People who receive distributions of money from Ponzi schemes usually are expected to return the money to a trustee who takes over the operation when the Ponzi organizer files bankruptcy. The trustee usually attempts to “claw back” money distributed to the investors, especially money representing winnings or profits. This recent Florida bankruptcy case produced a slightly different result for a Ponzi investor. Continue reading
Category Archives: Fraudulent Transfers
Funding IRA Prior To Bankruptcy is Not Fraudulent Conversion, Says Court
Within two weeks of filing Chapter 7 bankruptcy these debtors took $12,000 of non-exempt cash from an insurance policy and used the money to fund exempt IRAs. The trustee objected that the infusion of cash into the IRAs on the eve of bankruptcy was a fraudulent conversion of non-exempt assets to exempt assets. Continue reading
Are Investor’s Ponzi Scheme Profits Recoverable As Fraudulent Transfer Proceeds?
One of the defenses to a fraudulent transfer action is that the debtor’s transfer in question was for “reasonably equivalent value.” The general rule is that a transfer to repay a loan is a transfer for value because the transferor receives a deduction in the principal and interest owed on the debt. Continue reading
Forbes Article Discusses Risk Of Chapter 7 Bankruptcy By Wealthy
I read an article in Forbes online which discusses a Chapter 7 bankruptcy case that set aside several fraudulent transfers. The case illustrates why wealthy debtors should avoid filing bankruptcy.
Does Pre-Bankruptcy Planning Permit Transfer Of Car Title To Spouse
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Bankruptcy debtors use their $4,000 wildcard exemptions most often to protect cars. The debtor can apply the wildcard only to cars in the debtor’s name. For example, if a married couple is considering Chapter 7 bankruptcy and both of the couple’s cars are titled in the husband’s name the wife cannot apply her $4,000 wildcard exemption to either of the cars because she owns no car.
No Liability For Assisting A Debtor’s Fraudulent Transfers Or Conversions
A fraudulent transfers and fraudulent conversions prior to filing Chapter 7 bankruptcy can be detrimental in two ways. Continue reading
Protecting In Bankruptcy Pre-Filing Transfers Of Exempt Assets
There are so many reasons to stay away from bankruptcy- here is one more. Continue reading
Fraudulent Conveyance? Client Sells Former Residence And Pays Down Mortgage On Current Homestead
Five years ago one of my clients bought a new home pre-construction while he lived in his then current Florida homestead. The builder told him the new home would take 18 months to build. Continue reading
Are Support Payments To Debtor’s Parents Prior To Filing Bankruptcy Reversible Fraudulent Transfers?
If a debtor transfers money to his parents prior to filing Chapter 7 bankruptcy the bankruptcy trustee could try to recoup the money from the parents as recipients of fraudulent transfers. Continue reading
Fraudulent Transfer? Taking Your Name Off Title Of Asset Wholly Paid For By Another Person
I have written occasionally, and recently, about situations where a parent purchases an asset and puts their child’s name on the asset as a joint owner for estate planning purposes. If the child has a creditor problem, or in contemplation of bankruptcy, transfers, or has the parent transfer, the asset to the parents’ name alone the issue arises of whether the transfer to the parent is a fraudulent conveyance as to the child’s creditors or the trustee in the child’s bankruptcy. Today, a blog reader referred me a bankruptcy case from the Southern District of Florida which dealt with this issue.