Wing v. Layton, et al. (Standing, Fraudulent Transfers)

Wing v. Layton, 2:08-CV-708, 2013 WL 3725267 (D. Utah July 12, 2013)—District Court followed the Scholes v. Lehmann, 56 F.3d 750 (7th Cir.1995) line of cases, finding that a receiver has standing to assert fraudulent conveyance claims to recover amounts transferred by the company during the course of a Ponzi scheme. Additionally, while Defendant had argued that transfers made to him were actually from projects that were distinct from the Ponzi scheme, as he claimed they were profitable endeavors, the Court noted that just because a project is profitable does not make it distinct from the greater Ponzi scheme. In this case, the Court found that the profitable entities were not separate from the larger scheme as the money used to fund the projects, and the assets of the entities, were co-mingled with the other companies involved in the scheme. As Defendant was not able to show that he received funds for reasonably equivalent value, which along with good faith is a necessary element to establishing an affirmative defense to the transfer under the UFTA, the transfers were ruled fraudulent and Defendant will be required to return such funds to the receivership.