IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10–20670

In the Matter of: IFS FINANCIAL CORPORATION,

Debtor

------------------------------------

GUILLERMO DE LA PENA STETTNER; MARIO VALVERDE GARCES;

LUIS DE LA PENA; MARGARITA ISABEL DE LA PENA STETTNER;

MARIA CRISTINA DE LA PENA; MARIA PAZ DE LA PENA,

Appellants

v.

W. STEVE SMITH, TRUSTEE,

Appellee

------------------------------------------------------------------------------------------------------------

In the Matter of: IFS FINANCIAL CORPORATION, 

 Debtor

------------------------------------

W. STEVE SMITH,

 Appellee

v.

GUILLERMO DE LA PENA STETTNER

 Appellant

------------------------------------------------------------------------------------------------------------

United States Court of Appeals

Fifth Circuit

F I L E D

January 27, 2012

Lyle W. Cayce

Clerk

Case: 10-20670 Document: 00511739713 Page: 1 Date Filed: 01/27/2012
No. 10–20670

In the Matter of: IFS FINANCIAL CORPORATION, 

 Debtor

------------------------------------

W. STEVE SMITH,

 Appellee

v.

MARIO VALVERDE GARCES

 Appellant

------------------------------------------------------------------------------------------------------------

In the Matter of: IFS FINANCIAL CORPORATION, 

 Debtor

------------------------------------

W. STEVE SMITH, TRUSTEE, 

 Appellee

v.

LUIS DE LA PENA; MARGARITA ISABEL DE LA PENA STETTNER;

MARIA CRISTINA DE LA PENA; MARIA PAZ DE LA PENA

Appellants

Appeal from the United States District Court

for the Southern District of Texas

Before GARZA, CLEMENT, and SOUTHWICK, Circuit Judges.

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EMILIO M. GARZA, Circuit Judge:

In this bankruptcy appeal, Guillermo de la Pena Stettner, Mario Valverde

Garces, Luis de la Pena, Margarita Isabel de la Pena Stettner, Maria Cristina

de la Pena, and Maria Paz de la Pena (together, “Appellants”) appeal the district

court’s affirmance of the bankruptcy court judgment of over $3 million in favor

of Appellee W. Steve Smith (“Smith”), trustee of IFS Financial Corporation’s

(“IFS”) estate. Their appeal centers on the district court’s finding that IFS

fraudulently transferred funds to the Appellants. We AFFIRM.

I

IFS and seventeen affiliated organizations (together with IFS,

“Interamericas”) were debtors in a series of Chapter 7 cases. This appeal arises

from eight collective adversary proceedings, which Smith as trustee brought

against the Appellants for avoidance of fraudulent transfers under Chapter 5 of

the Bankruptcy Code and Chapter 24 of the Texas Business and Commerce

Code.

Interamericas, based in The Woodlands, Texas, extended its operations

internationally in the insurance, mortgage, and banking services industries. 

Many Interamericas entities did no more than temporarily stow stock in other

Interamericas companies, among which were offshore shell companies created

solely to channel money between investors and actively operating Interamericas

organizations. Interamericas’ activities centered on IFS. At Interamericas’ helm

was the Pimienta family. 

Hugo Pimienta led Interamericas and acted as the primary decision maker

for many Interamericas entities in the United States. Along with his father, he

exercised power of attorney over several Interamericas entities abroad. Even

though the different Interamericas companies had separate corporate structures,

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a single advisory board based in The Woodlands—also dominated by the

Pimienta family—oversaw all Interamericas operations and gave orders to

Interamericas officers and managers. The advisory board set interest rates,

managed investments, transferred money between Interamericas enterprises,

and personally handled the sale of assets. No company in Interamericas’

network operated independently ofthis board. When the board was not meeting,

it entrusted its full authority to Hugo Pimienta.

Interamericas’ investors were predominantly Mexican citizens. They

reportedly deposited their contributions into one of three bank accounts in

Texas: (1) account no. 137456 in the name of “Integra Bank” at Southwest Bank

of Texas; (2) account no. 325716 in the name of “INV Capital” at Southwest Bank

of Texas; and (3) account no. 91538 also in the name of “INV Capital” at

Woodforest National Bank. The Integra and INV accounts served as the

primary stream of funds into Interamericas; these accounts received over $270

million in funds from investors between December 1999 and October 2001. 

Other Interamericas entities also deposited over $163 million in funds in the

same accounts during that period. Although investors were told that their

deposits took some distinct, individualized form—such as a certificate of deposit,

money market account, or bearer note—in reality, the Integra and INV accounts

pooled all investor funds. 

To track investments in the different Interamericas companies placed in

these accounts, Interamericas used a software program known as the Portia

system. The system generated statements for investors that listed supposed

investment activity, interest rates, maturity dates, and deposits and

withdrawals. Interamericas Business Services, another Interamericas company,

provided administrative services for the system’s users. Investors apparently

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believed that their funds were held in a bank by the name of Integra, rather

than in an account under the name “Integra Bank” located in Texas.

The organization named Integra Bank did in fact exist. Although

operating out of a physical structure in Curaçao, where it was incorporated,

Integra Bank lacked tellers and had little interaction with depositors. Integra

Bank was independent from Interamericas only on paper. It is unclear what

actual function Integra Bank provided. IFS promoters1forwarded checks from

investors to IFS offices in The Woodlands, Texas, rather than to Integra Bank,

for deposit into one of Interamericas’ three accounts. When investors wanted to

remove funds, they contacted IFS—not Integra Bank. Hugo Pimienta or other

advisory board members approved all withdrawals. No one at Integra Bank had

the independent authority to withdraw funds from the account held in its name. 

A series of events from 1997 to 2002 led to Interamericas’ downfall, leaving

IFS its only functional entity. First, in late 1997, a failed merger led to

philosophical differences between Hugo Pimienta and a group of investors from

a non-Interamericas company, GCM Corporation Limited (“GCM”). GCM

withdrew from its relationship with Interamericas and agreed to accept a $50

million note from another Interamericas company, Interamericas Financial

Holdings Corporation (“IFH”). IFH soon defaulted on this note, however, and

GCM sued to enforce their agreement. IFS, IFH, and GCM reached a

compromise in May 2000: IFS replaced IFH as the note’s obligor, and Blitz

Holdings Corporation, another non-Interamericas company, replaced GCM as

the note’s payee. IFS restructured its debt, and GCM’s note increased to $70

The bankruptcy court explained, “Interamericas Companies paid ‘promoters’ to solicit 1

investors and encourage investors to keep their assets with the enterprise. Promoters were

paid 0.10-1.00% per month of total investments retained by Interamericas Companies. . . . The

promoter commission and interest rates were to be paid from the operation of Interamericas

Companies’ businesses.” In re IFS Fin. Corp., 417 B.R. 419, 429 (Bankr. S.D. Tex. 2009). 

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million in value. Over the next year, IFS paid Blitz $30 to $40 million out of the

Integra account before ultimately defaulting. Blitz brought a series of lawsuits

against IFS to recover the note’s balance. 

Over the course of Blitz’s litigation, all evidence suggests that the 

Interamericas companies were not operating as a financially stable or ethically

sound enterprise. During that time, the advisory board removed funds belonging

to IFS and Interamericas subsidiaries from the Integra account and began

loaning millions to IFS shareholders and insiders, including the Appellants. As

IFS defaulted on obligations to GCM and Blitz, American Founders Life

Insurance Company (“AFL”), an alleged fully-owned subsidiary of IFS, funneled

approximately $40 million to IFS investors in the form of “Select Asset Loans,”

which were loans in name only; the money actually went to IFS. These loans

served the purpose of streaming cash out of AFL and into IFS while buoying

AFL’s balance sheet with the appearance of obligations from creditworthy

investments. In late 1999, IFS sold AFL in exchange for $49.5 million and

50,000 shares of stock in another Interamericas entity. In November 1999, IFS

also negotiated the sale of Accubanc Mortgage, another allegedly fully-owned

subsidiary of IFS, for $30 to $40 million. Most proceeds from the sales of AFL

and Accubanc went through holding companies into the Integra account in

Texas. By 2002, the advisory board had sold off most of Interamericas. Only

IFS remained afloat. 

IFS filed for bankruptcy in 2002. The bankruptcy court appointed Smith

to represent the IFS estate as its trustee. Smith filed over a hundred separate

adversary proceedings, including eight adversary proceedings against the

Appellants, which the bankruptcy court consolidated. In the consolidated

proceedings against Appellants, Smith sought to avoid $3 million in transfers

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IFS made to the Appellants in Interamericas’ final years. Invoking Texas law

through the federal bankruptcy code, see 11 U.S.C. § 544; TEX. BUS. & COM.

CODE ANN. § 24.005, Smith claimed fraud, aiding and abetting fraudulent

transfers, and conspiracy. The bankruptcy court disallowed any claims based

on veil-piercing or earmarking theories. 

After a series of overlapping trials and summary judgment motions, the

bankruptcy court issued a final opinion in September 2009. That court found

that the evidence supported trustee’s claims of fraudulent transfer against the

Appellants and summarized its principal findings:

• The funds were paid out of an account legally

titled in the name “Integra Bank,” but actually

owned and controlled by the Interamericas

Companies.

• IFS, acting through its officers and agents,

exercised exclusive control over the account.

• The funds were paid on account of antecedent

debt but in furtherance of a fraudulent scheme.

• The [Appellants] knew or should have known of

the fraudulent scheme.

In re IFS Fin. Corp., 417 B.R. at 427.

Specifically, the bankruptcy court found that transfers to the Appellants

were fraudulent and awarded judgments totaling $3,131,315.20 against the

Appellants. The Appellants appealed the bankruptcy court’s judgment to the

district court. The district court affirmed. The Appellants now seek our review

of the district court’s judgment. 

Appellants raise two issues for our review: (1) whether the district court

erred in determining that IFS was the de facto owner of three bank accounts

through which its allegedly fraudulent transfers passed; and (2) irrespective of

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ownership, whether the district court erred in finding that Smith met his burden

to establish fraudulent transfers. 

2

II

“We review a district court’s affirmance of a bankruptcy court decision by

applying the same standard of review to the bankruptcy court decision that the

district court applied.” Barner v. Saxon Mortg. Servs., Inc. (In re Barner), 597

F.3d 651, 653 (5th Cir. 2010) (citation and internal quotation marks omitted). 

Like the district court, we review factual findings for clear error and legal

conclusions de novo. In re Amco Ins., 444 F.3d 690, 694 (5th Cir. 2006). “When

the district court has affirmed the bankruptcy court’s findings, [the clear error]

standard is strictly applied, and reversal is appropriate only when there is a firm

conviction that error has been committed.” Perkins Coie v. Sadkin (In re

Sadkin), 36 F.3d 473, 475 (5th Cir. 1994). 

Appellants request our consideration of a third issue: whether the district court

2

erred in determining that the Appellants were proper relief parties or were IFS insiders. We

do not reach the merits of either issue, however. Our review shows that Appellants did not

raise the question of whether they were relief defendants before the bankruptcy court. We

therefore do not address it now. See In re Martin, 222 F. App’x 360, 362 (5th Cir. 2007) (citing

In re Ginther Trusts, 238 F.3d 686, 689 & n. 3 (5th Cir.2001) (holding that we will not consider

any issues on appeal that were not raised before the bankruptcy court). And the question of

whether Luis de la Pena was an insider affects only the analysis of whether IFS had actual

intent to “hinder, delay, or defraud” under § 24.005 of the Texas Business and Commerce

Code. See TEX. BUS & COM. CODE ANN. § 24.005(a)(1), (b)(1). Because we separately conclude

in Part V, infra, that IFS had the requisite intent based on IFS’s transfers to the Appellants

at the same time it was facing litigation, substantial debt, and attempts to liquidate a large

portion of its assets before filing for bankruptcy, as well as evidence of its overall fraudulent

structure, and because the resolution of the question of whether Luis de la Pena is an insider

would not displace this analysis, we decline to reach this question on appeal. To the extent the

Appellants dispute Luis de la Pena’s insider status for other reasons, they have waived those

argument by failing to brief them. See FED. R. APP. P. 28(a)(9)(A); Alameda Films SA de CV

v. Authors Rights Restoration Corp., Inc., 331 F.3d 472, 483 n.34 (5th Cir. 2003).

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III

Section 544(b)(1) allows Smith as trustee to “avoid any transfer of an

interest of the debtor in property . . . that is voidable under applicable law by a

creditor holding an [allowable] unsecured claim.” See 11 U.S.C. § 544(b)(1). 3

Section 550 outlines the remedy available to Smith if successful on his § 544

claim: he may recover, for the benefit of the estate, property transferred

fraudulently or, alternatively, the value of the property. Id. § 550. “Property of

the debtor” under § 550 is “that property that would have been part of the estate

had it not been transferred before the commencement of the bankruptcy

proceedings.” Begier v. I.R.S., 496 U.S. 53, 58 (1990).

“The trustee’s successor rights arise under federal law, but the extent of

those rights depends entirely on applicable state law.” In re Moore, 608 F.3d at

260; see ASARCO LLC v. Americas Mining Corp., 404 B.R. 150, 156 (S.D. Tex.

2009) (“Trustees . . . use § 544(b) as a conduit to assert state-law-based

fraudulent-transfer claims in bankruptcy.”). The bankruptcy court, district

court, and parties all applied Texas law to Smith’s claim. We agree that

application of Texas law is appropriate in light of Texas’s dominant contacts

with the disputed funds. See Southmark v. Grosz (In re Southmark), 49 F.3d

1111, 1118 (5th Cir. 1995) (explaining that we apply the law of the state with the

dominant contact with the funds).

This court recently clarified the purpose of a § 544(b) claim in In re Moore, 608 F.3d 3

253, 260 (5th Cir. 2010): “If an actual, unsecured creditor can, on the date of the bankruptcy,

reach property that the debtor has transferred to a third party, the trustee may use § 544(b)

to step into the shoes of that creditor and ‘avoid’ the debtor's transfer. Although the cause of

action belonged to one creditor, any property the trustee recovers becomes estate property and

is divided pro rata among all general creditors.”

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Chapter 24 of the Texas Business and Commerce Code allows creditors to

avoid fraudulent transfers by debtors. Section 24.005(a) of the Code relevantly

provides:

A transfer made . . . by a debtor is fraudulent as to a

creditor, whether the creditor’s claim arose before or

within a reasonable time after the transfer was made or

the obligation was incurred, if the debtor made the

transfer or incurred the obligation . . . with actual

intent to hinder, delay, or defraud any creditor of the

debtor.

So while Texas law standing alone does not permit Smith as IFS’s trustee

to bring a fraudulent-transfer claim, § 554(b) allows Smith to avoid transfers on

behalf of IFS’s bankruptcy estate if he shows that they are fraudulent under §

24.005. See In re Moore, 608 F.3d at 261 (“[S]uch claims become estate property

once bankruptcy is under way by virtue of the trustee’s successor rights under

§ 544(b).” (internal citations and quotation marks omitted)). Smith as trustee

bears the burden of establishing alleged fraudulenttransfers by a preponderance

of the evidence. Jenkins v. Chase Home Mortg. Corp. (In re Maple Mortg., Inc.),

81 F.3d 592, 596 (5th Cir. 1996).

IV

Appellants’ first claim on appeal turns on whether IFS “owned” the

Integra and INV bank accounts, such that these accounts are an “interest of the

debtor in property . . . that is voidable under [Texas] law by a creditor holding

an [allowable] unsecured claim.” See 11 U.S.C. § 544 (b)(1). Applying Texas law,

both the bankruptcy and district courts held that these accounts were such

interests based on what they termed IFS’s “de facto” ownership. We agree.

Texas law broadly defines the property of a debtor to be “anything that

may be subject to [the debtor’s] ownership.” TEX. BUS. & COM. CODE ANN. §

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24.002(2),(10). Appellants dispute the inclusion of the Integra and INV accounts

in IFS’s estate as property subject to IFS’s ownership and specifically contest the

district court’s finding of IFS’s de facto, as opposed to legal, ownership on the

basis of IFS’s control over the accounts. Appellants claim that the case law does

not support the concept of control over bank accounts held in the name of

another entity, particularly here, where IFS lacked signature authority over the

accounts, and neither IFS nor Hugo Pimienta owned any interest or exercised

any authority over Integra. 

Smith does not dispute that IFS did not legally own the Integra or INV

accounts; nor does he contest IFS’s lack of signatory authority over those

accounts. He does not contend that IFS owned or held shares in Integra or INV,

or that IFS or anyone at IFS was an Integra officer, director, or employee. He

agrees, moreover, that no formal document shows IFS’s authority over Integra

or its accounts. But Smith asserts that these lack of formalities merely evince

IFS’s intent to defraud by intentionally avoiding a paper trial which would allow

creditors to easily identify its assets. Smith directs our focus to the fact that IFS

was Interamericas’ only operating company in its final years and, moreover, its

only shareholder with any value. Based on this fact, Smith stresses that any

money in the Integra and INV accounts was effectively IFS’s; IFS should not be

able to evade full discharge of debts in this bankruptcy through an intentionally

obscure organizational structure. 

The question Appellants ask us to resolve—whether legal ownership is

required to show that IFS owned the Integra and INV bank accounts, such that

they form part of IFS’s bankruptcy estate—is a question of first impression. The

scant case law within our grasp shows that in answering this question on appeal,

control is more decisive than ownership. Guided by these principles, we hold

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that control may be sufficient to show ownership in what is ultimately a factbased inquiry that will vary according to the peculiar circumstances of each case. 

Texas law counsels that the legal titleholder to a bank account is not

always the owner of its contents. Silsbee State Bank v. French Mkt. Grocery Co.,

132 S.W. 465, 466 (Tex. 1910). To ascertain ownership, Texas law directs courts

to look not to the legal relationship between parties; rather, courts are to

examine the individual facts of each case. Id. Reflecting this understanding, the

Texas Supreme Court held that a depositor of funds to an account in his name

was not the owner of the funds where he deposited the funds as “agent” and an

unknown third party withdrew the funds that same day. Id. “[T]he probative

force of the facts” showed that the account’s owner was not the one “found in the

full possession and control of the money deposited.” Id. An unseen hand

exercised actual control over the account. See id.

Further, in the context of voiding preferential transfers under § 547 of the

Bankruptcy Code, this court opined in Southmark v. Grosz (In re Southmark),

49 F.3d 1111, 1116–17 (5th Cir. 1995) that control over funds in an account is

the predominant factor in determining an account’s ownership. Central to the

dispute in Southmark was a payroll check drawn from an account in the debtor’s

name. Id. at 1113–14. The debtor legally owned the account, but the debtor and

its parent and affiliate companies all commingled their funds in it. Id. Rather

than focus on the debtor’s legal title to the account, this court emphasized the

debtor’s control over an account, explaining that “the primary consideration in

determining if funds are property of the debtor’s estate is whether the payment

of those funds diminished the resources from which the debtor’s creditors could

have sought payment.” Id. at 1117. Ultimately, the “unfettered discretion to

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pay creditors of its own choosing” supported the control requisite to Southmark’s

finding of ownership. Id. at 1116. 4

Although until now, the case law, emphasizing control over legal title, has

left unanswered the question of whether legal title, even though secondary to

control, is a threshold requirement for ownership, the facts of this case illustrate

Although we acknowledge that the bankruptcy court did not allow Smith to proceed 4

under earmarking or veil-piercing theories, the law undergirding these theories is nevertheless

instructive and lends broader support to our holding. The earmarking doctrine also

emphasizes control, and echoes the Texas Supreme Court’s early view of control (or lack of

control) of an account’s title owner seen in Silsbee. The doctrine acknowledges that funds may

be in a debtor’s account yet outside of its control—and therefore outside the reach of the

bankruptcy estate. Coral Petroleum, Inc. v. Banque Paribas-London, 797 F.2d 1351, 1356 (5th

Cir. 1986) (Where “‘a third person makes a loan to a debtor specifically to enable him to satisfy

the claim of a designated creditor, the proceeds never become part of the debtor's assets.’”

(quoting 4 COLLIER ON BANKRUPTCY ¶ 547.25 at 547 (101–102) (15th ed. 1986))). Bankruptcy

courts widely accept the earmarking doctrine “as a valid defense against a preference claim,

primarily because the assets from the third party were never in the control of the debtor and

therefore payment of these assets to a creditor in no way diminishes the debtor's estate.” Id.

But this doctrine applies narrowly. See id. The Fifth Circuit rejected application of

this doctrine where a debtor had dispositive control over loan proceeds deposited into its

account. See Caillouet v. First Bank & Trust (In re Etringer Bakeries, Inc.), 548 F.3d 344 (5th

Cir. 2008). Although the debtor claimed he had received the loan to pay a specific creditor,

there was no stipulation that the debtor would pay the creditor using the funds and, further,

the debtor was free to maintain the funds until he intentionally acted to release them to the

creditor by writing a check. Id. at 350.

And the general principle that a parent company’s ownership of a subsidiary does not

equate to absolute control over that subsidiary—thus, precluding the mechanical conclusion

that assets belonging to the subsidiary may satisfy the debts and liabilities of the parent— is

not absolute. See In re Sims, 994 F.2d 210, 218 (5th Cir. 1993). Where a parent company

dominates its subsidiary to such an extent that the subsidiary is little more than the parent’s

ambling marionette, and the “directors and stockholders utilize[] the corporate entity as a

sham to perpetuate a fraud,” we may find control sufficient to rub out the artificial boundaries

between parent and subsidiary. Id.; see Union Pac. Res. Group, Inc. v. Rhone-Poulenc, Inc.,

247 F.3d 574, 586 n.33 (5th Cir. 2011) (“When examining claims of fraud, courts can ignore

technicalities such as multiple layers of business entities and look directly to the true parties

in interest and control.”). In assessing whether the boundary between parent and subsidiary

is sufficiently insubstantial, we often consider whether (1)the subsidiary operates withgrossly

inadequate capital; (2) management keeps daily operations of the two corporations separate;

(3) the subsidiary observes the basic corporate formalities; and (4) the management of the

subsidiary acts in the company’s best interest or takes orders from the parent. Id.

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why it should not be: regardless of its legal title, IFS had the ultimate power to

transfer funds to others, who included the Appellants. That it obscured its

power to transfer in an intentionally complicated corporate structure suggests

that control is decisive, and that legal title is irrelevant where, as here, a debtor

organization has taken care to mask its activities through fictional divisions. 

Both the bankruptcy and district courts’ conclusions of de facto ownership find

support in the law and the evidence. 

Texas law and our Bankruptcy Code precedent navigate us toward the

conclusion that control is the primary determinant of ownership of bank

accounts such as those central to this appeal. Control over an account, and its

contents, is central to assessing whether they are to form part of a bankruptcy

estate. But in this necessarily fact-based inquiry, see Silsbee, 132 S.W. at 466,

control, while primary, may not always be decisive, and legal ownership is not

irrelevant. See In re Southmark, 49 F.3d at 1116–17. Where, as here, evidence

of fraud and the debtor’s strict control are both strong, disputed legal ownership

is less compelling. On the other hand, where evidence of fraud is weak, legal

ownership might weigh heavier in our calculus.

Although the Interamericas entities were separate and distinct, the facts

support the district court’s and bankruptcy court’s findings that IFS dominated

these subsidiaries to such an extent that the subsidiaries acted at IFS’s direction

and that the directors and stockholders utilized the corporate entity as a sham

to perpetuate a fraud. A single advisory board controlled all the Interamericas

corporations. A single advisory board set interest rates on the investments on

the three accounts, controlled how to invest the money, decided the selling price

and date of sale of Interamericas entities, and decided when to transfer monies

from Interamericas entities. The district court’s finding that IFS used the

accounts as its general operating fund also finds support in the record. Thus,

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this record reflects that IFS exercised such control over these accounts that it

had de facto ownership over these accounts, as well as the funds they contained.

The lower courts’ findings of ownership are not clearly erroneous and, moreover,

comport with precedent and our holding today. 

V

Appellants’ second claim on appeal turns on whether Smith established a

fraudulent transfer to the Appellants—specifically, whether Smith properly

established a claim under 11 U.S.C. § 544. The bankruptcy and district courts

held that Smith did. We agree.

In affirming the bankruptcy court’s finding that the transfers to

Appellants could be avoided as fraudulent under Texas law, the district court

stressed that IFS made transfers to the Appellants just as it was facing

litigation, was burdened with substantial debt, and sought to liquidate a large

portion of its assets before filing for bankruptcy. The bankruptcy court’s decision

rests on nearly identical findings.

Section 24.005(a)(1) of the Texas Business and Commerce Code defines a

fraudulent transfer to include a transfer made with actual intent to hinder,

delay, or defraud a creditor: 

A transfer made or obligation incurred by a debtor is

fraudulent as to a creditor, whether the creditor’s claim

arose before or within a reasonable time after the

transfer was made or the obligation was incurred, if the

debtor made the transfer or incurred the obligation . .

. with actual intent to hinder, delay, or defraud any

creditor of the debtor. 

The statute focuses on the transferor’s intent, rather than the transferee’s. See

SEC v. Res. Dev. Int’l, LLC, 487 F.3d 295, 301 (5th Cir. 2007) (“‘[T]he

transferees’ knowing participation is irrelevant under the statute’ for purposes

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of establishing the premise (as opposed to liability for) a fraudulent transfer.”)

(quoting Warfield v. Byron, 436 F.3d 551, 559 (5th Cir. 2006)). 

To determine whether a transfer is made with the requisite intent, we may

examine a number of factors, including whether (1) before the transfer was

made, the debtor had been sued or threatened with suit; (2) the debtor removed

or concealed assets; and (3) the transfer occurred shortly before or shortly after

a substantial debt was incurred. TEX. BUS & COM. CODE ANN. § 24.005(b). 

Evidence that a company operated as a fraudulent enterprise at the time of the

transfer, moreover, may be sufficient to establish actual intent. See SEC, 487

F.3d at 301 (finding that evidence that the company operated as ponzi scheme

sufficient to establish actual intent); see also Dean v. Davis, 242 U.S. 438,

444–45 (1917) (noting that knowingly making a transfer that constitutes a

fraudulent act is sufficient to find actual intent to defraud creditors).

Appellants fail to raise any arguments that would merit reversal. Smith

more properly directs our attention to evidence suggesting that IFS had the

actual intent to hinder, delay or defraud its creditors: (1) transfers to the

Appellants were transfers to insiders; (2) IFS concealed its transfers through

the use of Portia numbers in the place of investor names and the nature of the

transfers; (3) IFS made the transfers during its dispute and litigation with Blitz

and other pending litigation; (4) IFS transferred substantially all assets; (5) IFS

concealed assets from Blitz and other creditors through its fraudulent scheme;

(6) IFS did not receive reasonably equivalent value for the transfers to the

Appellants; and (7) the transfers occurred shortly before or shortly after IFS

incurred its direct obligation to Blitz. 

For the reasons Smith raises, we find that this record supports the

bankruptcy and district courts’ findings of fraudulent transfer. Specifically, IFS

faced pending lawsuits and mounting debts just as it liquidated nearly all

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Interamericas’ assets. TEX. BUS & COM. CODE ANN. § 24.005(b)(4),(9),(10). 

Further, evidence that IFS operated as a fraudulent enterprise at the time of the

transfers supports this finding of fraudulent intent. See SEC, 487 F.3d at 301.

VI

In sum, neither the bankruptcy court nor district court erred. We

AFFIRM the district court’s affirmance of the bankruptcy court’s judgment in

full.

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Case: 10-20670 Document: 00511739713 Page: 17 Date Filed: 01/27/2012