ATM LEASEBACK SCHEMES-- any insight?

[grimreaper]

Someone here is likely to invoke the recent Minnesota Supreme Court decision agsainst the Presumption Clause.

The 'Ponzi Scheme Presumption' Is Dead. Long Live the 'Ponzi Scheme Presumption'

http://www.lexisnexis.com/legalnewsroom ... on-39.aspx

Here's an answer for you>>>

Decision's Precedential Effect Is Unlikely

While many are quick to hail the Alliance Bank decision as a seismic shift in Ponzi scheme litigation, the reality is that the decision is likely to have little or no effect on future cases. Indeed, while the Ponzi scheme presumption is often used to demonstrate actual intent as required to support a fraudulent transfer claim, it is not the sole avenue afforded to creditors. Rather, state fraudulent transfer laws also allow a creditor to show actual intent by establishing the existence of badges of fraud. It is likely that cases involving Ponzi schemes will likely feature a plethora of badges of fraud that can easily satisfy actual intent in the absence of a 'Ponzi scheme presumption.'

This conviction is shared by Douglas Kelley, the court-appointed bankruptcy trustee tasked with recovering assets for victims of Thomas Petters' $3.65 billion Ponzi scheme, who dismissed the effect of the Alliance Bank decision in a recent interview with the Minneapolis Star Tribune, remarking:

Whether I prove the Ponzi presumption or use badges of fraud, I can easily prove fraudulent intent. We have no dearth of direct evidence of fraud in this case.

It is also worth noting that, even assuming the inability to invoke a 'Ponzi scheme presumption,' what further showing of fraud is necessary for an inherently deceptive scheme that by its nature depends on sustained and continuing fraud to perpetuate the scheme? Whereas various factors can be used to establish "badges" of fraud, the showing that a debtor is operating a Ponzi scheme is itself indicative of fraud. In other words, while the Minnesota Supreme Court recognized that the operation of a Ponzi scheme was not itself a badge of fraud, the showing that a debtor masterminded a Ponzi scheme is due to be afforded significant weight in determining the existence of the actual intent to hinder, delay, or defraud.

[grimreaper]

A company I once worked for got a judgment against a client to the tune of $14k. Two asset searches and $3k in legal fees later and they cut their losses. Never saw a dime.

The receiver has much deeper pockets than that small co you worked for. In addition, they will have a dedicated court and judge to hear the cases. Of course same holds true for many of the investors (as far as deep pockets). Let's see who blinks first.

[The Observer]

Someone here is likely to invoke the recent Minnesota Supreme Court decision agsainst the Presumption Clause.

None of the regular posters here are likely to do that. We know enough about reading and interpreting case law and decisions to recognize when a particular ruling is a "one-off" case and is not going to be setting a precedent. And, as the article states, most states don't have to rely on case law to prove fraudulent intent as they have statutory laws in place. Finally, it is not likely that newbies to this thread site are going to be spending time digging up singular cases to debate whether or not claw backs will be awarded. They are spending their time in this thread as victims trying to understand what the impact will be on their pocketbooks. So you make another presumption based on little or no experience about this site.

But that seems to be the one-trick pony you keep parading through here. Why? Because you have nothing else to offer in terms of knowledge and experience of what typically happens once claw backs are awarded or agreed to by defendants. None of the regulars here have said that (1) claw backs can't be imposed/pursued or (2) that claw backs won't be pursued or imposed. Yet you keep raising that strawman argument over and over every time we point out that clawbacks are not going to result in any significant restitution.

You seem impervious to understanding what we are saying. Either you just suffer from an abnormal need to be part of a conversation so badly that you will hijack the thread back to a point that everyone has already agreed to 20 times before over the last year, or you are trying to distract others from noticing that you don't know anything about enforced collections on assets.

Either way it ain't working.

[Tednewsom]

Or he just likes interacting with smart people, so he can get smarter. Like I do.

[The Observer]

Or he just likes interacting with smart people, so he can get smarter. Like I do.

The difference, Ted, is that you are getting smarter.

[grimreaper]

Yet you keep raising that strawman argument over and over every time we point out that clawbacks are not going to result in any significant restitution.

thanks for pointing this out..how could I be so naive...

Yes, I guess I'll remain in my funk for now..in denial. Just like old times and we all know the outcome... Things never change...right? Just keep looking in the rear view mirror..it's very reliable. As far *enforced collection of assets*>>> how much has been collected in Madoff so far?
10.5 billion...not enough, but not chump change either. This case is no *madoff* ..stay tuned.

PS..the irony of ironies is that that I hope I'm dead wrong. I won't elaborate.

[Gregg]

. Once fraudulent intent is established, the burden then
lies with the transferee to show it took in good faith and provided equivalent value
in exchange. See Cal. Civ. Code § 3439.08(a); In re Cohen, 199 B.R. at 718-719. It
is the transferor's actual intent that matters – the transferee's intent does not matter
unless it can also show it provided value in exchange for the transfer.

I don't think that says what you think it does.

http://www.willamette.com/insights_jour ... 011_11.pdf

The Ponzi Scheme Presumption
In the numerous bankruptcy clawback actions that
have resulted from the collapse of such fraudulent
schemes, trustees have frequently asserted a principle
called the “Ponzi scheme presumption” in an
attempt to simplify their burden of proof.Typically, the plaintiff has to prove actual fraud
through so-called “badges of fraud” or to prove
constructive fraud through valuation evidence and
testimony.
However, the Ponzi scheme presumption allows
trustees to obtain a finding of actual fraud by simply
showing:
1. that the transferor was engaged in a Ponzi
scheme (often by virtue of a guilty plea or
conviction) and
2. that the payment or transfer at issue was
made in furtherance of that Ponzi scheme.
And once actual fraud is established, the burden
immediately shifts to the defendant transferees, who
in turn must establish that they took for value and
in good faith.
Therefore, the presumption is a powerful tool. It
can provide a trustee with a shortcut to liability and
save the estate the financial burden of protracted
and valuation-driven litigation. But, more importantly,
the presumption can:
1. change the balance of the parties’ bargaining
positions and
2. force a settlement that favors the bankruptcy
estate.

The debt collection presumption:

A whole lot of people who, rightly or wrongly, don't agree they should have to pay, won't.
A whole lot of people who can't easily pay, won't.
A whole lot of the above, still don't make up all the people who for whatever reason, won't.

Some of these people won't lift a finger to fight any court action, they just won't pay, and if you think you, the courts or anyone or anything else can make them look up how many people owe the IRS and have been telling THEM, to phuck off for 10 years or more. By the way, the IRS, unlike someone trying to collect a private debt, can send you to prison, AND, they're harder to discharge in bankruptcy.


How many "If's..." does that make now?

[notorial dissent]

Grimy, to put it simply, it is one thing to say you're going to go after people who THEORETICALLY owe the estate money, it is another thing entire to convince a court of that, get a judgment, and then actually collect. Those are two BIG hurdles that are going to take time, and LOTS of money. And yes, the Receiver has deep pockets, the Receivership estate, well maybe not so deep of pockets after all considering what was left over after the boys got done, otherwise, they aren't going to put out a dime of their own money that they may not realistically ever get back. Receivers are notoriously cheap, they don't spend any more of their own money than they have to. So you can get over that idea right now.

[Judge Roy Bean]

The receiver does not have deep pockets. The court will not allow them to spend $5 to recover $1, particularly when the prevailing opinion of this kind of thing is that net losers who joined more recently should have known better.

[Judge Roy Bean]

...
10.5 billion...not enough, but not chump change either. This case is no *madoff* ..stay tuned. ...

Almost $2B of that came from a settlement with JP Morgan Chase - truly, this case is nothing like Madoff.

[webhick]

The receiver does not have deep pockets. The court will not allow them to spend $5 to recover $1, particularly when the prevailing opinion of this kind of thing is that net losers who joined more recently should have known better.

Exactly. The company I work for spent 20% of the debt trying to get it and got nothing for it. Spending 80% would not have gotten it. Spending 120% would not have gotten it. And in the end we were out $17k. Some people just ain't gonna pay no matter what. From what I understand, the receiver is paid out of the funds used to make the victims whole. Every dime he spends is a dime that won't get disbursed to the victims, so he's gonna make sure that those dimes are spent going after folks with a reasonable chance of collection.

[The Observer]

thanks for pointing this out..how could I be so naive...

Because of pride? Not willing to admit that you are sticking with your presumptions because you don't like being wrong? Just plain stubborn? I really don't know. But you may want to talk some friends and family and see if they have noticed this kind of behavior in you before.

Yes, I guess I'll remain in my funk for now..in denial. Just like old times and we all know the outcome... Things never change...right?

No, things can change if the right facts and circumstances exist for that change to happen. As soon as you can come up with some real facts that show that claw backs against the NASI net winners are going to result in people getting more than 30 cents on the dollar, I will be the first one to agree with you. But as everyone as told you before as you sat on your barge on the Da Nile River, these cases typically result in low payouts from claw backs and assets of the scammer(s).

As far [sic] *enforced collection of assets*>>> how much has been collected in Madoff so far?
10.5 billion...not enough, but not chump change either. This case is no *madoff* ..stay tuned.

That is pretty ironic. Your post earlier about the Minnesota case was done to pre-empt anyone from citing that case as an argument about the rules for claw backs being scaled back. Fair enough, it is a one-off case and I certainly agree it is not going to overturn the rationale for clawbacks. But now you try to bring the Madoff case into this argument as some sort of basis for saying that clawbacks can be significant. Yes, you immediately qualify your claim by correctly stating that this case is no "Madoff", but you obviously are trying to have your cake and eat it too.

Why is the Madoff case different than NASI?

(1) Madoff kept meticulous records of all transactions that he conducted. This allowed the receiver's office to conduct a precise forensic audit and determine where the money went and how much. Ed and Joel, on the other hand, were making it up as they went.

(2) Madoff had the experience and benefit of being a Wall Street insider, thus he was able to attract the big money: not only the rich and famous, but banks and investment houses inside and outside of the US; a majority of these were directed through feeder funds they were manger. Ed and Joel were attracting money from individuals, not money from Wall Street.

(3) Madoff's record keeping showed that nearly 50% of the over 2000 identified victims of the scam were "net winners." Madoff obviously had established a preferred clientele who were going to get paid first before the other alleged 49,000 victims who (at least through 2014) were still waiting for the receiver's office to verify them as net losers (or even actual victims; some have already been knocked off the list for failing to provide verification that they actually gave Madoff money). This meant that only 50% of the invested monies were lost (an aide to the receiver estimated that Madoff had collected $36 billion and had paid back $18 billion of it). Ed and Joel, at the last count I saw, were only victimizing 2000 people tops and the receiver, up to this point, is citing less than 50 net winners he would like to pursue.

(4) The receiver in the Madoff case did not have deep pockets - he had a huge pool of financial businesses that had deep pockets. These are businesses that had a sterling reputation and would (a) like to get out of the headlines for being in bed with Madoff and (b) settle for a portion of monies to the receiver. NASI has no such pool to pursue in terms of financial companies.

(5) Madoff had a lot of expensive assets and toys. At last count, the receiver had taken in $723 million from real estate, vehicles, accounts and jewelry. Huge chunk of change, right? That represented 4 cents on the dollar of the net losses. If the financial companies had never come into the picture, the receiver would have been done with this case a lot sooner. Regarding Ed and Joel, we have no report from the receiver's office about whether he will be going after their personal assets, I have not even seen a report that has listed what assets Joel and Ed have.

So there are a lot of reasons why the Madoff scam resulted in a higher payout for the victims. None of those reasons are present in the NASI debacle and that is why you are not going to see significant recovery for the victims overall. There may be some victims who will be made whole, because they were early investors and had little invested. And there will be some who won't get any due to them failing to meet the paperwork deadlines and standards of proof.

PS..the irony of ironies is that that I hope I'm dead wrong. I won't elaborate.

Of course you will not elaborate, you are still protecting those net winner relatives that you claim you know.

[notorial dissent]

Every dime he spends is a dime that won't get disbursed to the victims, so he's gonna make sure that those dimes are spent going after folks with a reasonable chance of collection.

That is exactly true and right. If it's not in the estate to begin with, they aren't going to spend money on something that may or will more likely not bear fruit. That is directly against their financial and fiduciary responsibility.

[grimreaper]

From what I understand, the receiver is paid out of the funds used to make the victims whole.

Well, they will be paid by the hour..NOT ON A CONTIGENCY BASIS. The funds will probably come from a combination of FED funds and recovery funds. In any event, they should be much more capable of pursuing legal avenues than a small co would in going after a single judgment. How successful they will be remains to be seen. I'll have some indication when I find out from the investors I'm familiar with.

This certainly won't be litigated like Maddof...the largest in history. It will be much more efficient and streamlined.
From the report:

In order to minimize the administrative
expenses associated with these cases, it is important they all be managed and
adjudicated by one District Court Judge and one Magistrate Judge who are familiar
with the underlying facts. Many of the cases will likely be filed at the same time
and, for efficiency purposes, should be kept on the same track. Having the cases
before one District Court Judge and one Magistrate Judge will also avoid
inconsistent rulings, which would complicate the litigation and potentially lead to
disparate treatment of similarly situated Prospective Defendants. Accordingly, the
Receiver proposes and seeks Court approval of having all Clawback cases
transferred to this Court as related actions. If the Court approves this request, the
Receiver will file a notice of related action with each complaint pursuant to Local
Rule 83-1.3.1.
With the exception of having all cases treated as related actions and
transferred to this Court, the cases should follow the Federal Rules of Civil
Procedure and Local Rules of the Court. The Receiver will request that all
settlement conferences be held before the Magistrate Judge (assuming the Receiver's
proposal above is approved, settlement conferences will be held before Magistrate
Judge Frederick Mumm). The Receiver will seek permission from Judge Mumm to
schedule multiple settlement conferences on the same day so as to minimize administrative expenses.

[notorial dissent]

From what I understand, the receiver is paid out of the funds used to make the victims whole.

Well, they will be paid by the hour..NOT ON A CONTIGENCY BASIS. The funds will probably come from a combination of FED funds and recovery funds. In any event, they should be much more capable of pursuing legal avenues than a small co would in going after a single judgment. How successful they will be remains to be seen. I'll have some indication when I find out from the investors I'm familiar with.

Uh NO. Not hardly. Not at all!!! The Receiver gets paid out of the corpus, which means that every time they go to court it is diminished by the amount of the legal expenses. They get paid expenses and legal fees for doing the work, that is how a Receiver is paid, and the amounts and such are agreed upon when the Receivership is first set up and then the judge signs off on the payments as they go along, and it ALL comes out of the corpus. The ONLY time a Receiver gets any Fed money is when they are called in to wind down an operation and there is no corpus and no hope of recovering anything, and then they do it for an agreed upon price.

[Gregg]

As far [sic] *enforced collection of assets*>>> how much has been collected in Madoff so far?
10.5 billion...not enough, but not chump change either. This case is no *madoff* ..stay tuned.

You would be amazed how co operative defendants can be when their insurance may cover some of it, when their multi-billion dollar business rests on a federal banking licenses, brokerage licenses, and other permits. Even more so when even though to you its a billion dollars, to them its a largish rounding error. Citibank and Goldman-Sachs have misplaced larger amounts.

[Gregg]

Some of the investors bilked by Wall Street swindler Bernard Madoff will soon be receiving some money back, nearly three years after his scheme was first revealed.

The trustee charged with recovering funds for customers of the jailed financier says some $312 million will be distributed staring Wednesday on claims relating to 1,230 accounts.

Trustee Irving Picard has recovered about $8.7 billion from investors who were paid fictitious profits by Madoff above the amount they invested.

That's about half the roughly $17.3 billion lost by Madoff customers who have filed claims.

The bulk of the recovered funds can't be paid out yet because they are tied up in litigation and appeals.
http://www.cbsnews.com/news/madoff-vict ... stitution/

And that's money they have recovered. They have $8.7 billion and can only pay $312 million of it after 3 years, There was, of course, NO DEFENSE to keep that money..

[Tednewsom]

Gee whiz, guys, you don't gotta holler at him. He's just lookin' on the bright side, an' you're givin' him the business.

(My Beaver Clever moment.)

I know Mr. G. Reaper, Esq., is not arguing that every investor is going to get every dime of their lost money back. Nor have I, for that matter. The insidious beauty of a Ponzi scheme is that the core of the scheme vanishes, so there are never obvious assets to attach. But equally clearly, no receiver ever would have come up with the "clawback" device nor would receivers ever bother invoking it, if it never yielded any results whatsoever.

I know what it's like to be considered judgment-proof, and plenty of the investors are going to classify. I also know about squirrelling dough away -- from a discrete distance.

But I'm very aware of the happy aspects of getting a lien against a debtor who thinks they're fat and sassy. The couple times I've had to take someone to court (and naturally, in neither case did they deign to show up), I just paid the minor fee and had them served by deputies. It's remarkable how quickly someone goes from "Sure, I owe you the money, but I ain't payin' a dime, mutthuhfukker, take me to court blar-har-har-har!" to "Holeee Jeezusss, there's a big armed goon in uniform at my door with a paper that says the court owns my house, my cars, my boat, my savings, my office furniture and my Sumerian coin collection. Where's my checkbook!? I'll pay, I'll pay!"

Naturally, not everyone will react the same way. YMMV.

[The Observer]

Gee whiz, guys, you don't gotta holler at him. He's just lookin' on the bright side, an' you're givin' him the business.

(My Beaver Clever moment.)

Ted, if it was just grimmie who would suffer from his lack of knowledge about enforced collection and his insistence on the sunny side of Ponzi schemes, I would have given up a long time ago and agreed with him: "Yep, Grimster, you are most certainly right, 'no defense' against clawbacks means you got a lot of serious bucks headed your way. The way I see it, you are going to get at least 90% of your money back and I wouldn't be surprised if you get 102% of your money back. Since that receiver has such deep pockets, he is probably going to miscount when he pulls out that bill wad and counting out the BenFrankies to you!"

But see, Ted? Grim has nothing vested in this conversation, so he can afford to be ignorant on other people's dimes. There are victims out there that deserve a more honest answer, regardless of grimmie's opinion, feelings and hubris. People who don't need to be shocked out of their skins two years from now when the settlements drip in and they don't match up with what our little reaper has been pumping here. The mere fact that despite us relating in this thread several times over the last few months that the receiver is funded only by what he recovers, grimmie is acting like he has only heard of this as a late and startling development (he will probably forget about this little revelation as early as next month and start his "no defense" mantra again). That alone should be indicator enough that grimreaper has been operating in the dark.

And that is why he needs to be hollered at and a thrown eraser upside his head, to boot.

(My Ward-Cleaver-from-an alternate-parallel-universe-finally-giving-Eddie-Haskell-what-he deserves moment, btw.)

[grimreaper]

So..for all those Hollerin' at me....IF YOU were an investor in this case>>>>what would YOU DO when you get the first demand letter with a settlement incentive? If NOT settling... What would YOU do when they hand down a judgement to fork over the profits you received? I'm waiting for an answer.