The end game for defrauded investors and other creditors in a Ponzi scheme case is the recovery of the maximum amount on their claims. Depending on whether the Ponzi perpetrator has landed in a bankruptcy case or a receivership proceeding, the rules governing the allowance and distribution priorities for claims filed in Ponzi scheme cases may vary. This Article discusses the treatment of the defrauded investor’s claim in both bankruptcy and receivership cases. This Article also contrasts relatively rigid provisions in the Bankruptcy Code for the allowance, priority and distribution of claims in Ponzi scheme cases with the more flexible approaches that district courts in receivership proceedings have adopted. Finally, this Article discusses particular provisions under the Bankruptcy Code that may apply to other aspects of claims allowance, priority and distribution in a Ponzi scheme case.
Cite as 42 Golden Gate U. L. Rev. 567 (2012).
Kathy Bazoian Phelps,
Handling Claims in Ponzi Scheme Bankruptcy and Receivership Cases, 42 Golden Gate U. L. Rev.