Golf Channel Defense in Ponzi Clawback Bolstered by Texas Court Ruling
The Texas Supreme Court is backing The Golf Channel's (TGC) reading of the Texas Uniform Fraudulent Transfer Act (TUFTA). The court said TGC provided $5.9 million worth of advertising to what turned out to be a financial fraud. TGC and…
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a number of amicus curiae briefs previously filed in the case had argued that good-faith creditors providing services at negotiated market rates are protected by TUFTA. The decision Friday was in response to a 5th U.S. Circuit Court of Appeals question asking for clarification of TUFTA and requirements under it for good-faith affirmative defense (see 1507010036) as part of TGC's ongoing legal battle with Ralph Janvey, the court-appointed receiver of Stanford International Bank. Janvey sued TGC in 2011, trying to claw back the money given it by Stanford -- which was the focal point of what the 5th Circuit called an "undisputed ... multi-billion-dollar Ponzi scheme." While it operated, Stanford was the title sponsor of a PGA Tour event held yearly in Memphis, and subsequently bought advertisements on TGC. The 5th Circuit previously ordered TGC to return what it was paid for ad services, ruling they had no value to a Ponzi scheme's creditors, but the Texas court ruling said TUFTA's "reasonably equivalent value" requirement is satisfied with evidence the transferee -- in this case, TGC -- fully performed a lawful, arm's length contract for fair market value, provided something that had objective value at the time and did so in the ordinary course of business. Given TUFTA's broad definitions of "value" and "reasonably equivalent value," the Texas court said, "the services Golf Channel provided indisputably had objective value at the time of the transaction." Counsel for TGC and Janvey didn't comment Monday.