As set forth in Scholes v. Lehmann and adopted by courts across the country, a Receiver has standing to pursue fraudulent transfer claims because the receivership entity in whose shoes the Receiver stands is deemed to be creditor of the Ponzi scheme or other fraudulent enterprise that was placed in receivership. That seminal case and its ever-growing progeny are listed below.
Wiand v. Lee, 753 F.3d 1194, 1202 (11th Cir. 2014) (adopting Scholes v. Lehmann and holding that “the Receiver has standing to sue on behalf of the receivership entities because they were harmed by their principal when he transferred profits to investors. . . from the principal investments of others for the unauthorized purpose of continuing the Ponzi scheme.”)
Janvey v. Democratic Senatorial Campaign Committee, Inc., 712 F.3d 185, 189-92 (5th Cir. 2013) (citing Scholes v. Lehmann, the Fifth Circuit held that receiver of assets of Ponzi scheme perpetrator has standing to bring Texas UFTA fraudulent transfer claims on behalf of perpetrator’s corporations to recover proceeds of Ponzi scheme that perpetrator had contributed to political committees, finding that “a federal equity receiver has standing to assert only the claims of the entities in receivership, and not the claims of the entities’ investor-creditors, but the knowledge and effects of the fraud of the principal of a Ponzi scheme in making fraudulent conveyances of the funds of the corporations under his evil coercion are not imputed to his captive corporations. Thus, once freed of his coercion by the court’s appointment of a receiver, the corporations in receivership, through the receiver, may recover assets or funds that the perpetrator fraudulently diverted to third parties without receiving reasonably equivalent value.”)
Wing v. Layton, 2:08-CV-708, 2013 WL 3725267 (D. Utah July 12, 2013) (following Scholes v. Lehmann and finding that a receiver has standing to assert fraudulent conveyance claims to recover amounts transferred by the receivership entity while it was being operated as a Ponzi scheme)
Wuliger v. Mfr’s Life Ins. Co., 567 F.3d 787 (6th Cir. 2009) (determining that, for purposes of fraudulent transfer action brought by receiver of entitles used to perpetrate fraud, “the Receiver in this case has standing to sue [defendant] because at least one of the receivership entities . . . would have standing to bring such an action[,] based on the injuries such entity suffered as a result of transfers traceable to it.”)
Donnell v. Kowell, 533 F. 3d 762, 777 (9th Cir. 2008) (“The Receiver has standing to bring this suit because, although the losing investors will ultimately benefit from the asset recovery, the receiver is in fact suing to redress injuries that [the company] suffered when its managers cause [the company] to commit waste and fraud.”)
Hays v. Paul, Hastings, Janofsky & Walker LLP, No. CIV.A.106CV754–CAP, 2006 WL 4448809, at *10 (N.D. Ga. Sept.14, 2006) (adopting Scholes v. Lehmann and finding that, in an SEC enforcement action involving a Ponzi scheme, because the injured investors were potentially tort creditors of the receivership estate, the receiver had standing to sue to recover the commissions the marketers received from the Ponzi scheme for the benefit of the estate so the estate could reimburse its creditors and/or investors for the tortious acts of the Ponzi scheme)
Warfield v. Alaniz, 2006 WL 2190563 at *5-6 (D. Ariz. Aug. 1, 2006) (holding that receiver of entity used to perpetrate Ponzi scheme has standing to assert fraudulent transfer claims based on injuries to receivership entity, which is liable to the defrauded investors as “tort creditors,” following Scholes v. Lehmann)
Eberhard v. Marcu, 530 F.3d 122 (2d Cir. 2008) (adopting Scholes v. Lehmann and holding that a receiver appointed in an SEC enforcement action has standing to pursue a fraudulent conveyance claim and “that a receiver’s standing to bring a fraudulent conveyance claim will turn on whether he represents the transferor only or also represents a creditor of the transferor”, but distinguishing Scholes on the basis that the receiver there was appointed for the corporations in receivership who held the claims, whereas the receiver here had been appointed only for the assets of the individual defendant who caused the fraud, and not for any of the corporations in which he had an interest and that conveyed the assets, and ultimately determining that the receiver of the individual defendant’s assets lacked standing to bring the fraudulent conveyance claim)
Stenger v. World Harvest Church, Inc., 2006 WL 870310 at *5-6 (N.D. Ga. Mar. 31, 2006) (citing to Scholes v. Lehmann and permitting receiver to pursue fraudulent conveyance claim under the Georgia Statute which stated that fraudulent conveyances were void as to “creditors and others,” thereby not limiting a receiver’s claims to only that of a creditor)
Quilling v. Cristell, CIV.A. 304CV252, 2006 WL 316981 at *6 (W.D.N.C. Feb. 9, 2006) (“[O]nce the Receiver was appointed, the . . . Entities were freed from the control of [the Ponzi scheme perpetrator], and the . . . Entities became entitled to the return of the funds that were wrongfully diverted to the Defendants. Under the clear and persuasive reasoning of the court in Scholes, the Receiver, as receiver for all entities owned or controlled by [the Ponzi scheme perpetrator], properly has standing to bring the fraudulent transfer claims that he is asserting against Defendants.”)
Knauer v. Jonathon Roberts Fin. Group, Inc., 348 F.3d 230 (7th Cir. 2003) (holding that a receiver has standing to assert claims on behalf of the receivership entities based on a Ponzi schemer’s transfers of assets from, or other dissipation of assets of, the receivership entities, but not claims based on the schemer’s soliciting funds from investors, which claims belong to the investors)
Obermaier v. Arnett, 2002 WL 31654535 at *3 (M.D. Fla. 2002) (“The Receiver, as an equity receiver, clearly has standing to bring claims if the causes of action attempt to redress injuries to the Receivership Entities. The issue, therefore, is whether the state causes of actions asserted by the Receiver may be brought by the receivership entities, or only by the investors. This is a matter of state law.”)
Miller v. Harding, 248 F.3d 1127, 1128 (1st Cir. 2000) (“An equity receiver, like a bankruptcy trustee, has standing for all claims that would belong to the entity in receivership, and which would thus benefit its creditors and investors, but no standing to represent the creditors and investors in their individual claims.”)
Scholes v. Lehmann, 56 F. 3d 750, 758 (7th Cir. 1995) (determining that receiver of corporations used by their principal to operate Ponzi scheme has standing to assert fraudulent conveyance claims to recover money wrongfully transferred from receivership corporations to pay liability assumed by those corporations to investors as a result of the illegal activities of corporations and Ponzi scheme principal, even if corporations were found to be alter egos of principal)
