For the Defense: State Courts Reject the Ponzi-Scheme Presumptions in Fraudulent Transfer Actions

August 2016 ABA Business Law Today

Bernie Madoff in New York, Tom Petters in Minneapolis, Allen Stanford in Houston, and Darren Berg in Seattle lead a rogues’ gallery of infamous Ponzi schemers. All are now serving time in prison, but the civil litigation arising from their Ponzi schemes and the Ponzi schemes of other less notorious fraudsters is not over. Ponzi schemes have spawned thousands of fraudulent transfer cases. Anglo-American fraudulent transfer law has a long history dating back four centuries to the Statute of 13 Elizabeth, enacted in 1571, and to the first reported fraudulent transfer case, Twyne’s Case,decided in 1601. Fraudulent transfer law is far from settled, however. In recent years, especially in fraudulent transfer cases arising out of Ponzi schemes, the law developed rapidly in a direction favoring the plaintiffs, but in 2015 and 2016 the direction began to turn.

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