mr greer good morning one issue if the transfer of the foliage and transfer returns the money to the debtor should this still be punished the answer is no for three reasons one it violates i'm principles of recovery statutes two section five fifty does not come into play because of fraud in transferred already been remedied and three is just bad public policy assume the facts of this case except that curtis to bury did not file bankruptcy and a creditor had sued sure he would lock and the very same statutes bought other brought by the trustee in state court which already had the stock that was our ledge lee fraudulent transferred by frost bank in two thousand was rican vade back in two thousand and three then as a matter of law there is no redeeming available for the alleged  not change the fact that she should be held liable the trustees actions is a code base collection action for all creditors it is a mechanism to recover property that has not been returned pre partition recognizing this the overwhelming case law is that if the transfer is returned to the debtor pre partition there is nothing for the trustee to avoid courts use different names but the results are the same transfer had been returned pre partition there's nothing for the bankruptcy trustee to recover in patz versus last when the court denied trustees action because the transfer had already been undone and the benefit of the state had already been completed the maiming court was even more blunt and i quote if the property has already been returned can one conceptualize a correct decision by the bankruptcy court that would allow recovery against a transfer so that makes some sense to me if i'm understanding what you're saying in all those cases stand for the general proposition that there is nothing to avoid  because the money was returned pre partition what i'm struggling with is a sentence in your brief that is on page eleven that says for purposes of this brief appellate concedes the transfer was avoidable we know if you can see that the transfer is avoidable then why are we talking about what happens once we're once my fifty does come into play because i take all of those cases and i and i understand your proposition to make some sense that we should be trying to fly fifty if there's nothing to difference between of boy dance and recovery so if you are driving your f three fifty back in texas and i'm driving my little electric car and i bump into you and my card demolished but your car's out solidified and i'm liable because i bumped into him but there's no remedy because of f three fifty doesn't look anything happened so that's why there's a difference why in the other case i'll cite you you look at the avoidance action say ok i can avoid this because it's a important the owner a doctor of in care had a judgment knew there was a judgment against him care and they already once got the money of his bank account out of the bank interest bank account so he calls one point seven seven nine million dollars of in tears money to be transferred to advance care another company owned by him he admitted that the only reason he transferred that money was so that the court said that's not enough the now says can't stop here because it was undisputed in advance care had paid back the one point seven seven nine million to in care before care file bankruptcy and denying the truth of what is transferred the court said if the debtor had received the property back the debtors estate has not been managed the creditors have not been prejudiced and all was effected reversed within the year the third point is that is just the lower courts are in generating bad public policy since the beginning of time we want the law want fraudulent transfer three turn to the debtor as quickly as possible there's a moral obligation to do so texas law supports that since early one thousand nine hundred they want that you believe there's a bankruptcy going to happen in the future you better not return that money back that you maybe get you may be sued twice so it prohibits people from wanting to trance give the money back to the debtor if they believe that some the year to affirm he said my logic was wrong but my issue is still the same and the logic he said by some spoke was because there are circumstances he said where if the a situation where the transfer each returned some money to the transfer in the transfer files bankruptcy he still has it nobody would bring a cause of action there's nothing to bring so just levers pointing as in the bank account she certainly didn't believe when she gave it back in which she did say dell thought bankruptcy or if you pick this property put it in put it by buy something and hold on to because we don't want to i don't want to be two hundred thousand went to i went to the husband's company right and then the other thirty would to his wife thirty five thousand went to the wife it is only fact issue as to that or did the did the court leave that unresolved the to whether that actually happened again because there was nothing in the record that showed that money was still there when he filed she was li rule that money rick could return could prevent liability something which god judge god it did not agree with however after making that change in logic just labor looked at all tases we cited to the court ball end of the court we sided here and he said i admit that my ruling is at odds with all those other cases but without explanation before bankruptcy was filed he said and i'll quote this the estate is down two hundred thirty two thousand dollars just it would have miss whitlock kept the funds to herself had transferred the property to someone else or had mr de berry spent the money without transferred to ms whitlock in the first place well if the last was true miss what wouldn't be  here if she had kept the funds to herself she wouldn't be here because she would turn it over to the trustee and whether she transferred to somebody else is not really relevant and i believe the judge  public policy all show that the money was returned to the majority of the case law what money should return and do not hold the transfer liable for having done so and public policy once people to return money fr raja return and not be punished they've conceded in their brief that i believe it was a page eleven that there was a fraudulent transfer and in addition they didn't raise that issue in the district court so it was waived even before they got here so that's not an issue we're looking at five fifty and five fifty d there's another theme that the appellant continues to weave through their pleadings their briefs and here in argument today and that's the question what is miss whitlock to do with this money that question one tries to think miss whitlock is the victim when in fact we shouldn't lose sight of the fact that the victims are the dozens of creditors innocent creditors in the bankruptcy proceeding who were left empty handed as a result of the debtors fraud and the assistance in the scheme number two it presupposes that ms whitlock had no choice but to accept a cashier's check for two hundred seventy five thousand dollars without any consideration or reasonable basis whatsoever my answer to mr bruce question is what should she do she should say no when presented with a cashier's check for two hundred seventy five thousand dollars say no it is your position that once she says yes that she's just she's on the ho to matter what i think under section five fifty it is essentially strict liability as the initial transfer if the what if she had said what if she gets the check on a thursday she realizes what happened right because she's like oh gosh he's in financial distress i'm super savvy i understand everything about five fifty houses with a bankruptcy and so on friday the next day she returns it to curtis i think there'd be a question as to whether she had dominion or control over it in our case there's no question she negotiated indorse the checked in bank account but if she has dominion and control over those funds which which she did here ok then i think she's a couple options they almost rhetorically throw out in their brief well what is she to do wait to limitations passes but that's not out of the realm of reason actually because the point should not be whether we return the money or where we return it to it should be what happens to the creditors the people that they were trying to conceal the asset from so options one she could have interplay had in any of the number of state court proceedings that creditors ha filed against the debtor and let the court decide in lease the monies kept safe or she could petition for receiver to take control of the funds but in a chicken to say oh my goodness and return the money up i don't think you can once she take that step to participate in the fraud to help the debtor conceal assets i think you then have assumed the duty and liability under five fifty mr greer it to your question i was going away to leave him but he asked he started with the question if there was no bankruptcy what would a creditor do could they sue state it's either indiana or illinois a uniform transfer law and they follow suit where a debtor transfers money to his girlfriend and it's in her account very similar to what we have here and in that case they the facts actually show that some of the money that went to the girlfriend was used to pay living expenses of the debt or something we don't even have here but in that case judge posner still said we think the inquiry must stop at the first stage of the analysis that is with the initial transfer rate if it was gratuitous the fact that some or for that matter all may have later seeped back to the debtor does not legitimize the transfer and i'll just without going too far i want to point out it didn't make any sense in the absence of a desire to throw creditors the scent why he would give the money to her and then remove the name from the account that is exactly what we have here where the cashier's check was given to ms whitlock in a name with kathy de berry on the account as well and then  removes her name from the account for the us danceable purpose of trying to provide funds for the kids education in a day and age where banks are as a big wood as fast food chains on every block i walk by for on my way here i could pull out a smartphone with the swipe of a finger transfer money to my son or daughter or go to my desktop in a clip of the mouse and do the same thing the story defies logic but you're not contesting the thirty two thousand dollars that was given for the owners school that was already cleared and so there was a credit that's why we are looking at a judgment for two hundred forty some thousand dollars opposed to seventy thought for shontelle that was already applied but with respect to the damages that are awarded now no other to be the trustees remedy if any if instead of involving ms whitlock curtis had just paid two hundred thousand dollars to his yacht company and thirty two thousand dollars he'd spent on lottery tickets or you know a blo party over the weekend or something with a trustee of any remedies in that circumstance i believe the trustee would have some women he's still have the right to go after the initial transferring and this gets to the point of why i thought if d d says you can't recover them both because if you read the statute in context right the statute allows a trustee to go after the initial transfer or a subsequent transfer but at the end of the day you can only have one recovery oh you've already got the two hundred thousand dollars is is to an l l by curtis right so you've already got that person in front of you it's in the bankruptcy proceeding the other thirty two thousand dollars in this case goes to the wife but imagine just gets frittered away on a lavish party or something that is not in part of the state when the state comes in the creation under five forty one on the petition date right so you've already got that one in in the money either in the state or it's not but it has no idea doesn't matter if there was an intermediate transfer or not and then to the other thirty two goes to the wife and she spends it on living expenses a party anything it's not something that's chang thousand dollars party he would have a claim that thirty two thousand goes to a party organizer the party organizer could be probably go to this to bear the money the money that was initially transferred to mr berry should be the initial recipient of that transfer make it even simpler say criticize the party well you can't go after the party organizer if the debtor where do they transfer that money to a party organizer there is consideration being exchanged they provided services that is the organizing of the party the issue we have here is the money before filing bankruptcy the trustee to this day doesn't know well first of all the debtor in the end i want to be clear here because they take a lot of license in their briefing by saying the money was returned to the debtor it was never returned to the debtor nothing ever went to curtis to bury it went to kathy to bury in his company that all referred to as n b c it was a limited liability company it went to that company that company was not declared an alter ego of the debtor at the time the transfer years in federal prison for bankruptcy from his looks like in the trust is taking the easy way out trying to go after this wedlock rather than trying to find out where this money went that was put into operation well i would say this five fifty allows the trustee to go after the immediate transfer and that is in this with logs and using that statute they just have it anymore well miss whitlock claims that she sent two hundred thousand dollars that she didn't even spend it on any education she went in transfer to begin as part of a shell game to another wholly owned company making it harder for the creditors to track it down and question of her how to re court then offered miss whitlock a bench trial and an opportunity to put on evidence she declined and so at that point it was the burden on miss whitlock to put forth evidence as to whether or not she thought or could prove that the money went to benefit the trustee or the estate absent miss whitlock showing or providing evidence that there was a double recovery and she's waived that issue so coming back to the first two issues is miss whitlock an initial transferee i think the law is clear on that the appellants breezing mischaracterizes this court's holding on dominion or control it's the in right to take a sub believe that says it's dominion or control the appellant tries to say it's dominion and control it's been pretty clear it's a million or control and in either case the trustee is shown both here miss whitlock had sold legal control over the a town she was the only one whose name was on the account after she signed off on the document removing mr berry's name and she had the ability to do whatever she wanted to with that money so there's no question that she needs to dominion or control test under this court's precedent of the other question then comes back to section five fifty d and whether there is a double recovery and in this case the law the record is clear there's been no other recovery by the trustee again this isn't say judgment or award it says recovery that's what the statute says there's been no other recovery other than the credit that was already applied to cut down the t seventy five tooth to forty one father so you know  correct me from wrong it seemed like the district court recognize there were lots of cases that went the other way on this on this question so as to part question first of all is that right and secondly are there any cases that support your view of how to interpret from fifty i think there are plenty of lower court cases that are not binding on this court that do go the other way i would distinguish those as we've done in our briefing was the majority of those cases show that some money did though back to the debtor to the estate and or the trustee not to the actual original transfer or in this case which is what makes this unique never going back to the transfer or going back to a so it held insider company that is subsequently declared to be a fraud in and of itself at n b c was declared an alter ego by the bankruptcy court because it was determined to be a fraud and a sham so that makes it very unique the other cases would be when falsely that does the district court's opinion in this case turn cited here i don't see any other case that involves a transfer back to a fraudulent entity to a company that was declared to be a sham like n b c was in the context of the bankruptcy that that is unique the other case i would say that does support our position i mentioned earlier and that's the lock we decision out of the seven circuit where they have very similar facts the money going into an account removing the transfers name from the account and in that case more favorable to their position they can show funds actually went back to support the debtors personal living expenses and still the judge posner says we stopped the inquiry at the initial transfer rate we go back to the sham and we'll see for a minute i don't see how that doesn't hurt your case in the sense that the more of a sham the l c appears the more it looks like the money was just given straight back to curtis which makes it look more like giving it i mean just because imagine to make it the  sham imagine that cheri had had written the check to curtis two hundred thousand dollars then it looks a lot more like all of the heavy list of authorities that the other side has given where pre partition return of the money doesn't trigger five i was sent to things in response to that one the transfer happened before it was declared a sham before long before any judgment was entered when it was still a valid l l c number one number two the bankruptcy courts judgment that was entered declaring it to be an alter ego and sham specifically says and they did not quote this in their briefing but they left out the provision in that order or that judgment that says this determination does not affect any other claims or causes of action by the chapter seven trusted so then coming back to section five fifty d and the double recovery i think if you just read a plain review of the statute when you have subsections a a to an initial transfer in a subsequent transferee the subsection indeed makes perfect sense that you can't have a double recovery because the statute on its face gives the trustee the right to sue both the initial and the subsequent transferees and so it makes sense to have that they're reading it in context then you have the trustee would make a recovery against one the trustee can make that election and in this case the trustee elected to sue as an initial transfer and a judgment was entered there's a supersedeas bond on fall down at the bankruptcy court and if this judgment is affirmed in allowed to stand than the real victims which are the innocent creditors who didn't ask for any of this can have a distribution made by the trustee to be made whole again so we would ask the court to affirm the judgment by the district court of the bankruptcy court thank want to give the money back if there is no bankruptcy or in the i r s case the there's been no notice of deficiency been filed then it's ok to give the money back to the  but if a bankruptcy spot in five fifty says if you give the money back to the debtor after the bankruptcy is found you do that at your peril because the true owner is now the trustee and as you pointed out which i mean there of action if it seems preposterous that you require you put on the onus on the transferee that she would have to wait fear all this out mr cooper she wants to talk about the innocent creditors in the chapter of chapter seven case where they were innocent creditors before the bankruptcy those same creditors most all were the same so when she returned the money to the debtor she was effectively giving the money of it to all the creditors for them to try to collect e and they're all on their old shoes just basically said go to the bank there's a wire transfer sign it and send it on about when she returned it it went to it went to it and it went to a bank account owned by goes into the bankruptcy state in a flood situation all the assets of both the husband and wife are all subject to claims for fraud so her so kathy giving the money back to kathy giving the money back to curtis given back to a sham corporation all went to the same girl it went back to him  citing there was a case we decided it was a state court case out of the west coast which was just bizarre and i know i believe it's an outlier but exist it shows a problem in that case the debtor return the money bankruptcy was waiting for the bank and see the fall out it's a conundrum that just this just baffles a court case because it should simply be say give the money back to the debtor case is under submission and we will