Wiand Ex Rel. Valhalla Investment Partners, L.P. v. Lee
2014 U.S. App. LEXIS 10154
| 11th Cir. | 2014Background
- Lee Defendants appeal district court summary judgment in Receiver's FUFTA action seeking voidance of profits transferred from receivership entities to Lee and return of $935,631.51; Ponzi scheme run by Arthur Nadel caused insolvent receivership entities and misrepresented assets/performance; receivership entities harmed by Nadel transfers to Lee and others; Ponzi scheme preserved via commingling, misstatements, and misrepresented NAV; Lee held distributions during 2000–2008 totaling profits beyond their investments; district court also addressed prejudgment interest on the recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether transfers to Lee were transfers of assets of a debtor under FUFTA with actual intent to defraud. | Receiver argues Ponzi transfers were made to defraud creditors. | Lee Defendants contend funds were not Nadel's assets or property of a debtor. | Yes; transfers satisfy FUFTA actual fraud elements (Ponzi presumption applied). |
| Whether a Ponzi-scheme presumption establishes actual intent to defraud without badges of fraud. | Receiver relies on Ponzi scheme presumption to prove intent. | Lee argues badges of fraud are needed or presume inapplicable. | Ponzi-scheme presumption established actual intent under FUFTA. |
| Whether receivership entities are creditors of Nadel for FUFTA purposes to support liability. | Receiving entities have claims against Nadel for improper transfers. | Lee contends no creditor-debtor relationship under FUFTA. | Yes; Lehmann supports standing; receivership entities are creditors of Nadel for transfers. |
| Whether prejudgment interest should be awarded under Florida law after FUFTA liability. | Receiver seeks prejudgment interest as part of damages. | Equitable denial possible under Blasland factors. | Remand to apply Blasland factors; generally prejudgment interest is an element of pecuniary damages; may be reduced/denied on remand. |
Key Cases Cited
- Lehmann v. Lehmann, 56 F.3d 754 (7th Cir. 1995) (standing of a receiver to sue on behalf of injured corporations in Ponzi context; creditors of Ponzi operator)
- S.E.C. v. Elliott, 953 F.2d 1560 (11th Cir. 1992) (receiver may void transfers in Ponzi context under FUFTA badges/presumption)
- Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) (Ponzi scheme presumption applied to UFTA context)
- Warfield v. Byron, 436 F.3d 551 (5th Cir. 2006) (Ponzi-like transfers presumed fraudulent under UFTA context)
- Res. Dev. Intl., LLC v. SEC, 487 F.3d 295 (5th Cir. 2007) (PUFTA/UFTA considerations in receiver context)
- In re Fin. Federated Title & Trust, Inc., 309 F.3d 1325 (11th Cir. 2002) ( Ponzi-like insolvency and badges guiding fraudulent transfer analysis)
- Gen. Elec. Co. v. Chuly Int'l, LLC, 118 So.3d 325 (Fla. 3d DCA 2013) (Badges of fraud and equitable considerations in FUFTA)
- Nationsbank, N.A. v. Coastal Utils., Inc., 814 So.2d 1227 (Fla. 4th DCA 2002) (Element three—property of a debtor under FUFTA)
- Argonaut Ins. Co. v. May Plumbing Co., 474 So.2d 212 (Fla. 1985) (loss theory of prejudgment interest; interest as pecuniary damages)
- Blasland, Bouck & Lee, Inc. v. City of N. Miami, 283 F.3d 1286 (11th Cir. 2002) (equitable factors for prejudgment interest under Florida law)
- Finlayson v. Broward County, 555 So.2d 1213 (Fla. 1990) (equitable considerations in prejudgment interest)