LexisNexis® Legal Newsroom
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...

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...

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...

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...

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...

Golf Channel Must Repay Nearly $6M in TV Ad Money to Stanford Receiver, Says Appeals Court

A federal appeals court has ordered The Golf Channel to repay nearly $6 million it received as payment for TV advertisement services from convicted Ponzi schemer Allen Stanford, finding that the advertisement services provided no value to Stanford's victims and thus could not defeat a court-appointed...

Facing Potential Clawback, Church Asks Members to Donate

A Michigan church that received approximately $300,000 in donations from a convicted Ponzi schemer has spurned a request by authorities to return the funds, instead announcing the creation of a fund that parishioners could donate to and which ultimately would be used to help the fraud victims. Resurrection...