Ralph Janvey v. Tonya Dokken
767 F.3d 430
| 5th Cir. | 2014Background
- R. Allen Stanford ran a Ponzi scheme through Stanford entities, selling high‑yield CDs via Stanford International Bank (SIB); scheme operated from at least 1999 until 2008 and raised over $7 billion.
- Ralph S. Janvey was appointed Receiver to preserve assets and pursue fraudulent transfer claims under the Texas Uniform Fraudulent Transfer Act (TUFTA) against investors who withdrew more than their principal ("net winners").
- The Receiver moved for partial summary judgment seeking disgorgement of interest/profits paid to net winners as fraudulent transfers lacking reasonably equivalent value; district court granted the motion.
- Defendants appealed, arguing (inter alia) choice of law, Receiver standing, statute of limitations, that interest payments satisfied antecedent debt (value), IRA exemption, and factual disputes on net‑winner status.
- The Fifth Circuit affirmed: applied TUFTA (Texas law), held Receiver has standing, claims timely, interest/fictional profits are clawbackable (no reasonably equivalent value), principals (returns of principal) were not clawed back, and IRA exemption not proved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | TUFTA (Texas) governs because scheme centered in Texas; Antigua has no interest | Antiguan law governs; district court erred using "false conflict" | Texas law applies under false‑conflicts test; TUFTA governs |
| Receiver standing | Receiver can assert Stanford entities' TUFTA claims as victims/creditors | Receiver lacks standing to bring creditors' claims; only creditors can sue | Receiver has standing to assert entities' claims against net winners |
| Statute of limitations | Claims filed within 1 year after scheme discovery (Davis plea and Receiver investigation) | Claims time‑barred because fraud was or could have been discovered earlier | Claims timely; knowledge of fraud not imputable to captive corporations before Receiver's investigation and Davis's plea |
| Reasonably equivalent value (interest payments) | Interest payments reduced antecedent contractual debt (CDs) — thus value | Interest payments were fictitious; CDs unenforceable; no value to transferor | Interest/profits are recoverable; CDs' promised excess returns are unenforceable and did not preserve transferor net worth |
Key Cases Cited
- Janvey v. Democratic Senatorial Campaign Comm., 712 F.3d 185 (5th Cir. 2013) (discusses Ponzi scheme and receiver standing to pursue claims)
- Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex. 1984) (adopts false‑conflicts governmental‑interest approach)
- Scholes v. Lehmann, 56 F.3d 750 (7th Cir.) (discusses that Ponzi operations establish transferor fraudulent intent)
- Warfield v. Byron, 436 F.3d 551 (5th Cir. 2006) (focus on preservation of transferor net worth and value analysis)
- Janvey v. Adams, 588 F.3d 831 (5th Cir. 2009) (distinguishes relief‑defendant status from TUFTA issues)
- Resource Dev. Int’l, LLC v. 487 F.3d 295 (5th Cir.) (Ponzi‑scheme fraudulent intent precedent)
- In re Carrozzella & Richardson, 286 B.R. 480 (D. Conn. 2002) (contrasting view that contractual interest to Ponzi investors can be reasonably equivalent value)