February 18, 2020, Northern District of Texas – Debtor was a company engaged in the business of purchasing and administering life insurance policies held by persons who were thought to be terminally ill. The Defendant, our client, had entered into a contract with the Debtor as one of its licensees.
The plaintiff sought to recover payments, worth $22k from our client towards the alleged commissions and damages suffered by the other investors. The plaintiff alleged that the alleged commissions were paid to the Defendant at the direction of insiders who were perpetrating a fraudulent investment scheme that inevitably collapsed and that was insolvent at the time the commission was paid.
Upon review, we showed that before signing any contract with the Debtor, the Defendant conducted adequate due diligence; he made no misrepresentations and believed in good faith. Based on our analysis, we proved that the Defendant received the transfers in good faith and for value. We also argued that the trustee can’t establish a prima facie case of negligent misrepresentation because the Defendant did not supply false information. Further, we argued that the alleged transfers were payments related to a securities contract.
Based on our defenses in the position statement, the plaintiff agreed to dismiss the case for no payment.