Trustee for Health Diagnostic Laboratory Pursues “Subsequent Fraudulent Transfers” to the Hands of Murray Baptist Church

May 09, 2022, Bankruptcy Court for the Eastern District of Virginia – Richard Arrowsmith, in his capacity as Liquidating Trustee (“Trustee”) for Health Diagnostic Laboratory, Inc. et al. (“Debtors” or “HDL”), sues Lake Murray Baptist Church (“Lake Murray Church”) to recover “avoidable transfers”. The Trustee has, on later dates, filed similar adversary complaints against Nancy K. Perry Children’s Shelter and Child Evangelism Fellowship of SC.

The Trustee, in 2016, had brought 76 causes of action against a wide range of individuals and entities that “improperly” benefitted from the “wrongful” activities of HDL. The Trustee’s aim was to recover losses suffered by HDL’s creditors. The defendants included HDL founders, directors and officers; BlueWave Healthcare Consultants, Inc.; HDL stockholders who received “illegal” distributions; and numerous subsequent transferees from BlueWave.

According to the facts averred in the 2022 complaint, the Trustee obtained a summary judgment from the Court against BlueWave in the amount of $220,336,247.91 as alleged “fraudulent conveyances”. Floyd Calhoun Dent, III, who was a shareholder of HDL and a principal and “insider” of Bluewave, allegedly received numerous transfers from BlueWave. The Trustee alleges that the proceeds of these avoided “fraudulent conveyances” were later transferred by Floyd Calhoun Dent, III to the Lake Murray Church in the form of “gifts, charitable contributions, or other transfers”. 

The Trustee in his 2016 complaint had argued that HDL management “hatched a scheme” to build and grow HDL through “illegal and fraudulent” business practices and to share the spoils with BlueWave, claimed to be associated with HDL. He affirmed that although HDL’s “scheme” allowed it to reap hundreds of millions of dollars in “fraudulent and improper” revenue, HDL was never actually solvent or profitable.

The Trustee seeks an order directing the Defendant to pay to the Trustee an amount that is not less than the full amount of the transfers made by Floyd Calhoun Dent, III to the Defendant pursuant to Section 550 of the Bankruptcy Code and disallowing any claim of the Defendant pursuant to section 502(d) of the Bankruptcy Code.

Richard Arrowsmith, Liquidating Trustee v. Lake Murray Baptist Church (In re Health Diagnostic Laboratory, Inc. et al.), AP No. 22-3036, Bankruptcy Court for the Eastern District of Virginia.

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