Ralph S. Janvey, in His Capacity as Court-Appointed Receiver for the Stanford International Bank, Limited Official Stanford Investors Committee v. the Golf Channel, Incorporated Tgc, L.L.C., Doing Business as Golf Channel
487 S.W.3d 560
| Tex. | 2016Background
- R. Allen Stanford ran a multi‑billion‑dollar Ponzi scheme through Stanford International Bank; the SEC shut it down in 2009 and a receiver sought to recover pre‑receivership transfers.
- Stanford paid The Golf Channel $5.9 million under a two‑year media‑advertising contract; Golf Channel fully performed but Stanford missed the last payment.
- The Receiver sued to avoid and recover the payments as fraudulent transfers, alleging transfers were made with actual intent (Ponzi presumption) or without reasonably equivalent value.
- The district court found actual fraud (Ponzi) but held Golf Channel’s good‑faith defense established: the advertising had objective market value, was arm’s‑length, at market rates, and in the ordinary course of business.
- The Fifth Circuit initially reversed, ruling advertising conferred no value to Stanford’s creditors (because it furthered the Ponzi scheme), then vacated and certified a question to the Texas Supreme Court about the meaning of “value” and “reasonably equivalent value” under TUFTA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether consideration to a Ponzi operator can be “value” under TUFTA | Receiver: Value must be judged solely from creditors’ viewpoint; services that further a Ponzi scheme provide no value because they deplete the estate | Golf Channel: Objective, market‑rate performance of services in arm’s‑length transaction is value even if consumable; creditor‑viewpoint is objective at the time of transfer | TUFTA value exists when the debtor received consideration with objective economic value at the time of transfer; debtor’s status as a Ponzi operator does not automatically negate value |
| What suffices for “reasonably equivalent value” under TUFTA §24.009(a) | Receiver: Market‑value test irrelevant at threshold; reasonably equivalent value requires preserving or potentially preserving the estate | Golf Channel: Market‑rate, arm’s‑length exchange conclusively satisfies reasonably equivalent value | Satisfying: (1) full performance under lawful arm’s‑length contract for fair market value, (2) objective value at transaction time, and (3) ordinary‑course conduct satisfies reasonably equivalent value |
| Whether value should be measured retrospectively or from a reasonable creditor at the time | Receiver: Focus should be on whether creditors (retrospectively or imputedly) benefited | Golf Channel: Measure objectively at the time of transfer from a reasonable creditor’s perspective, not retrospectively | Value is assessed objectively at the time of the transaction from a reasonable creditor’s perspective, not by hindsight or debtor’s subjective use |
| Whether TUFTA adopts a special Ponzi‑scheme rule nullifying good‑faith defense | Receiver: Ponzi presumption of intent/insolvency should also imply lack of value as matter of law | Golf Channel: No textual basis in TUFTA for a Ponzi‑specific value rule; transferee protection must remain | TUFTA contains no separate Ponzi‑specific value standard; transferees can prevail under ordinary market/value principles even if debtor was a Ponzi operator |
Key Cases Cited
- In re Fin. Federated Title & Trust, Inc., 309 F.3d 1325 (11th Cir. 2002) (services to a Ponzi operator can constitute value; focus on the discrete transaction’s value rather than enterprise effect)
- Warfield v. Byron, 436 F.3d 551 (5th Cir. 2006) (payments that further a Ponzi scheme may be found to provide no reasonably equivalent value where they extend the fraud)
- Janvey v. Brown, 767 F.3d 430 (5th Cir. 2014) (distinguishing principal repayments from interest/profit payments in Ponzi contexts; discusses Ponzi presumption)
- Finn v. Alliance Bank, 860 N.W.2d 638 (Minn. 2015) (Minnesota Supreme Court declined Ponzi‑presumptions for value and held value/ equivalency depend on transfer‑by‑transfer inquiry)
- Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995) (recognizing that continued operation of a Ponzi scheme increases investor losses and analyzing value in that context)