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Anyone who has served as a trustee in a chapter 7 or 11 bankruptcy case has encountered the business debtor whose records are “missing.” Usually, the debtor’s officers testify that they maintained the records, but just somehow won’t turn them over. The records just don’t show up.
In the continuing fraud and bankruptcy saga of former music promoter Lou Pearlman, the appointed chapter 11 trustee recently filed an emergency motion against his former lawyer charging her with conduct "intended and designed to obstruct, frustrate, impede, delay and prevent the trustee and creditors of the bankruptcy estate" from pursuing their investigation of the debtor's financial condition and identifying and locating "hundreds of millions of dollars" alleged to have been fraudulently obtained by Pearlman and entities he controls from creditors.
In Advanced Telecommunication Network Inc. v. Allen (In re Advanced Telecommunication Network Inc.), 490 F.3d 1325 (11th Cir. 2007), the U.S. Court of Appeals for the Eleventh Circuit adopted the approach set forth by the Seventh Circuit Court of Appeals in In re Xonics Photochemical, 841 F.2d 198, 200 (7th Cir. 1988) to reduce a contingent liability to its present, or expected, value in order to determine whether a debtor was insolvent on a given date.
A Ponzi scheme is an arrangement whereby an enterprise makes payments to investors from the proceeds of a later investment rather than from profits of the underlying business venture as the investors expected. The fraud consists of transferring the proceeds received from a new investor to previous investors, thereby giving other investors the impression that a legitimate profit-making business opportunity exists, where in fact no such opportunity exists. Hayes v.
Unlike Vegas, what happens in bankruptcy court does not necessarily stay in bankruptcy court. The ripples born of Enron’s and its affiliates’ chapter 11 filings are still reverberating in nonbankruptcy courts. The recent decision in Regents of the Univ. of Calif. v. Credit Suisse First Boston (USA) Inc., 482 F.3d 372 (5th Cir. 2007) (“Regents”), adds a new perspective on secondary liability in securities fraud cases.
Being a displaced Brit from north of the U.S. border, I frankly don’t have a whole lot to contribute to the Commercial Fraud newsletter on U.S. statutory issues.
uaranties of commercial debt, which greatly exceed the debt limits in §109(e), these particular individuals often are ineligible for chapter 13 in any event.
Among the listed “Bankruptcy Crimes” in chapter 9 of title 18 of the U.S. Code is one for “knowingly purchas[ing] directly or indirectly, any property of the estate of which the person is . . .
