Posted by Kathy Bazoian Phelps
    Below is a summary of the activity reported for August 2014. The reported stories reflect: 10 guilty pleas or convictions in pending cases; over 138 years of newly imposed sentences for people involved in Ponzi schemes; at least 5 newly discovered schemes; and an average age of approximately 55 for the alleged Ponzi schemers in the stories reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.
    Gabriel Bitran, 69, and his son Marco Bitran, 39, have agreed to plead guilty to running a hedge fund scam that lost more than $140 million. They ran their Ponzi scheme through GMB Management and GMB Capital Partners, promising returns of 16% to 23%.

The Ponzi Blog
(posted 2 days 13 hours ago)

There are more bankruptcy decisions that come out of the Fifth Circuit each month than I could ever write about.   I am going to try to provide at least a brief blurb for each one.  Here are five cases from the Fifth Circuit that came out during August.   They deal with discharge, dischargeability, jurisdiction and Stern issues, lien claims and preferences.
Graham Mortgage Company v. Goff (In re Goff),No. 13-41148 (5th Cir. 8/22/14)(unpublished).   Fifth Circuit affirmed denial of discharge for failure to keep records under § 727(a)(3).  Opinion here.
Galaz v. Galaz (In re Galaz), No. 13-50781 (5th Cir. 8/25/14).   Court found no jurisdiction over claims brought by non-debtor against non-debtor.   Debtor's fraudulent transfer claims against non-debtor were non-core claims for which Bankruptcy Court could not enter final judgment but could submit proposed findings and conclusions here.   Opinion here.

(posted 3 days 10 hours ago)

Many cases deal with debtors who fraudulently convey away their assets before filing bankruptcy.   But what about the situation where the debtor is the victim of a fraudulent conveyance rather than the perpetrator?    In Galaz v. Galaz (In re Galaz), No. 13-50781 (5th Cir. 8/25/14), which can be found here, the Fifth Circuit answers important jurisdictional and Stern questions about the debtor's quest to recover wayward assets.   
What Happened
Lisa and Raul Galaz were once married to each other.   One of their assets was an interest held by Raul in Artist Rights Foundation, LLC ("ARF"), a company which owned the rights to the Ohio Players music catalog.    The other owner of ARF was Julian Jackson.   When Lisa and Raul were divorced in 2002, Raul assigned Lisa 50% of his 50% interest in ARF.   Because the transfer was made without Julian's consent, Lisa received a 25% economic interest in the company but was not a member.    While it is not really relevant to the opinion, another significant occurrence in 2002 was that Raul pled guilty to mail fraud and surrendered his California law license.    

(posted 3 days 11 hours ago)

In a prior post, we discussed that a number of preference actions were filed in the MCG Limited Partnership, et al. bankruptcy proceeding by the Chapter 7 Trustee.  Since this post, an additional 93 preference complaints were filed, bringing the total to 131.
Click here for an example of a preference complaint filed in these cases.
For defendants to preference actions looking for an analysis of defenses that can be asserted in response to a preference complaint, below are several articles on this topic:
Preference Payments: Brief Analysis of Preference Actions and Common Defenses
Minimizing Preference Exposure: Require Prepayment for Goods or Services

(posted 3 days 13 hours ago)

Money down the drainNo – not again!!  You thought the foreclosure crises was behind us.  Right?  It turns out that many of the government programs intended to modify home loans have only delayed the inevitable because some of the programs as set to expire in 2015.   One of these programs, Home Affordable Modification Program (HAMP) was designed to provide homeowners with temporary interest rate relief.  That relief expires after five years at which time the interest begins to creep up.  When the program was designed the assumption was our economy would be back to “normal” by 2015.  Oops!!
Couple the expiration of the government programs with fact that many home equity lines of credit are scheduled to increase interest payments to the next level in 2015.   TransUnion, the credit rating firm, estimates that between $50 and $79 billion in home-equity lines of credit may default because of the increased payments.

(posted 4 days 6 hours ago)

student loan
The Bankruptcy Code makes it illegal for government agencies to refuse student loans to those who have filed bankruptcy. 11 USC 525(c).
So if you have filed bankruptcy, you are still eligible to receive student loans that are backed by the government (Title IV loans) such as the Stafford Loan.
If you get a student loan from a private lender, that’s a different matter entirely. The Bankruptcy Code prohibits discrimination only from government agencies, not private lenders.
Private lenders, such as banks, are under NO obligation to give you a student loan if you have filed bankruptcy or have other credit problems.
This doesn’t mean that you won’t be able to obtain a student loan from a private lender or bank if you have filed bankruptcy. It just means that private lenders are allowed to consider your credit history including bankruptcy filings in evaluating your student loan application.

(posted 4 days 11 hours ago)
U.S. Bankruptcy Court Judge Steven Rhodes in March 2012
John Meiu/Associated Press

Detroit’s bankruptcy judge said he’s considering sanctions for law firm Kirkland & Ellis’s “highly personal attack” on two mediators in the city’s bankruptcy case.
In a 22-page opinion, Judge Steven Rhodes said that Kirkland lawyers, who represent bond insurer Syncora Guarantee Inc., called into question the “moral character” of U.S. District Judge Gerald Rosen and attorney Eugene Driker in court papers they filed earlier this month. And he made it clear that he wasn’t happy about it.

WSJ.com: Bankruptcy Beat
(posted 4 days 11 hours ago)

As the unofficial last day of summer approaches, we imagine many of you are heading out of your offices early to enjoy one last long weekend of swimming, barbequing, and just plain ol’ relaxing.  In honor of the Labor Day weekend, we at the Weil Bankruptcy Blog are taking a well-deserved day off today.  We’ll be back on Tuesday with some exciting news. So be sure to check back with us then. In the meantime, have a great weekend!

(posted 4 days 13 hours ago)

Bank of America has taken a significant reputational hit as a result of its 2008 acquisition of Countrywide Financial. Could it have mitigated some of the damage with a different branding strategy?

BankThink
(posted 4 days 13 hours ago)