COLORADO COURT OF APPEALS 2017COA13 

_______________________________________________________________________________ 

Court of Appeals No. 13CA0239 

City and County of Denver District Court No. 12CV1699 

Honorable Edward D. Bronfin, Judge 

_______________________________________________________________________________ 

C. Randel Lewis, solely in his capacity as Receiver, 

Plaintiff-Appellee and Cross-Appellant, 

v. 

Steve Taylor, 

Defendant-Appellant and Cross-Appellee. 

_______________________________________________________________________________ 

JUDGMENT REVERSED, ORDER VACATED, 

AND CASE REMANDED WITH DIRECTIONS 

Division IV 

Opinion by JUDGE ASHBY 

Freyre and Nieto*, JJ., concur 

Announced February 9, 2017 

_______________________________________________________________________________ 

Lindquist & Vennum PLLP, Michael T. Gilbert, John C. Smiley, Theodore J. 

Hartl, Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant 

Podoll & Podoll, P.C., Richard B. Podoll, Robert A. Kitsmiller, Dustin J. Priebe, 

Greenwood Village, Colorado, for Defendant-Appellant and Cross-Appellee 

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. 

VI, § 5(3), and § 24-51-1105, C.R.S. 2016. 
1 

¶ 1 Following remand instructions from the supreme court, we are 

again presented with an issue of first impression in Colorado. We 

must now decide whether the Colorado Uniform Fraudulent 

Transfer Act (CUFTA) requires an innocent investor who profited 

from his investment in a Ponzi scheme to return all funds in excess 

of his principal investment. We conclude that such an innocent 

investor may be entitled to keep some of the funds exceeding the 

amount of his principal. 

I. Background 

¶ 2 In 2006, defendant, Steve Taylor, invested three million dollars 

in a hedge fund run by Sean Mueller, a licensed securities broker. 

During the period of his investment, Taylor received a series of 

payments from the fund. Taylor withdrew all of his money in 2007, 

about one year after investing, and made a profit of over $487,000. 

¶ 3 In 2010, the Colorado Securities Commissioner discovered 

that the hedge fund was a Ponzi scheme and Mueller was convicted 

of various criminal offenses. The district court appointed plaintiff, 

C. Randel Lewis, as receiver to collect and distribute Mueller’s 

assets to the creditors and investors he defrauded through the 
2 

Ponzi scheme.1 Lewis filed a claim under CUFTA seeking to void the 

transfer of the over $487,000 in net profits that Taylor received 

from Mueller’s fund. 

¶ 4 Both Lewis and Taylor moved the district court for summary 

judgment. Taylor argued that (1) the CUFTA claim was filed outside 

the statutory time period and (2) even if the claim was timely, his 

net profits were not recoverable under CUFTA because he was an 

innocent investor. Lewis argued that the claim was timely filed and 

that CUFTA required Taylor to return his net profits. The district 

court agreed with Lewis on both issues and granted him summary 

judgment. 

¶ 5 Taylor appealed. A division of this court held that the district 

court erred by ruling that the claim was timely and reversed the 

district court’s grant of summary judgment on that ground. Lewis 

v. Taylor, 2014 COA 27M, ¶ 8. Based on this conclusion, the 

division did not address whether CUFTA required Taylor to return 

his net profits. 

 

1 A “Ponzi scheme” is a fraudulent investment scheme in which 

investors are paid from the principal amounts invested by later 

investors. 
3 

¶ 6 Lewis appealed the division’s decision to our supreme court. 

The supreme court reversed the division’s opinion, reinstated the 

district court’s ruling that the CUFTA claim was timely, and 

remanded the case to this court to “consider the alternate argument 

on which [Taylor] appealed the trial court’s order.” Lewis v. Taylor, 

2016 CO 48, ¶ 39. We therefore now address whether CUFTA 

requires Taylor to relinquish any amount of money exceeding his 

principal investment in the Ponzi scheme. 

II. CUFTA and Ponzi Schemes 

¶ 7 Taylor argues that the district court erred by ruling that even 

though he was an innocent investor in Mueller’s fund, CUFTA 

nevertheless required him to return all of the payments from the 

fund in excess of his principal investment. We review an order 

granting summary judgment de novo, applying the same legal 

principles as the district court. See Hamon Contractors, Inc. v. 

Carter & Burgess, Inc., 229 P.3d 282, 290 (Colo. App. 2009). 

¶ 8 Granting summary judgment is proper “when the pleadings 

and supporting documentation demonstrate that no genuine issue 

of material fact exists and that the moving party is entitled to 

judgment as a matter of law.” Credit Serv. Co., Inc. v. Dauwe, 134 
4 

P.3d 444, 445 (Colo. App. 2005). We, like the district court, give the 

nonmoving party the benefit of all favorable inferences from the 

undisputed facts. Id.

¶ 9 The CUFTA provision under which Lewis brought his claim, 

section 38-8-105(1)(a), C.R.S. 2016, provides that “[a] transfer made 

. . . by a debtor is fraudulent as to a creditor . . . if the debtor made 

the transfer . . . . [w]ith actual intent to hinder, delay, or defraud 

any creditor of the debtor.” The parties do not dispute that (1) 

Mueller’s fund was Taylor’s debtor based on Taylor’s three million 

dollar investment in the fund and (2) any transfers from the fund to 

Taylor were fraudulent under section 38-8-105(1)(a). 

¶ 10 However, CUFTA also provides that “[a] transfer . . . is not 

voidable under section 38-8-105(1)(a) against a person who took in 

good faith and for a reasonably equivalent value.” § 38-8-109(1), 

C.R.S. 2016. The parties agree that Taylor was an innocent 

investor in the fund and withdrew his principal and profits in good 

faith. They also agree that Taylor gave reasonably equivalent value 

for the return of his principal. But the parties disagree about 

whether Taylor gave reasonably equivalent value in exchange for his 

receipt of the approximately $487,000 in net profits. 
5 

A. District Court Misapplied the Term “Reasonably Equivalent 

Value” in Section 38-8-109(1) 

¶ 11 Taylor argues that the district court erred by ruling that, as a 

matter of law, he did not give reasonably equivalent value for 

transfers he received in amounts exceeding his principal 

investment. We agree. 

¶ 12 The meaning of “reasonably equivalent value” is a question of 

statutory interpretation that we review de novo. See Fischbach v. 

Holzberlein, 215 P.3d 407, 409 (Colo. App. 2009). If the language of 

the statute is clear and unambiguous, we give effect to its plain and 

ordinary meaning. See Fleury v. IntraWest Winter Park Operations 

Corp., 2014 COA 13, ¶ 7, aff’d, 2016 CO 41. 

¶ 13 Whether a party has given reasonably equivalent value in 

exchange for a transfer is a mixed question of law and fact that 

requires a court to apply the proper definition of reasonably 

equivalent value to “all the facts and circumstances surrounding 

the transaction.” Schempp v. Lucre Mgmt. Grp., LLC, 18 P.3d 762, 

765 (Colo. App. 2000). Market value is not “wholly synonymous” 

with reasonably equivalent value, but it is an important factor for 

courts to consider. Id.
6 

¶ 14 Although no Colorado appellate court has addressed this 

issue, courts in other jurisdictions that have enacted similar 

versions of the Uniform Fraudulent Transfer Act (UFTA) have done 

so. Among the courts that have addressed this issue, two lines of 

opinions have developed. One line holds, as a matter of law, that 

any payout of net profits by a Ponzi scheme operator to an investor 

can never be given in exchange for reasonably equivalent value. 

See, e.g., Donell v. Kowell, 533 F.3d 762, 777 (9th Cir. 2008). The 

other line rejects the idea that, based only on the fraudulent nature 

of the Ponzi scheme, any payout in excess of an innocent investor’s 

principal is necessarily not given in exchange for reasonably 

equivalent value. See, e.g., In re Carrozzella & Richardson, 286 B.R. 

480, 490-91 (D. Conn. 2002). Instead, these opinions require 

courts to focus on what was actually given and received in the 

specific transaction between the Ponzi scheme and the investor to 

determine whether the investor gave reasonably equivalent value for 

the net profits. Id.

¶ 15 Lewis, like the district court, relies on opinions from the first 

line of cases. We find that line of cases unpersuasive and now 

explain why. 
7 

¶ 16 In a widely cited case on which Lewis relies, the Ninth Circuit 

explained that the purpose of the reasonably equivalent value 

requirement in UFTA is to ensure that the only fraudulent transfer 

that is allowed to stand is one that does not deplete the assets of 

the Ponzi scheme and thereby hinder the scheme’s ability to pay 

back innocent investors (creditors). Donell, 533 F.3d at 777. In the 

words of the Ninth Circuit, the “reasonably equivalent value” 

provision exists to “identify transfers made with no rational purpose 

except to avoid creditors.” Id. Transfers that pay innocent 

investors a net profit are made to avoid creditors because “[p]ayouts 

of ‘profits’ made by Ponzi scheme operators are not payments of 

return on investment from an actual business venture. Rather, 

they are payments that deplete the assets of the scheme operator 

for the purpose of creating the appearance of a profitable business 

venture.” Id.

¶ 17 But in a Ponzi scheme, all transfers to investors, whether they 

constitute net profits or repayment of principal, are made with the 

principal of later investors. Because all of these transfers “deplete 

the assets of the scheme operator for the purpose of creating the 

appearance of a profitable business venture,” id., none is supported 
8 

by reasonably equivalent value as defined by the Ninth Circuit. 

This is inconsistent with the Ninth Circuit’s ultimate holding that 

transfers repaying principal are supported by reasonably equivalent 

value but transfers of net profits are not. 

¶ 18 The Ninth Circuit attempted to mitigate this flaw in its 

analysis by explaining that the return of an innocent investor’s 

principal is nevertheless given for reasonably equivalent value 

because such transfers “are settlements against the defrauded 

investor’s restitution claim.” Id. This rationale is also fraught with 

contradiction. If we consider the value of a defrauded investor’s 

restitution claim, should we not also consider the amount of 

prejudgment interest to which the defrauded investor would be 

entitled? And would this not increase the amount of any such 

settlement so that the value of the settlement is greater than the 

principal investment? These practical issues aside, we conclude 

that it is improper in the first place, when determining what 

constitutes reasonably equivalent value under CUFTA, to consider a 

purely hypothetical restitution claim that an innocent investor 

might have brought and succeeded on had the investor not 

recovered the principal. 
9 

¶ 19 Other courts have reached the same conclusion as the Ninth 

Circuit by a different, but, in our view, equally questionable route. 

In another widely cited case on which Lewis relies, the Seventh 

Circuit in Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995), 

employed an equitable and moral analysis that, we think, strays too 

far from the proper and limited inquiry of whether the innocent 

investor accepted the transfer for reasonably equivalent value. In 

Scholes, an innocent investor invested $2.5 million in, and netted 

almost $300,000 from, what was later discovered to be a Ponzi 

scheme. Id. at 755. The Seventh Circuit’s task was to decide 

whether the Ponzi scheme’s transfer of the net profits to the 

innocent investor violated Illinois’ version of UFTA. Id. at 756. Like 

CUFTA, the Illinois statute provided that a transfer is fraudulent 

and voidable if the transferor makes it “without receiving a 

reasonably equivalent value in exchange.” Id. (quoting 740 Ill. 

Comp. Stat. 160/5(a)(2) (1995)).2

 

2 As we understand Scholes, the Seventh Circuit held that its 

reasoning applied equally to Illinois’ pre-UFTA statute and Illinois’ 

UFTA statute. 
10 

¶ 20 The Seventh Circuit began by considering the application of 

the statutory provision in a moral context: 

unless a fair in the sense of equal (or at least 

approximately equal) exchange is insisted 

upon, loopholes are opened in the fraudulent 

conveyance statute that can only be described 

as immoral — a relevant consideration, when 

we consider the equitable origins of the 

concept of fraud. We said that [innocent 

investor’s] profit was supported by 

consideration. But what was the source of the 

profit? A theft by [the Ponzi scheme operator] 

from other investors. What then is [the 

innocent investor’s] moral claim to keep his 

profit? None, even if the intent in paying him 

his profit was not fraudulent. 

Id. at 757. Purportedly returning to the statute it was applying, the 

Seventh Circuit held that the innocent investor was 

entitled to his profit only if the payment of that 

profit to him, which reduced the net assets of 

the estate now administered by the receiver, 

was offset by an equivalent benefit to the 

estate. It was not. A profit is not offset by 

anything; it is the residuum of income that 

remains when costs are netted against 

revenues. The paying out of profits to [the 

innocent investor was] not offset by further 

investments by him conferred no benefit on the 

corporations but merely depleted their 

resources faster. 
11 

Id. (citation omitted). With that, the Seventh Circuit held that the 

innocent investor could keep his principal but not the net profit. Id.

at 757-58. 

¶ 21 A significant problem with this analysis is that it ignores the 

fact that the value that an investor gives by investing is not limited 

to the precise dollar amount of the principal investment. The value 

also includes the use of that money for however long it was 

available for investment or any other use. Thus, the Seventh 

Circuit’s analysis “ignore[s] the universally accepted fundamental 

commercial principal [sic] that, when you loan an entity money for a 

period of time in good faith, you have given value.” Carrozzella & 

Richardson, 286 B.R. at 489. 

¶ 22 We recognize that in the context of a Ponzi scheme, the 

investors’ principal is not invested as promised, and the time value 

of an innocent investor’s principal does not increase the scheme’s 

net worth. But reasonably equivalent value “include[s] both direct 

and indirect benefits to the transferor, even if the benefit does not 

increase the transferor’s net worth.” Leverage Leasing Co. v. Smith, 

143 P.3d 1164, 1167 (Colo. App. 2006). Regardless of whether a 

Ponzi scheme uses an innocent investor’s money for proper or 
12 

fraudulent purposes, it nevertheless receives the benefit of the use 

of that money for a period of time. And the use of that money for a 

period of time has value. See Carrozzella & Richardson, 286 B.R. at 

489. 

¶ 23 In addition to the problems with Donell and Scholes identified 

above, we note one more which those opinions have failed to 

resolve. Under Donell, Scholes, and opinions like them, payments 

from a Ponzi scheme to trade creditors like landlords and utility 

companies for legitimately provided services would be subject to 

avoidance if those trade creditors profited at all from the 

transaction. These payments, just like the payment of net profits to 

innocent investors, are funded by the principal invested by other 

investors. This, coupled with the fact that they are made to 

perpetuate the Ponzi scheme, means that they are made with 

“actual intent to hinder, delay, or defraud any creditor” of the 

scheme and are therefore fraudulent. § 38-8-105(1)(a). And even if 

the trade creditors take the payments in good faith, under Donell

and Scholes, any amount of that payment in excess of the utility 

company’s or landlord’s costs would not be for reasonably 

equivalent value under section 38-8-109(1). See In re Unified 
13 

Commercial Capital, Inc., 260 B.R. 343, 352 (Bankr. W.D.N.Y. 

2001); see also Carrozzella & Richardson, 286 B.R. at 490 (citing 

Unified Commercial Capital, 260 B.R. at 352). 

¶ 24 Although we find the reasoning in the cases cited by Lewis 

flawed and unpersuasive, we nevertheless recognize that the courts 

that authored them, and the district court here, were motivated by 

the laudable goal of attempting to mitigate the harm to defrauded 

creditors in a fair and equitable manner. But when applying a 

provision in a statute, it is our job to apply the plain and ordinary 

meaning of the words in the statute even when doing so may 

conflict with our own view of what is the most fair or equitable 

result. We suspect that the flaws that we perceive in the analysis of 

the opinions discussed above emanate from an attempt to apply 

fraudulent conveyance statutes to circumstances for which they 

were not legislatively designed. As the court stated in Unified 

Commercial Capital, 260 B.R. at 350, 

[b]y forcing the square peg facts of a “Ponzi” 

scheme into the round holes of the fraudulent 

conveyance statutes in order to accomplish a 

further reallocation and redistribution to 

implement a policy of equality of distribution 

in the name of equity, I believe that many 

courts have done a substantial injustice to 
14 

those statues and have made policy decisions 

that should be made by Congress. 

¶ 25 We are not the first court to have disagreed with the reasoning 

of cases like Donell and Scholes. The Carrozzella & Richardson

court, among others, did so too, and identified the fundamental flaw 

in the reasoning of those cases: the improper focus on the overall 

nature and propriety of the transferor’s business rather than, as the 

statute requires, whether the transferor received reasonably 

equivalent value for the transfer. See Carrozzella & Richardson, 

286 B.R. at 488-89 (“The statutes and case law do not call for the 

court to assess the impact of an alleged fraudulent transfer in a 

debtor’s overall business.” (quoting In re Churchill Mortg. Inv. Corp., 

256 B.R. 664, 680 (Bankr. S.D.N.Y. 2000))). As the Carrozzella & 

Richardson court explained, the reasonably equivalent value 

provision in UFTA, which is identical to that in CUFTA, requires “an 

evaluation of the specific consideration exchanged by the 

[transferor] and the transferee in the specific transaction which the 

[receiver] seeks to avoid, and if the transfer is equivalent in value, it 

is not subject to avoidance under the law.” Id. at 489 (quoting 

Churchill, 256 B.R. at 680). We agree with the Carrozzella & 
15 

Richardson court that we cannot read a Ponzi scheme exception 

into CUFTA that would allow us to examine the propriety of the 

transferor’s business when determining whether a transferee gave 

reasonably equivalent value for a transfer. 

¶ 26 Ultimately, no matter how tempting, we may not look beyond 

the plain language of the statute to decide which transfers from a 

Ponzi scheme are voidable and which are not. The General 

Assembly may wish to revisit this issue and craft a different statute 

that it determines more fairly addresses these circumstances. 

Perhaps it should, especially given that courts have engaged in 

such unconvincing analytical gymnastics to effect equitable 

remedies by way of fraudulent transfer statutes. If it does craft a 

new statute, the General Assembly may wish to consider the 

arguments advanced by cases like Scholes, or equitable principles 

embodied in doctrines such as the clean hands doctrine. See 

Premier Farm Credit, PCA v. W-Cattle, LLC, 155 P.3d 504, 519 (Colo. 

App. 2006) (“[A] party engaging in improper or fraudulent conduct 

relating in some significant way to the subject matter of the cause 

of action may be ineligible for equitable relief.”). But it is not our 

place to apply such equitable principles in circumstances where, as 
16 

here, there is an unambiguous statute to apply. Instead, we must 

apply the plain language that the General Assembly chose in 

enacting CUFTA. And section 38-8-109(1), like the rest of CUFTA, 

addresses the propriety of a transfer, not the propriety of the 

transferor’s overall business. Accordingly, any evaluation of what 

constitutes reasonably equivalent value in this case must address 

what was actually exchanged, not how the hedge fund fraudulently 

used whatever it received in the exchange. This evaluation cannot 

ignore the fact that there is value in the use of money for a period of 

time. 

¶ 27 We therefore conclude that the district court erred by not 

accounting for the time value of Taylor’s principal investment when 

determining whether he gave reasonably equivalent value under 

section 38-8-109(1) for transfers he received from Mueller’s fund. 

B. Remand is Necessary 

¶ 28 We would normally prefer to give the trial court more specific 

guidance on remand. And, under different circumstances, we might 

have been able to properly apply section 38-8-109(1) ourselves to 

determine which transfers are voidable and which are not. But 

whether “reasonably equivalent value” has been given is a question 
17 

of fact. See In re Zeigler, 320 B.R. 362, 374 (Bankr. N.D. Ill. 2005). 

And because the district court did not make findings about any 

individual transfers, we cannot do so and must remand for the 

district court to make additional findings. 

¶ 29 Section 38-8-109(1) is unambiguous in describing 

circumstances under which “a transfer” is voidable. The plain and 

ordinary meaning of this section therefore requires courts to decide 

whether individual transfers are voidable. See Fleury, ¶ 7 (when 

interpreting a statute that is clear and unambiguous, we give effect 

to its plain and ordinary meaning).

¶ 30 The district court’s findings of undisputed material facts 

suggested that there were individual transfers, but did not identify 

any of them. The district court found that “[b]etween September 1, 

2006 and April 19, 2007, a total of $3,487,305.29 was paid out to 

Mr. Taylor from the Mueller Funds (the Ponzi scheme). This 

represents a return of all $3 million in principal he invested, plus 

an additional profit of $487,305.29 (‘Net Profit’).” We presume from 

this finding that (1) Taylor received a series of transfers from 

Mueller’s fund and (2) the district court aggregated the value of 

these unidentified individual transfers and then determined that 
18 

the portion of the aggregate Taylor received that exceeded his 

principal investment was not, as a matter of law, supported by 

reasonably equivalent value. 

¶ 31 This analysis violates the plain language of section 38-8-109(1) 

requiring courts to evaluate whether “[a] transfer” is voidable, not 

whether portions of the aggregate of several transfers are voidable. 

And because the district court’s factual findings do not identify the 

individual transfers, we are unable apply section 38-8-109(1) 

ourselves. 

¶ 32 We must therefore remand the case to the district court to 

make additional findings about the individual transfers Taylor 

received from Mueller’s fund and to consider whether Taylor 

received the transfers for reasonably equivalent value. 

III. Other Issues 

¶ 33 Because we reverse the district court’s order granting 

summary judgment, we vacate the court’s order awarding costs and 

interest to Lewis. But because the supreme court’s remand order 

directed us only to “consider the alternate argument on which 

[Taylor] appealed the trial court’s order,” Lewis, 2016 CO 48, ¶ 39, 

we do not address Taylor’s argument that the district court erred by 
19 

dismissing his counterclaim for rescission of the investment 

contract with Mueller. We nevertheless note that even if the 

supreme court’s remand order allowed us to consider this 

argument, we could not because the investment contract is not part 

of the record on appeal. 

IV. Conclusion 

¶ 34 The district court’s order granting Lewis summary judgment is 

reversed and the case is remanded to the district court with 

directions to determine whether Taylor received any individual 

transfers for reasonably equivalent value as that term is explained 

in this opinion. Based on that determination, the district court 

should rule on both Taylor’s and Lewis’ motions for summary 

judgment and conduct further proceedings as it deems appropriate. 

JUDGE FREYRE and JUDGE NIETO concur.