- Case No 12-2463, 12-2464, 12-2493, 12-2494 and 12-2495 - Court of Appeals (7th Cir. - September 6, 2013)
- AFFIRMING the bankruptcy court's ruling in favor of defendants.
- Procedural context:
- Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. The bankruptcy court entered summary judgment in favor of the investors, and the trustee appealed to the district court. On agreement, the trustee and defendants requested direct review by the Court of Appeals, bypassing the district judge.
- In 2008, Gregory Bell's mutual funds, known as Lancelot or Collosus group folded (collectively "the Funds"). The acting trustee filed numerous suits and adversary proceedings seeking to recover from solvent third parties. Specifically, the trustee is seeking claims against some of the Funds' investors, which the trustee asserts were receiving preferential transfers or fraudulent conveyances. The Funds invested in notes issues by Thousand Lakes, LLC and other companies operated by Thomas Petters. Petters was running a Ponzi scheme which was paying old investors with newly raised money. When Thousand Lakes stopping remitting money to the Funds in 2008, Bell discovered that Petters was running a Ponzi scheme. Instead of report him to prosecutors, Bell began to operate a second-tier Ponzi scheme using new funds to pay old investments. From those transactions, the trustee asserts that investors who redeemed their shares before the bankruptcy received preferential transfers or fraudulent conveyances, and commenced actions against the respective parties.
- Easterbrook, Bauer and Sykes - Circuit Judges.
3495 in the system
5 Being Processed