Stanford Ponzi Receiver Suffers Jolt on his $88M Clawback Claim Against a Billionaire Investor
January 17, 2017, Texas – Last year, Ralph Janvey, the receiver for a $7 billion Ponzi scheme run by R. Allen Stanford, requested a Texas federal jury to allow him to recoup nearly $88 million from a billionaire investor and a film producer Gary D. Magness. The Receiver alleged that Gary Magness knew or should have known that Stanford International Bank Ltd. was insolvent and still engaged in the fraudulent activity at the time his investment vehicles—GMAG LLC, Magness Securities LLC, and Mango Five Family Inc. took out $88.2 million in loans from the bank. Magness countered that he had no reason to believe that the Stanford bank was a multibillion-dollar fraud. During the recession, plenty of banks were struggling or ended up closing their doors, and they did not turn out to be fraudulent.
The Texas federal jury unanimously found that Gary Magness acted in good faith and need not return the alleged payment. The jury reasoned that although investment vehicles owned by Magness had notice of the Stanford Empire’s potential fraud, it would have been futile for Magness to attempt to investigate the Stanford bank’s complex fraud because a diligent inquiry would not have revealed to a reasonable person that Stanford was running a Ponzi scheme. There appears to be a likelihood of scrutiny of the matter by the Fifth Circuit, as the Receiver possibly may appeal to the Fifth Circuit concerning the issue. Ralph Janvey is represented by David Arlington, Stephanie Cagniart, Ashley Carr, Brendan Day, Tim Durst, Robert Howell, Scott Powers and Kevin Sadler of Baker Botts LLP and Ben Krage of Krage & Janvey LLP. The Magness parties are represented by Mark J. Barrera and M. David Bryant Jr. of Dykema Cox Smith and Rachel Mentz and Andrew Petrie of Ballard Spahr LLP. The case is Janvey v. GMAG LLC et al., case number 3:15-cv-00401, in the U.S. District Court for the Northern District of Texas.
Payments May be Ordinary, Even When the Payment Practices Differ in the Preference and Base Period, If there Is a Change in the Defendant’s Ownership
Satija v. C-T Plaster, Inc. (In re Sterry Indus.), Nos. 13-11818-TMD, 15-01108-TMD, 2016 Bankr. LEXIS…Read More
Jay Borromei, “Alleged” Key Personnel in the TelexFree Ponzi scheme, Files for Bankruptcy
California, September 13, 2016 – Two years ago, TelexFree Inc. filed for bankruptcy under Chapter…Read More
SunEdison’s CEO Opposes Unsecured Creditor’s Clawback Motion
December 22, 2016, New York – During the last week, SunEdison CEO John S. Dubel…Read More
Defendant Successfully Rebuts the Presumption of Insolvency During the Preference Period
Lanik v. Smith (In re Cox Motor Express of Greensboro, Inc.), Nos. 14-10468, 15-02023, 2016…Read More
Preference Actions Filed in Standard Register Company
May 16, 2016, Delaware – SRC Liquidation, LLC (Liquidating Debtor) (f/k/a SRC Liquidation Company f/k/a…Read More