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The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes

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ISBN: 9780769846576
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Covering virtually all legal issues relating to unwinding Ponzi schemes, The Ponzi Book is relevant and timely, given the increased exposure of Ponzi schemes and the substantial litigation that has ensued in the quest to find assets and to make investors whole. Designed to be a comprehensive guide to the complex issues that arise in Ponzi schemes, The Ponzi Book includes a thorough legal analysis to support competing claims and defenses of affected parties, and contains a sophisticated discussion of the administrative practicalities that arise in Ponzi cases. See what other experts are saying about The Ponzi Book.

Both practitioners in the field and parties affected by a Ponzi scheme can benefit from the comprehensive coverage of issues in The Ponzi Book. Several chapters are dedicated to increasingly common fraudulent transfer claims (clawbacks) and preference claims arising in Ponzi schemes, along with the defenses that investors, brokers and others can assert to those claims. The book also includes a detailed discussion of a broad array of litigation claims that can be pursued against any type of defendant with culpability or liability due to its involvement in a Ponzi scheme. Separate chapters are dedicated to each of the complicated legal issues of deepening insolvency, standing, and in pari delicto as they arise in Ponzi litigation. Since Ponzi schemes usually involve related criminal proceedings, the book also covers Fifth Amendment and other privilege issues as well as a detailed analysis of what happens to competing claims for assets in parallel insolvency and criminal proceedings.

For those seeking to recover assets, several chapters discuss prejudgment remedies available to freeze assets, contempt proceedings, and service issues both internationally and domestically. The ultimate end game for claimants and those administering the unwinding of a Ponzi proceeding is the claims and allowance and distribution process, and this book offers a sophisticated review of differing approaches and methodologies available in the claims review process.

Finally, the highlights of recent changes in the tax laws relative to tax relief for Ponzi victims are covered to raise awareness of these issues for victims and their tax advisors.

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Table of Contents

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