Wiand v. Lee (Prejudgment Interest on Voided Transfers/Ponzi Presumption)

The Eleventh Circuit Court of Appeals overturned the district court’s denial of prejudgment interest on “false profits” that individuals received from entities involved in a Ponzi scheme would be required to return. While upholding the grant of summary judgment voiding the transfers under the Florida Uniform Fraudulent Transfer Act (FUFTA), the appellate court found that the district court did not properly consider the equitable factors required to be weighed under Florida law when denying prejudgment interest, which is otherwise allowed as a matter of course. Furthermore, the Court of Appeals affirmed the grant of summary judgment to the receiver, approving the application of the Ponzi presumption to find “actual fraud” under FUFTA, whereby proof that a transfer was made in furtherance of a Ponzi scheme establishes actual intent to defraud. In explaining the rationale behind the Ponzi presumption as applied to transfers made to investors from the Ponzi entities by the fraudster, the Eleventh Circuit affirmed the reasoning of Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995) as to a receiver’s standing to sue on behalf of receivership entities, as separate entities injured by the scheme.