CFTC. v. RFF GP, LLC (Distribution Plan)

The Magistrate Judge recommended denying the objection of a secured creditor who opposed the receiver’s distribution plan as it prioritized investor claims over the claims of creditors. In explaining the propriety of granting defrauded investors a higher priority than creditors, the court cited Quilling v. Trade Partners, Inc., 103CV236, 2006 WL 3694629 (W.D. Mich. Dec. 14, 2006) for the proposition that claims of defrauded investors take priority over creditors when the funds are traceable to the fraud. The court noted that as the creditor-objector did not provide any evidence that there was a nexus between its loan and the fraud, its objections should be denied.