TAMPA, FL--(Marketwired - Jun 2, 2014) - Burton W. Wiand, the court-appointed receiver for the investment funds underlying Arthur Nadel's approximately $400 million Ponzi scheme, and his counsel, Gianluca Morello, Michael Lamont, and Jared Perez, of the law firm Wiand Guerra King P.L., obtained a decision from the United States Court of Appeals for the Eleventh Circuit today in Wiand, as Receiver v. Lee, Case No. 13-10448 (11th Cir. 2014), that firmly establishes a receiver's right to recover fraudulent transfers from a Ponzi scheme. Mr. Morello argued the appeal for the receiver.
The Eleventh Circuit wrote, "Although Nadel represented to investors that their individual accounts and the [investment funds] as a whole were generating profits, the [investment funds] were insolvent as early as 2000 and remained so until January 2009, when the scheme collapsed." Hundreds of investors lost approximately $168 million. Mr. Wiand had obtained a judgment of nearly $1 million against the defendants in the United States District Court for the Middle District of Florida.
The defendants appealed the District Court's decision granting summary judgment for the receiver and challenged certain elements of the fraudulent transfer claims. The Eleventh Circuit rejected the defendants' arguments, affirming that receivers have a right to recover money fraudulently transferred from Ponzi schemes under Florida law.
According to Mr. Morello, "Although courts regularly allow receivers to pursue fraudulently transferred money, this decision conclusively resolves issues that commonly are raised by defendants in 'clawback' cases and that usually delay the progress of receiverships in providing relief to victims. This decision is one of the first among the country's Circuit Courts to address those issues so directly, and it provides a clear roadmap for receivers seeking to recover fraudulent transfers."
The Eleventh Circuit also found the District Court abused its discretion in denying Mr. Wiand's request for an award of prejudgment interest. The case was remanded for further proceedings on that issue alone.
Mr. Wiand said, "This is a good day for receivers, and ultimately, for defrauded Ponzi scheme investors. This decision should lead to larger and quicker recoveries because a receiver's ability to recover fraudulent transfers from Ponzi schemes under Florida law could not be clearer."