into a single step transaction second the ruling the result of the ruling is contrary to the congressional intent that set forth in section five fifty of the bankruptcy co section five fifty imposes strict liability on an initial transfer re because that transfer e is the one that is in the best position to monitor the source of the funds and the transaction subsequent transfer generally doesn't have the ability to monitor the source of the funds and even if they did they're not an affective monitor but maybe the logic behind congress is an act meant but the doesn't say that a transfer is strictly liable if it was in a position to monitor the source of the farm instead what the statute does is draw a line between the initial transferring and the subsequent transferee i thank you for offered up the logic for why it congress threw that line the line it drew did not contain as a component of that piece of the logic that is it doesn't say an initial transfer strictly liable if it was in a position to monitor the source of the funds it simply says initial transfer is strictly liable that's correct your honor but i guess the bonded court in the court and video depot kind of cross checked their saying ok this person received the transfer for example in the video de polk case it was a transfer the hilton had received a check that was drawn from the debtors account and not the person  held the money so the court kind of crosschecked and said well hilton should have been put on inquiry notice that this check is in from the person that owes him money so i think you know where the money come from here in this particular case the money came from the mortgage store and that's the better it came from the generator but it also went to mr freeman who pursuant to a one hundred one a settlement agree or settlement statement that had been signed by all the parties had agreed on behalf of george lynn bell the principal the getter that he would receive funds to hold for mr lindo and disperse in accordance with the instructions that mr window gave in that settlement statement and that's what happened in this case and i think one of our biggest arguments with the bankruptcy court is the bankruptcy court essentially collapsed that transaction and said that at the moment the debtor parted with those funds monaco had dominion over them and i think that is inconsistent with the fa because the amount of the transfer was i think three hundred eleven thousand sixty five dollars and twenty five cents and that amount was to pay mr lynn bell's entire closing costs which incurred included the balance of the purchase price and it also included about thirty five thousand dollars of additional closing costs that were the obligation of mr bell so when you do the five the dominion test and i think everyone is in agreement that income that sets forth the dominion test no way he could have applied that entire three hundred eleven thousand dollars to its own uses it had no ability to direct mr freeland to transfer the closing costs that instrument the closing costs raise a different issue with regard to to whether whatever the smaller piece was that a claim has been away but you accept it as a premise that somebody had dominion over it and if it wasn't your transfer comes from the mortgage store account to the attorney in texas and nobody is arguing that the attorney in texas is the person with the menu so who had dominion at that point in time that point in time george will and george will has given instructions to mr freeman on how that money is to be used and to be used for mr mandela's benefit and that's why we're saying that the mccurdy piece is pretty close to the situation that we have here it's a little bit different because the person the trustee was trying to recover from to the principal to pay the balance of the purchase price escrow received on his behalf and even though he couldn't change his mind or demand it back he exercised dominion over that because he directed what would happen so even asking about you know that when you have an escrow transaction and you may be committed to close that doesn't mean that you don't have dominion over the funds if basically said look look at the facts and here's what happened that the  principal directed that the money go into the property he made the choice as to how it would be expanded he gave instructions on what to purchase he was going to be the owner of the property after the closing and that this amount of dominion even though he couldn't change his mind regarding the transaction still meant that he had dominion over those funds and that he was the initial transferee ok are you aware though effect to the facts are one of the things that i haven't had the opportunity to bring up now is this ruling actually creates a lot of danger to commercial transactions throughout the country this situation that happened mano could happen to anyone could happen to your honor's it can happen to people's parents and what is being asked for by monitoring this simply the ability to be able to sort of defense because it didn't it's not in that position where under five fifty where strict liability should be imposed and it all fits together because there is a legitimate factual basis that the money was first didn't close the money would go back to mr lindo we don't have that situation where we don't have that situation but that is what would have happened under the general  evidence that a deed was signed on the twentieth and it's not clear which went first the money or the deed so you know i don't think the trustee has met that burden and then just when we get the summary judgment how the inference is supposed to be in the all the documents are there that everything's in the water that the funds get dispersed as required that all of that happened you know the record shows that the money came in on the twentieth some of the deeds were signed on the twentieth disbursements were made the escrows it is legitimate and not a distortion of the facts to be able to say that that money was received in escrow on behalf of in this case george mind you know so whether the money came in a  knows both the bankruptcy court each of the bankruptcy court and the united states district court determined that on the date at the time of the debtors transfer of funds mano was entitled to the f or to models attorney to be it was actually transferred to the trust account in the name of monaco held by minors attorney the each of the courts found at the time the funds were transferred into the into the i don't trust account of mr friedman in the name of monaco as it turned out for the record shows that that's the name of the client trust account  you know conclusion is that mano of the two parties to the contract had to mean you know over the phone and when they were received by mr friedman what about opposing counsel the transaction for some reason i had not gone forward as it did as it has as the court has observed it to go forward then the then mano would still be entitled to by a bus or suppose the mall burned down i mean i do things that could have happened that would have interrupted the transaction but i assume that if he had well bankruptcy it would have been mr  would have taken the position that having entered into an agreement it was entitled to the benefit of the agreement was entitled to the money and it was prepared to convey the property trustee or an estate or whatever  transferred to a real last crow prior to the conditions being met so for instance they would be have a different argument if the three hundred eleven thousand dollars was wired before january fifteenth when the mr lindau had the inspection period was still ongoing and he had a right arguably to cancel the transaction  under the i'm just a few terms of the agreement that inspection period had expired on january fifteenth six days before five days before the funds were transferred and the bankruptcy court in the district court held that those conditions having been met when the funds were transferred the funds were transferred to directly to dominion mano w could you speak to appellant's argument as to the broader implications of this either in terms of the logic behind the statute or the impact upon other commercial transactions i look at this why should moto have any reason to thank or or consider the need to investigate the mortgage store probably didn't even know the mortgage store was was involved in this transaction actually they were represented by coun mean documents make clear that mr freeland wise mottos attorney at all times before during and after this transaction until they  hand the funds were wired the wire transfer part of the record reflect the funds were coming from the mortgage store you know mr freeland as counsel for m isn't title the payment for something and i don't think it would occur to me if i'm sitting in the position of manas attorney what's not the world's largest transaction that i'm suddenly got to have to investigate the mortgage story whose name i and he could have investigated elected not to and it may have been in the ordinary course of business that he would not allow us to concern for commercial transactions you know any attorney has to to investigate the source of funds and consider the financial stability of the source of funds and i throw a wrench into a lot of transactions now son yes and some no i mean ordinarily particularly if you're represented by counsel counsel will want to understand if there's a third party ordinary lender will not accommodate junior financing which demonstrates which may demonstrate that the borrower has no equity has no skin in the game but putting that aside i guess i would say  and nonetheless if you do not have recoveries by a trustee there are harsh consequences to the creditors of the state from which the funds are transferred and it is the judgment of the congress and it is effective avoidance claims that the playing field is even between existing creditors and some third parties by providing for you more use of transfers under certain conditions and those conditions i suggest are i met here are there imperfections in any given result that is possible now having said that having said that i would observe that in balancing and he argument is the argument of equity is occasionally raised in balancing rights against there is no ends with there are no equitable defenses and in this particular case where are the victims of the ponzi scheme are basically people who were retirees and and  counsel throughout the transactions they had a greater ability to examine them is there is there a risk in any given possible transaction there is always some risk but i  understand what you're making but i'm not sure that i could agree they had a greater ability i mean one day they were the people left holding the bag at least knew they were dealing with the mortgage store i'm not sure that can fairly be said about  thank you runners i think that the court is aware and i can see from the questions that there are larger concerns beyond this case the video people case statutory scheme including section five fifty and the reason is there isn't a definition of transfer in the code so i think it is important to look at why congress and acted section five fifty and why had assigned strict liability to certain people and why other people have the opportunity to raise defense is one thing that the courts ruling have done  those circumstances there is absolutely no opportunity to determine the source of the funds or whether or not there's a potential fraudulent transfer because under the court's ruling it's immedia wired mano had to mean it and i don't think that it's fair or appropriate and it's not necessarily consistent with the facts of the case and again with respect to the broader picture there are probably millions of real estate transactions every year where there sellers and it's not uncommon that the last thing to happen is the funding and under this court's ruling millions of dollars could potentially be strictly liable in some cases and in the equities of the trustee trying to bring out you could have innocent homeowners who received some cash and now they're being told that they're strictly liable to return that cash becomes came from a s today is whether the litigation arising from that incident should be heard in state court or in federal court v s e corporation asserts that the federal footprint over the events leading up to this incident is officially great that the case should be heard in federal court not only the m