LexisNexis® Legal Newsroom
Rothstein Trustee Files Clawbacks Seeking Funds Spent on Jewelry and Cars

Herbert Stettin, the bankruptcy trustee appointed to recover assets for the benefit of victims defrauded by Scott Rothstein's $1.4 billion Ponzi scheme, filed several more clawback suits seeking the return of funds spent by Rothstein on expensive jewelry and exotic automobiles. The clawback...

Charities: Proper Clawback Targets in Ponzi Scheme Cases?

To gain valuable recognition, Ponzi perpetrators often make handsome contributions to charities. But those contributions create political difficulties for the trustees and receivers in evaluating whether to seek the return of those contributions on fraudulent transfer theories for the benefit of...

Legislative Protection for Charities Caught by Ponzi Clawbacks

On April 3, 2012, Minnesota Governor Mark Dayton signed a new law, Chapter 151, House File 1384, designed to protect nonprofits from having to pay back donations made by Ponzi perpetrators and other fraudulent sources. The new law actually restricts a trustee's recovery in three distinct ways...

The Ponzi Perpetrator’s Art Dealer? The Endless Scope of Clawback Claims

Sheila Gowan, the trustee of Dreier, LLP ("DLLP"), has filed a fraudulent transfer action against Marc Dreier's personal art advisor, Heidi Lee, and her business, Heidi Lee Art Advisory. Gowan asserts that Marc Dreier caused DLLP to make a series of transfers to Lee totaling $1,940,915...

New IRS Guidance for Ponzi Scheme Clawback Victims

For investors who need help from the IRS on how to treat clawback payments made to trustees, the IRS has published a new webpage . So far the IRS has posted answers to two questions: 1. How does a taxpayer treat the repayment of a clawback? 2. What does the taxpayer need to establish...

Taking Advantage of Stern v. Marshall in a Ponzi Scheme Case

Clawback actions in Ponzi scheme cases may be a dime a dozen these days, but the issues now raised by the Supreme Court decision in Stern v. Marshall , __ U.S. __, 131 S. Ct. 2594 (2011), can become quite costly for those involved. In Stern v. Marshall , the Supreme Court held that bankruptcy judges...

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...

Update From Zeek Receiver Provides Insights Into Recovery, Clawbacks

The court-appointed receiver overseeing the recovery of funds for the $600 million ZeekRewards Ponzi scheme has filed his quarterly update (the "Update") with the court, providing interesting insight into asset recovery, litigation against so-called "net winners," and the recently...

Couple Files Bankruptcy To Avoid Ponzi "Clawback" Lawsuit

A New Mexico couple facing the possible "clawback" of nearly $1 million from the largest Ponzi scheme in New Mexico history has filed for bankruptcy in a bid to avoid dodge the lawsuit. Mark and Maura Dahrling, of Albuquerque, New Mexico, were among hundreds of investors that lost approximately...

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...

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...