non-filing spouse who lost her homestead interest and a bank which provided "reasonably equivalent" value but not enough to constitute a complete defense...