The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes A comprehensive guide to the complex issues that arise in Ponzi cases

Chapter 1 Introduction
1.01 Scope of Issues Arising in Ponzi Cases
1.02 Ponzi Scheme Defined
1.03 Statutory and Legal Basis for Administration of Ponzi Proceedings
1.04 Ponzi Schemes in the News

Chapter 2 Actual Fraudulent Transfer Claims
2.01 Introduction
2.02 Meaning of "to Hinder, Delay or Defraud"
2.03 Proof of Fraudulent Intent
2.04 Proof of Injury in Fact
2.05 Apportionment of Property Recovered
2.06 Recovery from the Entity for Whose Benefit the Transfer Was Made
2.07 Advantages to Actual Fraudulent Intent Claim for Relief
2.08 Prejudgment Interest

Chapter 3 Constructive Fraudulent Transfer Claims
3.01 Introduction
3.02 Less Than Reasonably Equivalent Value
3.03 Debtor's Financial Condition
3.04 Prejudgment Interest

Chapter 4 Defenses to Fraudulent Transfer Claims and Preference Claims
4.01 Introduction
4.02 Defenses Available to an Initial Transferee
4.03 Section 550(b)(1) Defense Available to a Subsequent Transferee
4.04 Statute of Limitations Defense

Chapter 5 Claims to Avoid Preferential Transfers
5.01 Introduction
5.02 The Bankruptcy Preference Statute
5.03 Transfer of an Interest of the Debtor in Property
5.04 To or for the Benefit of a Creditor
5.05 On Account of an Antecedent Debt
5.06 Insolvency
5.07 The Investor Received More Than Chapter 7 Distribution
5.08 Defenses to Preference Claims
5.09 Prejudgment Interest on Preference Claim

Chapter 6 Property Interests and Express, Resulting and Constructive Trust Claims
6.01 Introduction
6.02 Interest of Debtor in Property
6.03 The Elements of Express, Resulting and Constructive Trust Claims
6.04 Use of Constructive Trust by Trustees and Receivers to Claim Interest in Third Party Property
6.05 Investor Claims Constructive Trust in Bankruptcy or Receivership Assets
6.06 Defendant's Defense to Fraudulent Transfer or Preference Claims

Chapter 7 Tort and Equitable Claims Against Insiders and Third Parties
7.01 Introduction
7.02 Breach of Fiduciary Duty Claim Against Corporate Officers or Directors
7.03 Breach of Fiduciary Duty Claim Against Non-Insider Third Parties
7.04 Constructive Fraud
7.05 Negligence 
7.06 Malpractice and Professional Negligence 
7.07 Fraud 
7.08 Aiding and Abetting Fraud
7.09 Aiding and Abetting a Breach of Fiduciary Duty 
7.10 Aiding and Abetting Negligent Misrepresentation
7.11 Aiding and Abetting a Fraudulent Transfer
7.12 Conspiracy
7.13 Breach of Duty of Good Faith and Fair Dealing
7.14 Tortious Interference with Contract Claim
7.15 Conversion
7.15 Unjust Enrichment 
7.16 Constructive Trust
7.17 Accounting
7.18 Alter Ego

Chapter 8 Deepening Insolvency
8.01 Introduction
8.02 Definition, History and Debate
8.03 Tort Claim for Deepening Insolvency
8.04 Deepening Insolvency as a Theory of Damages
8.05 Standing Issues in Pursuing Deepening Insolvency

Chapter 9 Disgorgement Claims Against Relief Defendants
9.01 Introduction
9.02 The Key Features of a Disgorgement Claim Against a Relief Defendant
9.03 The Distinction Between Relief and Fraudulent Transfer Defendants
9.04 The Elements of the Claim

Chapter 10 Statutory Claims: Securities and RICO Violations
10.01 Introduction
10.02 Securities Laws Violations
10.03 Racketeer Influenced and Corrupt Organizations ("RICO") Act Violations

Chapter 11 Equitable Subordination
11.01 Equitable Subordination
11.02 The Elements for Equitable Subordination
11.03 Inequitable Conduct
11.04 Harm to Other Creditors
11.05 Insiders of Debtor
11.06 Defenses to Equitable Subordination

Chapter 12 The Economic Loss Defense
12.01 Introduction
12.02 Tort Damages Limited Where Claim Is Based in Contract 
12.03 Exception for Existing Duty or Special Relationship 

Chapter 13 Standing
13.01 Introduction
13.02 Trustee Standing
13.03 Receiver Standing
13.04 Standing of Creditors
13.05 Standing Issues in Particular Claims for Relief

Chapter 14 The In Pari Delicto Defense
14.01 Introduction
14.02 General Principles of In Pari Delicto
14.03 Distinction Between In Pari Delicto and Standing Issues
14.04 Applicability of In Pari Delicto Defense to Trustees
14.05 Applicability of In Pari Delicto Against Receivers
14.06 In Pari Delicto Used Against Third Parties
14.07 Ways to Defeat the In Pari Delicto Defense
14.08 In Pari Delicto Is Not Applicable Against Insiders 
14.09 In Pari Delicto Usually Not Ripe for Consideration on Motion to Dismiss

Chapter 15 Gathering Evidence: Privilege Issues and Exchanging Information with the Government
15.01 Introduction
15.02 Privileges
15.03 Reporting Crime and Obtaining Evidence from the Government

Chapter 16 Forfeiture Proceedings and Victim Compensation Through the Criminal Process
16.01 Introduction
16.02 Criminal and Civil Forfeiture Proceedings
16.03 Impact of Bankruptcy Filing on Forfeiture Proceeding
16.04 Interests of Third Party Claimants in Forfeited Property
16.05 Disposition of Forfeited Property Through the Remission Process
16.06 Restitution and Restoration in Criminal Ponzi Cases
16.07 Competition Between Parallel Forfeiture Proceedings and Civil Insolvency Proceedings to Compensate Ponzi Victims
16.08 Cooperation Agreements
16.09 Rothstein: A Case Study

Chapter 17 Use of Contempt Proceedings to Recover Assets
17.01 Introduction 
17.02 Civil Contempt Proceedings 
17.03 Criminal Contempt Proceedings

Chapter 18 Non-Resident and Foreign Defendants: Personal Jurisdiction and Service of Process
18.01 Introduction
18.02 Personal Jurisdiction
18.03 Service of Process

Chapter 19 Foreign Proceedings and Discovery Abroad
19.01 Introduction
19.02 International Discovery: The Hague Convention or the Civil Rules? 
19.03 An Introduction to Mareva, Anton Piller, and Norwich Pharmacal Orders
19.04 The Mareva or Freezing Injunction
19.05 The Anton Piller or Search Order
19.06 The Norwich Pharmacal Order
19.07 Mareva by Letter
19.08 Recognition of Foreign Proceedings Under Chapter 15 of the Bankruptcy Code

Chapter 20 Allowance of Claims and Distribution Schemes
20.01 Introduction
20.02 Types of Claims
20.03 Procedures in Submitting and Fixing Claims
20.04 Methodologies for Calculating Amount of Distribution on Claims
20.05 Additional Issues Impacting Distributions in Receivership Cases
20.06 Distributions in SPIC Proceedings

Chapter 21 Prejudgment Remedies
21.01 Introduction
21.02 Rule 64: Seizing a Person or Property
21.03 Rule 65: Preliminary Injunctions and Temporary Restraining Orders
21.04 Distinguishing Rule 64 and Rule 65

Chapter 22 Tax Issues Arising in Ponzi Schemes
22.01 Introduction
22.02 Earnings as Income
22.03 Tax Deduction for Losses

Kathy Bazoian Phelps

Kathy Bazoian Phelps has been a partner at the law firm of Danning, Gill, Diamond & Kollitz, LLP since 1999. She was admitted to the California Bar in 1991, and has been a member of her firm since then. She obtained her undergraduate degree from Pomona College in 1988, and her law degree from the University of California at Los Angeles in 1991.

She represents trustees and receivers, debtors, secured and unsecured creditors, and creditors' committees in bankruptcy cases and has extensive litigation experience representing both plaintiffs and defendants in a wide variety of bankruptcy litigation matters. She frequently represents operating and liquidating trustees in cases pending in the United States Bankruptcy Court as well as receivers in the United States District Court and the Superior Court of the State of California. She is recognized by peers for her ability to trace and recover assets in large-scale complex cases and for her familiarity with all issues arising in Ponzi cases. She has developed a specialty in representing bankruptcy trustees and receivers in litigation involving fraudulent activities and has been lead counsel in large-scale litigation involving recovery of assets in Ponzi scheme cases. 

Her recent publications include: Emergence of Mareva by Letter: Banks? Liability to Non-Customer Victims of Fraud, co-authored with Lincoln Caylor, Martin S Kenney, and Yves Klein, Business Law International, Vol. 12 No. 2, May 2011; In Pari Delicto and The Blame Game: Should Receivers Get Caught in the Fray?, California Receivers Forum Newsletter, January 2011; Opportunities for Trustees in Ponzi Scheme Cases, NABTalk, Journal of the National Association of Bankruptcy Trustees, Summer 2010; Bankruptcy Issues Arising in Ponzi Schemes, Century City Bar Association Newsletter, April 2010. 

She is currently the editor of the Receivership News. She is also a member of the Board of Directors and secretary of the Los Angeles/Orange County Chapter of the California Receivers' Forum; a member of the Board of Directors of the Century City Chamber of Commerce; a member of the advisory board of the International Association for Asset Recovery; a member of the advisory board of the American Bankruptcy Institute for the Battleground West; and a member of Financial Lawyers Conference; American Bankruptcy Institute; Los Angeles Bankruptcy Forum, Los Angeles County Bar Association, the Beverly Hills Bar Association, and the Armenian Bar Association. She served on the Insolvency Law Committee for the State Bar of California from 2000 to 2003.

She has lectured widely and written on bankruptcy and receivership matters for, among others, American Bankruptcy Institute, the National Association of Bankruptcy Trustees, the Association of Insolvency and Restructuring Accountants, and the International Association for Asset Recovery.

Honorable Steven Rhodes

Judge Steven Rhodes has been a United States Bankruptcy Judge in the Eastern District of Michigan since 1985, serving in Detroit. He was chief judge of the court from 2002-2009. He has served two terms on the Bankruptcy Appellate Panel of the Sixth Circuit, 1997-2004 and 2008-2011. He was also chief judge of the Bankruptcy Appellate Panel from 2002-2004.

Before his service as bankruptcy judge, he was a United States Magistrate in the Eastern District of Michigan from 1981-1985. Before that, he was in private practice (1977-1981) and served as an Assistant United States Attorney (1974-1977). He was also a law clerk to the Honorable John Feikens, United States District Judge for the Eastern District of Michigan (1973-1974).

His undergraduate degree is from Purdue University in Mechanical Engineering in 1970 and his law degree is from the University of Michigan Law School in 1972. In law school, he served as an editor of the Michigan Law Review. He was an adjunct professor at the University of Michigan Law School from 1992-2003, teaching bankruptcy law, and at the University of Detroit Law School in 1986, teaching ethics. 

From 1994-1996, he was an Associate Editor for the American Bankruptcy Law Journal,published by the National Conference of Bankruptcy Judges. In 1995, he was inducted as a fellow of the American College of Bankruptcy. From 2002 to 2004, he served as Chair of the National Conference of Bankruptcy Judges Endowment for Education. From 2005 to 2009, he was Vice President for Research of the American Bankruptcy Institute and on its Executive Committee. On April 3, 2009, the ABI awarded him its 2009 Distinguished Service Award. He is currently serving on the Board of Governors of the National Conference of Bankruptcy Judges and on the Judicial Council of Sixth Circuit.

His publications include The Ethical Obligations of a Chapter 7 Trustee, 80 AM. BANKR. L.J. 147 (2006);A Preview of "Demonstrating a Serious Problem with Undisclosed Assets in Chapters 7 Cases," 2002 No. 5 (May) Norton Bankr. L. Advisor 1; An Empirical Study of Consumer Bankruptcy Papers, 73 AM. BANKR. L.J. 653 (Summer 1999); Eight Statutory Causes of Delay and Expense in Chapter 11 Cases, 67 AM. BANKR. L.J. 287 (Summer 1993).

He has spoken at numerous conferences and seminars on bankruptcy law and practice sponsored by the Federal Judicial Center, the National Association of Bankruptcy Judges, the National Association of Bankruptcy Trustees, the National Association of Chapter Thirteen Trustees, the American Bankruptcy Institute, the American Bar Association, the Commercial Law League, the Turnaround Managers Association, the Association of Insolvency and Restructuring Accountants, the United States Trustee Program, the Byrne Judicial Clerkship Institute at Pepperdine Law School, the Michigan Institute for Continuing Legal Education and several other state and local bar organizations.