Ralph S. Janvey, in His Capacity as Court-Appointed Receiver for the Stanford International Bank Limited v. Gmag, L.L.C. Magness Securities, L.L.C. Gary D. Magness Mango Five Family Incorporated, in Its Capacity as Trustee for the Gary D. Magness Irrevocable Trust, 592 S.W.3d 125

Stanford International Bank operated a long-running Ponzi scheme; the SEC uncovered it in 2009.
Gary Magness (and related entities) invested heavily and withdrew funds after the SEC investigation; he received $88.2 million (including $79 million principal) and later repaid $700,000, leaving an $8.5 million net gain.
Ralph S. Janvey was appointed Receiver and sued to claw back Magness’s withdrawals under the Texas Uniform Fraudulent Transfer Act (TUFTA) and for unjust enrichment.
A jury found Magness had inquiry notice of suspicious facts but also found a diligent inquiry would not have revealed the Ponzi scheme; the district court held Magness satisfied TUFTA’s good-faith defense for the principal; the Fifth Circuit reversed.
The Fifth Circuit certified the question whether a transferee on inquiry notice who did not investigate (because investigation would have been futile) can nevertheless claim TUFTA’s good-faith defense.
The Texas Supreme Court answered: a transferee on inquiry notice must, at minimum, conduct a diligent investigation to prove good faith; mere suspicion without inquiry is insufficient.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a transferee on inquiry notice can invoke TUFTA §24.009(a) good-faith defense without investigating	Inquiry notice defeats good faith as a matter of law	If a diligent inquiry would have been futile, transferee lacks constructive knowledge and acted in good faith	No—transferee on inquiry notice must show it conducted a diligent investigation to prove good faith
Effect of a finding that a diligent inquiry would have been futile	Futility means no imputed knowledge; good faith can stand	Futility prevents imputation, so transferee is not charged with what an inquiry would show	Futility does not excuse failure to investigate; actual suspicious facts remain and an investigation is required; what an investigation would reveal may be imputed but does not eliminate the duty to investigate
What is the meaning of “good faith” under TUFTA	(Receiver relied on traditional badges of fraud to deny good faith)	Good faith means honesty and lack of willful ignorance	Good faith requires honesty in fact, reasonableness given known facts, and absence of willful ignorance
Scope of the Court’s answer (did the Court set full standards for diligence/inquiry?)	Receiver sought a clear rule that inquiry notice precludes defense	Magness urged limitations given jury findings about futility	Court limited its holding to the certified question: it requires investigation but does not define every circumstance where an investigation will suffice

KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70 (Tex. 2015) (describing TUFTA’s purpose to protect creditors)
Janvey v. GMAG, L.L.C., 925 F.3d 229 (5th Cir. 2019) (Fifth Circuit opinion certifying the legal question to the Texas Supreme Court)
Janvey v. Golf Channel, Inc., 487 S.W.3d 560 (Tex. 2016) (interpreting TUFTA’s reasonably equivalent value defense)
R.R. Comm’n of Tex. v. Gulf Energy Expl. Corp., 482 S.W.3d 559 (Tex. 2016) (defining good faith concepts, including honesty in fact)
Blum v. Simpson, 17 S.W. 402 (Tex. 1886) (suspicious circumstances can put transferee on inquiry notice)
Woodward v. Ortiz, 237 S.W.2d 286 (Tex. 1951) (knowledge discoverable by diligence can be imputed)
Ruebeck v. Hunt, 176 S.W.2d 738 (Tex. 1943) (knowledge that would spur inquiry is equivalent to knowledge of fraud)
Wethered’s Administrator v. Boon, 17 Tex. 143 (Tex. 1856) (diligent investigation can defeat a finding of notice)
Humphries v. Freeman, 22 Tex. 45 (Tex. 1858) (discussing notice by ordinary diligence)