Mark Calvert v. George Kooshian
690 F. App'x 1011
| 9th Cir. | 2017Background
- Debtor Darren Berg operated investment funds and later pleaded guilty, admitting he used investor funds for personal/business purposes and to pay earlier investors, hallmark Ponzi conduct.
- Trustee Mark Calvert sued to avoid as fraudulent transfers approximately $781,798.66 of purported profits paid to investor George Kooshian.
- Kooshian had invested beginning in 2004 and later received principal plus purported profit payments from Berg’s funds.
- The district court held Berg’s operation was a Ponzi scheme and that profit distributions to Kooshian were voidable under 11 U.S.C. § 548(a)(1)(A).
- Kooshian argued Berg’s plea agreement was too vague about when the scheme began to cover the dates of his receipts; the Trustee and a forensic expert testified the scheme began by 2001.
- The district court admitted the Trustee’s percipient-witness testimony about bank records and the certified fraud examiner’s expert opinion; the Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were payments of purported profits to Kooshian avoidable as fraudulent transfers under § 548(a)(1)(A)? | Trustee: Payments are fraudulent because Berg ran a Ponzi scheme; profit payments exceed principal and are voidable as a matter of law. | Kooshian: Payments were legitimate returns, not fraudulent transfers. | Held: Yes. Existence of Ponzi scheme established; profit payments are fraudulent transfers as a matter of law. |
| Does Berg’s plea agreement vagueness about start date preclude finding the scheme encompassed Kooshian’s receipt dates? | Trustee: Other evidence and expert analysis show the scheme began by 2001, covering Kooshian’s transactions. | Kooshian: Plea agreement states uncertain start time and thus may not include dates when he received transfers. | Held: No. Court relied on Trustee and expert testimony showing scheme existed by 2001; plea vagueness did not bar avoidance. |
| Were the Trustee’s percipient-witness testimony and the expert’s opinion admissible? | Trustee: As custodian of debtor records, he had personal knowledge; expert qualified as certified fraud examiner. | Kooshian: Challenged admissibility. | Held: Admissible. District court did not abuse discretion admitting Trustee testimony or expert opinion under Rules 702/703. |
| Standard of review and appellate outcome | Trustee: District court findings should be upheld. | Kooshian: Challenged factual findings and evidentiary rulings. | Held: Ninth Circuit affirmed; factual findings reviewed for clear error, evidentiary rulings for abuse of discretion. |
Key Cases Cited
- Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) (a Ponzi scheme’s existence establishes actual intent to defraud; profit payments are fraudulent transfers as a matter of law)
- In re Slatkin, 525 F.3d 805 (9th Cir. 2008) (debtor’s guilty plea admissions conclusively establish fraudulent intent in Ponzi cases)
- FTC v. BurnLounge, Inc., 753 F.3d 878 (9th Cir. 2014) (standard for reviewing district court findings of fact)
- Valdivia v. Schwarzenegger, 599 F.3d 984 (9th Cir. 2010) (standard for reviewing evidentiary rulings for abuse of discretion)