Janvey v. The Golf Channel Incorporated, case No. 13-11305, 780 F.3d 641, 2015 WL1058022 (5 Cir. March 11, 2015). In a case applying fraudulent transfer analysis to payments received from a company that was part of a Ponzi scheme, the Fifth Circuit Court of Appeals, applying the Texas Uniform Fraudulent Transfer Act held that a provider of services to the entity within the Ponzi scheme, even at a market rate of charges, does not provide reasonably equivalent value for amounts paid to it for services used to promote or advertise the entities that are part of the scheme. Accordingly, monies paid for those services can be retried by a receiver for the Ponzi scheme entities to the extent any other fraudulent transfer of funds could be retrieved under the Uniform Fraudulent Transfer Act. The case arose under the Stanford receivership involving advertising fees charged by The Golf Channel as part of a strategic “co-branding” advertising campaign that the Stanford entities used to promote the business within the Ponzi scheme and to attract wealthy investors to the investment scheme. The court held that under UFTA in Texas, the value of services must be determined from the perspective of Stanford’s creditors, rather than based on the abstract market value of those services to legitimate business actors. The Court concluded that “Golf Channel’s services did not, as a matter of law, provide any value to Stanford’s creditors.”
In another case involving fraudulent transfers, Williams v. Federal Deposit Insurance Corporation (Matter of Positive Health Management), 769 F.3d 899 (5 Cir. 2014), the court measured the scope of a transferee’s defense of “reasonably equivalent value” against a bankruptcy trustee’s claim of a fraudulent transfer (notwithstanding the intent of the transferor to delay, hinder or defraud its creditors). But in providing that defense the court also limited its scope to provide only precise scope of protection– that is, the transferee/defendant was permitted to retain only the dollar value that equaled the dollar value determined by the court to have been conferred by the transferee on the transferor. This result, in the context of this defense, seems to require some precise valuation determinations.
