### FI LED U.S. COURT O F APP EALS ELEVENTH CIRCUIT Ma y 3 , 2 005 THO MAS K. KAH N CL ERK [PUBLIS H] IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ ____ ____ ____ N o. 04- 1182 9

____ ____ ____ ____ ____ ____ D. C. Docket N o. 03-00765 -CV -O RL -19-KR S

BKC Y N o. 96-03950 -6J-1 InRe : INTERNATIONAL A DMINIS TRATIVE SERVICES, INC., Deb to r.

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ IBT INTERNATIONAL, INC., SOUTHERN CALIFORNIA SUNBELT DEVE LOPERS, INC., Defen da nt s- App el la nt s, ve rs us JOHN A. NORTHERN, Pl ai nt iff -Ap pe ll ee.

____ ____ ____ ____ ____ ____ Appeal f rom the United State s District Court fo r the Mi ddl e D istri ct

of F lor ida

____ ____ ____ ____ ____ ____ _ (M ay 3 , 200 5)Honora ble Eug ene E . Siler, J r., United States Circuit J udg e for the Six th Circuit, sit ting * by desig nation. 2 Be fo re MA RC U S, F A Y and S IL E R , Ci rc uit Jud ge s. * FA Y, Circuit Judge: T his appe al ste m s f

ro m the bankr

upt cy of I nte rn at ion al A dm ini str at ive Service s, I nc. ( “ IA S” or the “ De btor”). The D ebtor’ s stock trust ee ( the “ Tr ustee”), ac tin g onbe ha lf

of the O ff ic ia l C om m itt ee of U nse cure d C re dit or s ( the

“ Com m ittee”) f iled an adversary

proceeding against IBT International, I nc. (“ IBT ”) and South ern Calif ornia Sunbelt Developers, Inc. (“ SCSD ”) to re cover as se ts th atha d b een frau du le nt ly tran sf erre d fr om

th e Deb to r to IBT an d S CSD. T he bankr

upt cy c ourt e nte re d j udgm en t i n th e adve rs ar y pr oc ee din g inf

av or of the T ru ste e. I BT and S CS D appe al ed to the dis tr ic t c ourt, w hic h a ff irm ed the j udgm en t, and the D ef

en dants the n a

ppe al ed to thi s C ourt. I BT and S CS D r ai se fo ur gr ound s f

or e rr or that w oul d r equir e re ve rs al : ( 1) that the statut e of li m itatio ns pr ev en te d an e xte nsi on o f the ti m e fo r br ing ing the a ct ionby e ith er c ourt or de r or equit ab le tol lin g; ( 2) that the a voi danc e ac tio n w as im pr ope rl y br ough t be ca

use the Tr ustee did no t first avoid the transfer to the initial transfere es; (3) that the T rustee im properly trace d the funds so ught to be recovere d; and (4) that the bankrupt cy co urt i nc or

re ct ly c al cu la te d pr e-

j udgm en t i nte re st a ga ins t the D ef en dants . F or

the3

reasons set forth below, we disagree w ith the Defe ndants’ assignm ents of error , an d a ff irm the j udgm en t of

the bankr

upt cy c ourt. I. F acts IA S specialized in m arketing financial advice to unsop histicated consu m ers thr oughabarr ag e of

se m inars and l at e nig ht i nf om er ci al s. Ale viathan inthe w or ld of get-rich-quick schem es, I AS guaranteed custom ers incre ased we alth, provided th ey fol lo wedth e co m

pa ny’ s fi na nc ia l s tra te gi es , whi ch were co nt ai ne d i n IAS publ ic at ion s. T he tr ap , how ev er , w as that t o be pr ivy to thi s va lua

ble inf orm at ion , a cu sto m er

ha d to f ir st p ur ch as e a m em

be rs hip and the n pay

asub stanti al a m ount in annua l du es . E sse nti al ly , I A S pr om ote d a gam ble -f re e m ethod of

ge tti ng r ic h, onc e, of c our se , c ust om er s pa id I A S, r ec ei ve d th e publ ic at ion s, and m et ic ulo usl y fo llo w ed the ins tr uc tio ns. Ch ar le s G ive ns f

ound ed I A S in 1 986, and w as the c om pany ’ s so le share hol de r. H e se rv ed

a s an of fi ce r an d di re ct or

unt il 1991 or

199 2, a lth ough m an ag em en t c ont inu ed

to loo k to G ive ns f

or gui danc e af

te r his de part

ur e. A s th e vis ibl e voi ce of

I A S, G ive ns trave le d e xte nsi ve ly , pr om oti ng h is “ w ea lthw ith out ri sk” plan. Ady

na m ic and c om

pe lli ng s pe ak er , G ive ns p er sua de d audi en ce s to buy expe nsi ve m em

be rs hip s inI A S, and those num be rs sw el le d to ove r 250, 000. Sheer num

bers, however, do not validate a theory absent em

pirical4

ev id en ce, an d d ou bt so on fel l upo n t he leg it im acy of th e IAS fi na nc ia l ad vi ce. A m aj or ity of the inf orm at ionw as ne ith er

nov el nor

c ove rt - m ost of it w as r ea dil y available and com

prised com

m on-sense bus iness practices. Other advice, such as en co ur ag ing c ust om er s to c an ce l un ins ur ed m oto ri st c ove ra ge on the ir ve hic le s, rai se d m or e redfla gs . In199 1, se ve ra l m em

be rs ini tiate d law sui ts a ga ins t I A S an d G ive ns, challenging the practica lity of their advice. On the advice of IA S, several cu sto m er s dr oppe d th ei r uni nsur ed m oto ri st c ove ra ge , onl y

to be inv olv ed

in serious car cr ashes with uninsu red drivers, and leaving them with uncom

pensated losses. The custom ers sued IA S for givin g them the detrim ental advice. E ve ntu al ly , e le ve n si m ilar law sui ts w er e fi le d th ro ugho ut the c ountry , se ek ing a larg e am ount

in da m ag es . A nothe r lay er

w as a dde d to I A S’ tr oubl es w he n th e SE C t ar ge te d G ive ns an d I A S as part

of ase curi tie s f

ra ud i nve sti ga tio n inc onne ct ionto a re al e state venture. I AS ’ problem s grew when the attorney generals of sever al states launched m aj or investig ations in volv ing IAS’ failure to pay the state sales tax generated at se m inars aro und the c ountry . F ina lly , the F ed er al T ra de Co m m iss iona im ed

it s sig hts a t the c om

pany ’ s bu sin es s pr ac tic es . IA S vig or ousl y

de fe nde d th e law sui ts and g ove rn m en t i nve sti ga tio ns, but itTedde r held himself out as a n expert in asset protec tion, and lecture d on related 1 strateg ies. 5 w as c le ar that I A S’ e xpos ur e to l ia bil ity in the se c as es e xc ee de d $1 0 m ill ion . A s a pr ee m pti ve m ethod of

pr es er vin g bo th h is and I A S’ w ea lth , G ive ns r et ai ne d th e s e rv i c e s o f

a t t o rn e y Da v i dH. Te d d e r ( “Te d d e r ” ) , h i s l a wf

i rm, a n dh i s c o mp a n y, T he I nst itu te f

or A sse t & L aw sui t P ro te ct ion , to fo rm ulate aplan th at

w oul d sh ie ld the a sse ts f

ro m c re dit or s. 1 Te dder m oved to Florida in o rder to im plem ent the IA S/Givens asset pr ote ct ionplan. F ir st, a sse ts w er e tr an sf er re d to vari ous T ed de r- ow ne d f or ei gn and dom estic entities. T edder then rec y cled the assets through a tangled and com plex w eb of m ult i- ste p in te rn at ion al tr an sa ct ion s. I n to ta l, T ed de r tr an sf er re d a sse ts m ore than one hund red tim es am ong twenty -three diff erent entities. B etwe en January 199 2 and 1 996, G ive ns r em ove d atr ea sur e ch es t i n e xc es s of $50 m ill ion fr om I A S’ c of fe rs ; pu tti ng i t ou t of

the dir ec t r ea chof

I A S’ c re dit or s. O n June 20, 199 6, I A S fi le d avol unt ar y Ch ap te r 11 b an kr

upt cy pe tit ion , no doub t due in part to Givens and Tedder’ s purge and plu nder schem e. The U. S. T ru ste e ap poi nte d th e O ff ic ia l C om m itt ee of U nse cure d C re dit or s ( the

“ Co m m itt ee ”) to fa ci lit at e the I A S re or ganiz at ion , w hic h w oul d se em pla usi ble because G ivens no longer m anaged the day -to-day aff airs of the debtor.Ultimately , the Debtor ’s re org anization effor ts failed, and IAS eventually filed a 2 liquidating plan, whic h included a pr ovision creating the Stock Tr ustee, the pla intiff in the adver sary proce eding . The plan grante d the Stock Trustee the power to investigate, commenc e, and prose cute a ll avoidance and fr audulent tra nsfer adver sary

proce eding s, such as this one. 6 U n f o rtu n a t e l y fo r

th e De b t o r , Gi v e n s s t i l l p l a ye dan a c t i v e r o l e i n th e c o mp a n y, w hic h c ri ppl ed

I A S’ abil ity

to inv es tig at e the sus pe ct tr an sf er s w ith out

bia s or influence. T he Co m m itt ee soo n di sc ove re d th e ex ist en ce of the G ive ns- IA S tr an sf

er s, an d w iththe goa l of

r eo rg an iz at ionin m ind , the D eb tor a ssi gne d it s r igh t and d

uty to pursu e any

fra udul ent transfer actions or avoidance claim s to the Comm ittee. 2 By S ep te m be r of 199 6, the T ru ste e the n be gan th e une nvi ab le ta sk o f unr av el ing the knot ted trail of transfers. The T rustee’ s ability to investi gate the transfer s was ham pered by Givens and his associates, w ho, am ong o ther things , delay ed doc um en t pr oduc tio n, w ith he ld d isc ove ry r es pons es , and s im

ply “ los t” r ec or ds o f the a sse t transf

er s. A s ar es ult , the T ru ste e fi le d am oti on t o ho ld G ive ns, and the pr of es sio na ls a ssi sti ng h im

in co ve ri ng the tr ac ks, in co nte m pt o f co urt. T he bankrupt cy

court appoint ed a Spec ial Master to oversee and adm inister discov ery com pliance. T he pr obl em s a sso ci at ed

w ithdis co ve ry

le d to the T ru ste e’ s in ab ili ty to tim el y ide nti fy the lon g c ha in o f tr an sf

er ee s, and thus ini tiate any pr oc ee din g to7

av oid the tr an sf

er s w ith in the li m itatio n pe ri od, w hic h e xpi re d onJun e 20, 199 8, tw o y ears a ft er

I A S fi le d f

or bankr upt cy . T he bankr

upt cy c ourt gr an te d th e C o mmi t t e e ’s r e qu e s tt o e x t e n dth e t i me t o f i l e a v o i d a n c e a c t i o n s th r o u g h th e t i me of ahe ar ing by

the S pe ci al Ma ste r on July 29, 199 8, w he n th e co urt w oul d a ga in c o n s i d e r an y e x t e n s i o n s b a s e dup o n th e p r o g r e s s i o n o f d i s c o v e ry. A s se em s par fo r thi s c as e, dis co ve ry dis put es c ont inu ed , and the he ar ing in which the Specia l Master delivere d his report was not concluded un til Septem ber 3, 199 8, m or e than on e m onth a ft er the de ad lin e of

the ini tia l e xte nsi on. A t this he ar ing , the S pe ci al Ma ste r de te rm ine d th at the a ll- im

portant transf

er doc um en ts did no t appear to have been “ m isplaced,” but, rather, that the item s had been

“ de lib er at el y

and i nte nti ona lly

se cr et ed ” fr om

the T ru ste e. Ba se d up on the se fi ndi ngs, the T ru ste e m ove d inope n c ourt t o f urthe r ex te nd the ti m e to f ile avoidance actions. T he oral m otion wa s granted, and the bankruptcy court entered a w ritten order m em orializing its rulin g on Septem ber 17, 1998. T hat order extended the tim e period for the T rustee to file avoidance ac tions until February 10, 199 9. O n F eb ru ar

y 10, 199 9, the T ru ste e fi le d th is a dve rs ar y pr oc ee din g a ga ins t a list of defendants, includin g John Does. IBT and SCSD we re not nam ed parties unt il A ugus t 17 , 199 9, onc e the T ru ste e ha d tr ac ed I A S as se ts t o th em , and f ile d a8

fi rs t am en de d c om

pla int . Co unt

I of the c om pla int sou ght to av oid any tr an sf er of anint er es t of

the D eb tor

in pr ope rty

pur suant t o 11 U . S. C. § 54 4( b) and F lor ida Statutes §§ 726 .105, 726.106, and 726.108, w hich perm it avoidance of transfer m ad e w iththe a ct

ua l i nte nt t o hi nde r, de lay , or de fr au d c re dit or s. I n C ount I I, the T ru ste e soug ht t

ur nove r of the pr ope rty

im pr ope rl y tr an sf er re d f ro m the D eb tor under 11 U.S .C. § 542(a). T he T ru ste e targ et ed

I BT and S CS D be ca

use the y r ec ei ve d $1 , 050, 000 fr om IA S, thr oughse ve ra l of

T ed de r’ s in tr ic at e tr an sf

er de vic es . T he e xa ct

r out e the m oney took, and the various st ops it m ade, is a difficult road to follow. Af ter essentially

being laund ered through the Tedder m echanism s, the I AS m oney tr ic kle d do w n to the V anD anL im ite d P ar tne rs hip ( “ V anD an ”) , w hic h w as a N ev ad a en tity

ow ne d by

T ed de r. V anD antr an sf

er re d $5 0, 000 of

I A S m one y

to IBT on May

11, 1993. Tw o day s later, a N etherlands com pany , E urokredit Finance S. A . ( “ E ur okr ed it” ), tr an sf er re d anothe r $3, 500, 000 of I A S funds to an a cc ount he ld b y H . D . , I nc . , an I sle of

Mann c or

por at ion . O n M ay

26, 199 3, E ur okr ed it tr an sf er re d an a ddi tio na l $3 , 350, 000 of the D eb tor ’ s f

unds to a se co nd H D -h el d account. T edder him self transfe rred $999,975 from the two H D a ccounts to a Van Dan account on Ju ly

1, 1993. Finally , on July 7, 1993, T edder transfe rred $1, 000, 000 fr om

V anD anto IB T and S CS D . Co nse que ntl y , be tw ee n th e May 119

and July7, 1993, transfe rs, IBT and SCSD rec eived $1,050,000 in De btor-derived funds. The m oney

trail does not end th ere, however. On Augus t 20, 1993, IBT transferr ed its share of the $1,050,000 to SCSD . I BT and SCSD are relate d co nstru ct ion/r ea l e state de ve lop m en t c om panie s owne d by

D anBa er , one of Te dder’ s busi ness associates. SC SD used the m oney to purchase a com

m ercia l of fi ce c ondo m ini um

de ve lop m en t kn ow n a s th e JohnW ay ne O ff ic e G uil d ( the

“ Guild”), in Orange County , C alifornia. As to the G uild p roperty , the T rustee alleged that the m onies which bou ght th e property we re f raudulent transfers originatin g from

IA S, and wer e subjec t to avoid ance. The Tr ustee soug ht recovery of IBT and SCSD ’ s interest in the Guild as property of the D ebtor’ s bankrupt cy es ta te , not

j ust the m one y

j udgm en t. T he bankr

upt cy c ourt he ld a

thr ee -d ay

tr ia l onthe iss ue s. A t the tr ia l, the Tr ustee presented a thorough tracing analy sis, highlig hting that the assets obtain ed b y IB T a n dSC SD h ad o ri g i n at ed wi t h IA S a n dwe re th en tra n s fe rr ed t o Te d d er ’s entities und er the a

uspices of his asset prot ection plan. T he evidence at trial de m onstrate d th e co m

ple x and i nte nti ona lly

ins idi ous na tur e of

the plan, and ill ustrate d th e dif

fi cu lty the T ru ste e expe ri en ce d ininv es tig at ing the m ult itransaction schem e.Th e ba nk ru ptc y c ourt a lso e nte re d ju dg me nt a g a ins t ano the r d e fe nd ant, Ke vin 3 McCarthy , in the amount of $1,288,534.30, but he ne ither attende d trial nor pre sented a ny de fe ns e on

his be ha lf

. M c Cart hy is n ot a pa rt y to t his a pp e a l. 10 The r em oval of IAS ’ funds was not accom plish ed in one fell swoop. Rather, the T ru ste e ide nti fi ed

se ve ra l di ff

er en t ave nue s us ed

by I A S, G ive ns, and h is professional advis ors to extract com pany funds. Millions o f dollars filtere d thr oughac oll ec tio n of

f or ei gn j ur isd ic tio ns, a llo w ing T ed de r to i nve st m oni es f or G ive ns w ith out

the ha ssl e of

c om pany c re dit or s or

the r el ev an t t ax ing auth or iti es . The de to ur s t ha t t he IAS fu nd s t oo k ra ng edfro m “ le as in g” Giv en s’ ser vi ces to IAS fo r a pa ltr y annua l sum

of $4. 8 m ill ionto co nve rt ing $19 m ill ionof I A S’ non ex em pt l iqu id a sse ts i nto c re dit or -p ro of e xe m pt a sse ts v iathe pur ch as e of pho ny an nui tie s to sim

ply giv ing $3. 5 m ill ionto a T ed de r co m pany that pr om ise d to sta bil iz e IA S’ inc om e, but

ins te ad c an ce le d th e co ntr ac t w ith out r et ur nin g th e funds. Eventually , betw een the siphon ing of the funds and blanket liens that Te dder’ s com

panies acquired on IAS’ assets and future incom e, all of IA S’ re sour ce s w er e en cum

be re d and b ey ond the r ea chof c re dit or s. Ba se d up on the e vid en ce , the bankr upt cy c ourt e nte re d am one y

j udgm en t for the T rustee, and against IBT and SCSD in the am ount of $1,679,251.30, which included in terest. IBT and SCSD appealed to the district court, w hich affirm ed 3 the bankr upt cy c ourt’ s r uli ng. T he D ef

en dants the n f

ile d th e ins tant a

ppe al .11 II. D isc us sio n A. Stand ard of R eview OurCo ur t h as juri sd ic ti on ov er t hi s m at te r un de r 28 U.S.C. § 1 58 (d ). “ As the ‘ se co nd c ourt of

r ev ie wof

abankr upt cy c ourt’ s j udgm en t, ’ ” w e ind ep en de ntl y ex am ine the f

ac tua l and l eg al de te rm inatio ns o f the bankr upt cy c ourt and e m

plo y the sam e standard s of

r ev ie wa s th e dis tr ic t c ourt. I n r e Is sa c L ea se co , I nc . , 389 F. 3d 1 205, 120 9 ( 11th C ir . 200 4) ( quot ing I n r e Cl ub A sso c. , 951 F . 2d 1 223, 122 8 (11th Cir. 1992)). As the district court m ade no factual f indin gs in its function as anappe llate c ourt, our

r ev ie wis de nov o. I n r e Su ble tt, 895 F . 2d 1 381, 138 4 ( 11th Cir. 1990 ). W e re view the f indin gs of fact m ade by

the bankruptcy

court for c lear er ro r. I n r e JL J I nc . , 988 F . 2d 1 112, 111 6 ( 11th C ir . 1993 ). Af ac tua l f ind ing is not clear ly err oneous unless “ this court, after review ing all of the evidence, [ is] left with the definite and firm conviction that a m istake has been com m itted.” L ykes Bros., Inc. v. U nited States Ar m y Corps of E ngr's, 64 F.3d 630, 634 (11th Cir. 1995 ) (i nte rn al quo ta tio n m ar ks o m itt ed ). T his Co urt c ondu ct s ade nov o r ev ie wof

“ de te rm in at io ns of l aw, whet he r fro m th e b an krup tc y

co ur t o r th e d is tri ctco ur t.” Inr e Bi lz er ian, 100 F . 3d 8 86, 889 ( 11th C ir . 1996 ) (p er c ur iam ); I n r e Su

ble tt, 895 F. 2d at 138 3 (11th Cir.1990).

B. Statu te of L im itations and th e F iling of the Com plaintAlthough N orthen is re fer red to a s the “Tr

ustee,” his tit le is that of “stock truste e,” 4 which is not the statutory trustee de scribed in § 546( a)( 1)(B ).

12 O ne of the pr im ar

y iss ue s of the appe al c onc er

ns whe the r the T ru ste e le t the lim itatio ns p er iod

r un p ri or to fi lin g su it. I BT and S CS D arg ue that the statut e of lim itations set forth in 11 U. S. C. § 546 (a)( 1) had lapsed before the T rustee filed thi s a dve rs ar

y pr oc ee din g onF eb ru ar

y 10, 199 9. Co unt

I of the c om pla int se ek s av oid an ce of

the tr an sf

er to IB T and S CS D und er

§ 54 4( b) , and i s li m ite d by 11 U . S. C. § 54 6( a) , w hic h pr ovi de s th at : A n a ct ionor

pr oc ee din g un de r se ct ion544 , 545 , 545 , 547 , 548 , or 553 of this tit le m ay

not be comm enced afte r the earlier of -- (1) the later

of – (A ) 2 y ears a ft er

the e ntr y of the or de r of

r el ie f; or (B) 1 y ear a fte r th e ap po in tm en t o f el ect io n o f th e fi rs t t ru st ee... Be ca use the re w as no s ta tut or

y tr ust ee appoi nte d inthi s c as e, the statut e of 4 lim itatio ns w oul d have r

un tw o y ears a ft er

the f ili ng o f the bankr

upt cy c as e - June 20, 1998. Thre e day s before the lim itations wa s set to run, the bankruptcy court en te re d an or de r ex te ndi ng the ti m e unt il a he ar ing by the S pe ci al Ma ste r on July 29, 199 8. D ue to the ong oin g di sc ove ry dis put es , that he ar ing w as not he ld unti l Se pte m be r 3, 199 8. O n S ep te m

be r 17, 199 8, the bankr

upt cy c ourt e nte re d ase co nd or de r, gr an tin g a

f urthe r ex te nsi on o f the ti m e fo r fi lin g an a dve rs ar y a ct ion thr oughF eb ru ar

y 10, 199 9.I B T a nd SCSD c onte nd

that th e re is a

57 -d ay g a p b e tw e e n th e e xpir atio n o f t he fi rs t 5 e xten sio n, July

29 , a nd the he ari ngby

the Spe c ia l Ma ste r, on

Se pte mbe r 3 . T he De fe nd ants further argue that anothe r four

teen- day g ap exists between the Septembe r 3 hea ringand the da

y the final e x tension was ac tually order ed, September

17. 13 T he D ef en dants ’ f our -p ro nge d a tta ck

on the e xte nsi on o f the statut e of lim itatio ns c onsi sts of

: ( 1) that the bankr

upt cy c ourt di d no t have the pow er to extend the § 54 6(a) per iod; (2) that the bankrup tcy court’ s extension of the § 546(a) period was inoperative beca use of the “ gap” period between the order s ex te ndi ng the li m itatio ns p er iod ; ( 3) that the doc tr ine of e qui ta ble tol lin g sh oul d 5 not appl y to the a dve rs ar

y pr oc ee din g; and ( 4) that the § 54 6( a) e nlarg em en t or de rs were i ne ffec ti ve ag ai ns t IB T andSCSD. T he re is the thr es hol d m atte r of w he the r the bankr

upt cy c ourt ha d any au tho ri ty - e ith er by it s own or de r or

the doc tr ine of

e qui ta ble tol lin g - to en larg e the § 54 6( a) pe ri od f

or c om m en ci ng avoi danc e ac tio ns. T he D ef en dants sug ge st that rather than a statute of lim itations , § 546(a) oper ates as a j urisdictio nal bar, an d po int to Bankr upt cy Ru le 900 6( b) , w hic h do es not spe ci fi ca lly

pr ovi de f or en larg em en t of

ti m e pe ri od c re at ed

by statut e, a s op pose d to tho se c re at ed by the Fe de ra l R ule s of Bankr upt cy P ro ce dur e or

ac ourt or de r. W e fi nd n o m er it in this ar gum en t. Ru le 900 6( b) state s: [W ] hen an act is required or a llowed to be done at or within a specified pe ri od b y the se r ule s or by anot ic e giv enthe re unde r or by or de r of c ourt,14

the c ourt f

or c au se m ay

a t any ti m e in i ts d isc re tio n. . . or de r the pe ri od en larg ed . A lth ough“ by

the se r ule s. . . or by or de r of c ourt” doe s no t e xpl ic itl y e nc om pa ss statutory tim efram es, it does bring all of the Feder al Rules of Bankruptcy Pr oc ed ur e unde r its um

br el la . N ot s ur

pr isi ngl y , thi s w oul d in cl ude Ru le 700 1, w hic h de fi ne s an a dve rs ar y pr oc ee din g a s on e “ to r ec ove r m one y or pr ope rty ” an d Ru le 700 3, w hic h go ve rn s th e co m m en ce m en t of

a dve rs ar y pr oc ee din gs. T o r ea d a j ur isd ic tio na l bar int o § 5 46 w oul d le ad to ab sur d r es ult s, and the D ef en dants did not c ite any auth or ity f or suc h apr opos iti on. T he re fo re , § 54 6 is ind ee d astatut e of lim itations , subj ect to w aiver, equitable tolli ng, and equitable estopp el. See In re Rodriguez, 283 B.R . 112, 116-18 (Bankr. E. D. N. Y. 2001 ) (f indin g § 546 to be a tr ue statut e of

li m itatio ns, sub

j ec t t o e nlarg em en t by

c ourt or de r, r athe r than a statute of repose or j urisdictio nal bar). Whil e w e thi nk a

bankr upt cy c ourt ha s th e dis cr et ionto ex te nd the f ili ng period for an adversar

y proceeding, that re solut ion is o nly the tip of the iceberg. It is und isput ed that the Tr

ustee filed the adversary

proceeding within the § 54 6(a) period, as extended by

the bankruptcy

court’ s second order. T he controversy lies w iththe so- ca lle d “ ga

ps” be tw ee n th e or de rs that e xte nde d th e tim e pe ri od, and w he the r the e xte nsi on w as f ixe d by da te or r ef er en ce to a he ar ing . N am el y , the15

am bigu ity arose out the June 17 enlargem ent order, which provided for an ex te nsi on o f the § 54 6( a) li m itatio ns p er iod “ thr oughthe ti m e of

the he ar ing by

the Sp ec ia l M as te r on July

29, 199 8. ” T his he ar ing w as the n c ont inu ed unt il Septem ber 3 due to the protracted discovery disagreem ents. A t the Septem ber 3 he ar ing , the j udge gr an te d an or al m oti on t o e xte nd the § 54 6( a) pe ri od thr ough February 10, 1999. The bankrupt cy court m em orialized this extensio n by wr itten or de r on S ep te m

be r 17, 199 8. Th e D ef en d an t s m ai n t ai n th at th e e ff ec t i v e w o rd s o f t h e b an kru p t cy co u rt ’s fi rs t e nlarg em en t or de r w er e “ Jul y 29, 199 9" rathe r than th e re fe re nc e to the

“ hearing set before the specia l m aster. ” Further , the sec ond o rder w as docketed fi ft ee n day s a ft er

the or al r uli ng, and w as not

e nte re d nunc pr o tunc . G ive n th es e inh er en t am

big uit ie s, the bankr

upt cy c ourt de cl ine d to r es t i ts o pin ionsol el y on i ts ow n or de rs , a lth oughit

e ve ntu al ly

de te rm ine d th at

the T ru ste e tim el y

f ile d th e co m pla int . W e thi nk tha t the bankr

upt cy c ourt’ s or de rs did

ind ee d e xte nd the lim itatio ns p er iod , a lbe it not in a se am le ss f

as hio n. I n it s F ind ing s of F ac t and Co nc lus ion s of

L aw , the bankr

upt cy c ourt no te d th at

“ [w ] ith out

que sti on, [ it] int en de d th e lim itatio ns p er iod of S ec tio n 54 6( a) to ex te nd thr oughF eb ru ar y 10, 1999 . ” Su chastate m en t de m onstrate s th e cl ear pur pose of the bankr

upt cy c ourt,16

ev enw he re an or de r doe s no t. Whe re an or de r is am big uous , “ its e xte nt m

ust be de te rm ine d by

w ha t pr ec ed ed

it and wha t i t w as int en de d to e xe cu te . ” U nio n Pa ci fi c Ra ilr oa d C o. v. Ma son Ci ty & Fo rt D odge Ra ilr oa d C o. , 222 U . S. 237 , 247 (1 911) . Mo re ove r, w e m ay use am em or an dum

opi nio n to de te rm ine the int en t of the court in issu ing th at order. United State s v. T ay lor, 544 F. 2d 34 7, 349 (8th Cir. 1976 ). Consequentl y , the language “ hearing set before the S pecial Master ” co ntr ols , and the li m itatio ns p er iod w as c ont inu ed

in co nj unc tio n w iththe he ar ing . T he re is al so the m atte r of the a lle ge d ga

p be tw ee n S ep te m

be r 3 and Se pte m be r 17, w he re the bankr

upt cy c ourt or al ly

gr an te d ase co nd e xte nsi on at the he ar ing of

the S pe ci al Ma ste r, but

did not e nte r a w ri tte n or de r unt il Se pte m be r 17. Inthi s in stanc e, the ti m e at w hic h th e w ri tte n or de r w as e nte re d by the c ourt and fi le -s tam pe d by the c le rk is ir re le vant t o th e tim e of

it s e ff ec tiv en es s. “ A j udgm en t is n ot wha t i s e nte re d but wha t w as dir ec te d by the c ourt. . . I n th e ve ry

na tur e of thi ngs, the a ct

m ust be pe rf ec t be fo re it s hi sto ry

c anbe so; and the im

pe rf ec tio n or ne gle ct of it s hi sto ry

f ai ls t o m odi fy

or obl ite rate the a ct . ” Inr e A ck er m an n, 82 F. 2d 97 1, 973 (6th Cir.1936) (citation om itted). O ther courts have treated oral or de rs sim ilarl y . S ee , e . g. , N oli v. Co m m iss ion er , 860 F . 2d 1 521, 152 5 ( 9th Ci r. 1988 ) (h old ing abankr upt cy ’ s c ourt or al or de r bin din g and e ff ec tiv e de spi te the court's failure to enter it on the docket). T hus, a court’ s order is com plete when17

m ad e, not w he n it is re duc ed

to pa pe r an d e nte re d onthe doc ke t. S ee a lso D al ton v. Bo w er s, 53 F . 2d 3 73, 374 ( 2d C ir . 1931 ) (“ E ntr y is fo r m ost

pur pose s no t ne ces sa ry to th e v al id it y

of a n o rd er.”) . Inan a bund an ce of

c au tio n, w e w ill not

li m it our ana ly sis of

the li m itatio ns pe ri od t o th e bankr

upt cy c ourt’ s or de rs . Rathe r, w e w ill a lso r ea chthe que sti on o f w he the r the T ru ste e de m onstrate d an e qui ta ble ba sis f

or e xte ndi ng the li m itatio ns pe ri od. Whe re , de spi te the e xe rc ise of due dil ige nc e, atr

ust ee f ai ls t o ti m el y

br ing ana voi danc e ac tio n du e to f ra ud o r ex tr ao rd inary

c ir cum stanc es be y ond the tr ust ee ’ s c ontro l, e qui ta

ble tol lin g pr ev en ts the e xpi ratio n of § 54 6( a) ’ s li m itatio ns period. In r e L evy , 185 B. R. 378 (Bankr. S .D . F la. 1995 ). See Lam pf, P leva, L ipk ind , P ru

pis & Pe tig ro wv. G ilb er

tso n, 501 U . S. 350 , 363 , 111 S . Ct . 277 3, 2782 , 115 L . E d. 2d 3 21 ( 1991 ) (“ w he re the party inj ur ed by the f ra ud r em ai ns i n ign or an ce of

it w ith out any f au lt or w an t of dil ige nc e or

c ar e on h is p ar

t, the bar of the statut e doe s no t be ginto run un til the f ra ud i s di sc ove re d, tho ugh the re be no spe ci al c ir cum stanc es or

e ff orts o n th e part

of the party c om m itt ing the f

ra ud t o co nc ea l i t f

ro m the kno w le dge of

the oth er party . ”) ( quot ing Ba ile y

v. G lov er , 21 W al l. 3 42 , 34 8, 2 2 L.Ed . 63 6 (1 87 5) ). T he e qui ta

ble tol lin g do ctri ne m ost

of te n a ppl ie d is that e nunc ia te d in H olm be rg v. A rm

br ec ht, 327 U . S. 392 , 397 , 66S . Ct . 582 , 585 , 90 L . E d. 74318

(1 946) . Whe n ade fe ndant’ s f ra udul en t de ce pti ons le av e a pla int if f ign or an t of

the facts or e ven existence of his claim , the lim itations period is toll ed until d iscovery of the f ra ud. I d. a t 39 6- 97, 66 S . Ct . a t 58 4- 85. E qui ty doe s no t l en d it se lf

to fr au d of any kin d. I d. a t 39 6, 66 S . Ct . a t 58 4. Whil e thi s do ctri ne is not appl ic ab le to the tim e lim itation im

posed byevery

feder al statute, it does apply to all federa l statutes where the tim e lim its are in the char acter of a true statute of lim itations . I n re M& L Bu s. Ma ch . Co . Co . , I nc . , 75 F . 3d 5 86 ( 10th C ir . 199 6) ; I n r e U nit ed I ns. Mgmt., Inc. , 14 F. 3d 13 80 (9th Cir. 1994). I n such a case, the statute is sim ply an affir m ative defense, and, consequently , subj ect to equitable consid erations such as es top pe l and w ai ve r. S m ithv. Mark T w ai n N at ' l B an k, 805 F . 2d 2 78, 293 -9 4 ( 8th Ci r. 1986 ) (a

ppl y ing e qui ta

ble e sto ppe l t o se ct ion549 (d )) . E qui ta ble co nsi de ratio ns are ina

ppl ic ab le , how ev er , w he re ti m e lim its are j ur isd ic tio na l i n na tur e an d are to be str ic tly c onstru ed . I d. O ur

Ci rc uit ’ s pr ec ed en t ho lds that § 546( a) is a statut e of

li m itatio n th at

c anbe w ai ve d. I n r e Pu gh, 158 F . 3d 5 30, 537 (11th Cir. 1998) W e think th e sam e principles apply to equitablytoll the statut e as w el l. S ee I n r e K laym an , 228 B. R. 805 ( Bankr . M. D . F la . 199 9) ; I n r e U nit ed I ns. Managem ent, I nc., 14 F.3d 1380, 1385 (9th Cir. 1994 ) (noting that “ [e] very court that ha s c onsi de re d th e iss ue ha s he ld tha t e qui ta ble tol lin g a

ppl ie s to §T h e i s s u e h er e i s n o twh et h er § 5 4 6 (a ) i s a s t atu t e t h ati s s u b j ec tt o equ i t ab l e t o l l i n g. 6 Ins te a d o ur

fo c us is whe the r t

he re is e vid e nc e to e qu ita bly tol l th e statut e of

lim itatio ns . 19 546(a)(1). ”). 6 G en er al ly , tw o ty

pe s of c as es giv e ri se to the e qui ta ble pr inc ipl es of

tol lin g wh er e t h e p l ai n t i ff

ca n n o tt i m el y co m

m en ce an ac t i o n b ec au s e o f ad ef en d an t ’s af fi rm at ive or

ne gli ge nt c ondu ct . I n r e Po m av ill e, 190 B. R. 632 ( Bankr . D . Mi nn. 1995 ). First, when the f

raud goes und iscovered because the defe ndant has taken posi tiv e ste ps a ft er

the c om m iss ionof

the f ra ud t o ke ep it

c onc ea le d, the n th e statute of lim itations is tolled un til the plaint iff ac tually discovers the fraud. I d. at 636- 37. I n r e L y ons, 130 B. R. 272 , 280 . ( Bankr . N . D . I ll. 199 1) . “ Fr au dul en t concealm ent m

ust cons ist of affir

m ative acts or r epresentations which are ca lc ulate d to , and i n f

ac t do , pr ev en t the dis co ve ry of the c au se of

a ct ion . ” L y ons, 130 B. R. a t 28 0. T he ide nti ty of the party c onc ea lin g th e fr au d is im m at er ia l, the cr iti ca l f ac tor is w he the r an y

of the part ie s in vol ve d c onc ea le d pr ope rty of the es ta te . I d. T he se co nd i nst an ce is the m or e m undane c ir cum stanc e w he re the de fe ndant h as not

a ct ive ly c onc ea le d th e fr au d, and the pla int if f m ust the n e xe rc ise due dil ige nc e in an a tte m pt t o di sc ove r the f

ra ud. I d. T he li m itatio ns c loc k st ar ts tic kin g w he n th e pla int if

f obt ai ns - or

sho uld have obt ai ne d - kno w le dge of the underly ing fraud. I d. A gain, the inquiry is whether a ssets of estate have been20

concealed. Id. Beca

use the applicabilit y

of equitable tollin g is a fact- based de ci sio n, the bankr

upt cy c ourt de te rm ine s w he the r equit ab le tol lin g go ve rn s ona ca se -b y -c as e ba sis . P om av ill e, 190 B. R. a t 63 6. Thus, in the instant case, the Tr ustee m ust dem onstrate either that he acte d w ithdue dil ige nc e to d isc ove r the ne gli ge ntl y c onc ea le d f

ra ud o r that on e of

the parties involv ed in the alleged fraud took po sitive steps to conceal the transfer s. I n re N at ur al ly Be au tif ul N ai ls, I nc . , 243 B. R. 827 , 829 ( Bankr . M. D . F la . 199 9) . T he statute of lim itations in the form er situation begin s when the T rustee either ac qui re d, or

sho uld have a cquir ed , a ct

ua l kn ow le dge of

the e xis te nc e of

ac au se of ac tio n. I d. T he la tte r sc en ar io, how ev er , ove rl ooks the T ru ste e’ s di lig en ce , and the statut e be gin s to r

un o nly w he n th e T ru ste e ga ins a ct ua l kn ow le dge . I d. T he bankr

upt cy c ourt f ound that the T ru ste e suc ce ed ed und er both te sts , obse rv ing that the T ru ste e “ w orke d lo ng and h ar d to dis co ve r al l the intri ca ci es of IA S’ and G ive ns’ a sse t di ve rs ionplan. ” W e ag re e. T he T ru ste e hir ed af or en sic ac co unt an t t o a ssi st i n pi ec ing tog ethe r the j igs awpuz zl e of tr an sf er s. A lth ough the T ru ste e ide nti fi ed

som e of the ini tia l transf

er s e ar ly in the c as e, it

too k m onths to ass em bl e an d a sc ert ai n t he di ffer en t m ech an is m s at workbe hi nd th e IAS tr an sf er s. T o f urthe r co m

pli cate the T ru ste e’ s a tte m pts to fe rr et

out the de ta ils of

the21

as se t di ve rs ionplan, the D eb tor and G ive ns w en t t o e xtr em e le ngths t o hi de the ir ac tiv iti es . T he c as e w as r ep le te w ithdis co ve ry vio la tio ns, m ost ly

in the f orm of the D eb tor and i ts a sso ci at es ’ r ef

usa ls t o su

ppl y the T ru ste e w ithc ri tic al and i m portant docum entation. The appoin tm ent of a Spec ial Master and his concludin g report de m onstrate the de lib er at e an d in te nti ona l a tte m pts to obsc ur e the tr

ue na tur e of the asset transfer s. T he docum ents that evidenced a m oney trail fr om

IA S to IBT and SCSD we re not produced unti l after Septem ber 3, 1998 . W ithou t that inform ation, it would have been car eless, and perhaps m alpractice , f or the T rustee to fil e th is ad ve rs ary pr oc eed in g p rio r to th e d el iv ery of th es e d oc um en ts . A s su ch , w e co nc lud e that the T ru ste e did not obt ai n a ct

ua l kn ow le dge of

the ca use of a ct ionunt il af

te r Se pte m

be r 3, 199 8, a t whic h ti m e the li m itatio n pe ri od of S ec tio n 54 6 be gan to r

un. T he F eb ru ar

y 10, 199 9 c om

pla int w as ti m el y

f ile d. Mor eo ve r, e ve n if

the c onc ea lm en t w as ne gli ge nt o r ina dve rt en t, and w e ar e not in the le as t c onvi nc ed

that i t w as , the bankr

upt cy c ourt w as r igh t t o f

ind that the Trus te e “ act edwit h e xe m pl ary di li ge nc e g iv en th e co m pl ex it ie s o f th is cas e.” A s af ina l c ha lle nge to the e nlarg em en t of the § 54 6( a) statut e of

li m itatio ns, the D ef en dants arg ue that the bankr upt cy c ourt’ s or de rs do n ot a

ppl y to the m . T he se co nd e nlarg em en t or de r en co m pa sse d po te nti al a dve rs ar y pr oc ee din gs a ga ins t certa in lim ited partnerships and “ any other entity

(including indiv iduals) which22

hol ds o r he ld, e ith er

dir ec tly or ind ir ec tly , a sse ts f

or the be ne fi t of

Ch ar le s J. G ive ns o r m em

be rs of his f am ily . ” IB T and S CS D c ont en d th at the or de r co uld

not apply to them because they

do not hold anysuch interests. T he rec ord, howe ver, dem onstrates otherwise. The e vidence at trial established that Tedder and Givens orchestrated an el ab or at e o pe rat io n t ha t fi lt ered m on ey di rect ly from

IAS to IBT an d S CSD. T ed de r an d D anBa er

- the ow ne r of

both D ef en dants - ini tiate d vari ous busi ne ss ve nture s to ge the r an d c oll ab or at ed on a vari ety of inv es tm en t pr ogr am s and se m inars . I n th ei r busi ne ss d ea lin gs, Ba er m an ag ed the day -t o- day

a ct ivi tie s and T ed de r ar range d f or f inanc ing . Mo re ove r, the G uil d pr oj ec t, w he re the D ef en dants ev en tua lly

put the I A S funds, w as one of m an y inv es tm en ts T ed de r m ad e w ith in the confines of the asset dissip ation plan. Finally , e vidence dem onstrated that Baer kne wthat Guil d f

undi ng o ri gin at ed

w ithI A S an d G ive ns. The sec ond enlargem ent order pertained to those that held assets eith er

“ dir ec tly or ind ir ec tly . ” T he D ef

en dants ’ pos se ssi on o f IA S funds fa lls squ ar el y w ith in tha t de sc ri pti on. T he m one y m ove d th ro ugh a ch ai n f ro m I A S an d G ive ns to Tedder and his entities to Baer and his entities, the D efendants. A s joint venture partners, Baer

wa s to renovate and m anage the G uild p roj ect, while T edder se cure d and s uppl ie d f

inanc ing . T ed de r cl earl y

kne wthe sourc e of

the f unds , and23

the bankrupt cy

court charged Ba er w ith this knowledge as we ll. IB T unqu estionin gly

acce pted the m oney , no strings attached. B aer knew that IA S w as not an equit y

participant in the projec t, but no one sig ned a prom issory note. Rather, Te dder incredibly suppl ied $1.050 m illion fre e and clear of any debt. IB T an d S CS D c an not

e sc ap e lia

bil ity on the not ionthat C harl es G ive ns d id n ot dir ec tly hand the m

af ist f ull of c as h or w ri te am ill ion -d oll ar

c he ck . S im

ply put , the D ef en dants w er e subj ec t t o th e te rm s of the bankr

upt cy c ourt’ s se co nd enlargem ent order. C. Avoidance of th e Initial Transf er De fendants argue next that the Bankruptcy Code requires that the T rustee fi rs t avoi d th e tr an sf

er s to the ini tia l transf

er ee s be fo re he ha s ac au se of a ct ion ag ai nst the sub se que nt transf

er ee s. I n f ra udul en t transf

er a ct ion s, the re is a dis tin ct ionbe tw ee n avoi din g th e tr an sa ct ionand a ct ua lly r ec ove ri ng the pr ope rty or the va lue the re of

. I n r e Burn s, 322 F . 3d 4 21 ( 6thCi r. 200 3) . By it s langua ge , 11 U. S. C. § 544 (b)indicates that the transaction m ust first be avoided before a pla int if f can r ec ove r unde r 11 U . S. C. § 55 0. I n r e H & S T ransp. Co . , 939 F . 2d 3 55 (6th Cir. 1991 ); In re Richm ond Produce Co., 195 B.R. 455 (N. D. Cal. 1996 ); In re DL C, Ltd. , 295 B. R. 593 (8th Cir. B. A. P. 2003 ), aff 'd, 376 F.3d 819 (8th Cir. 2 0 0 4 ) . Th i s d e mar c a t i o n b e t w e e n a v o i d a n c e an dr e c o v e ry i s u n d e r s c o r e db y §24

550( f) , w hic h pl ac es ase parate statut e of li m itatio ns o n r ec ove ry

a ct ion s; i t p r o v i d e s th a tas u i tf

o r r e c o v e ry mu s tb e c o mme n c e dw i t h i n o n e ye a r o f th e t i me that a tr an sa ct ionis av oid ed

or by the ti m e the c as e is c los ed or dis m iss ed , whichever occurs first. In re Carpenter , 266 B. R. 671 (Bankr. E .D . T enn. 2001), subs equently

aff 'd, 79 Fed. Appx. 749 (6th Cir. 2003 ). Ti t l e 1 1 U. S . C . § 5 5 0 ( a ) d e t a i l s th e s c o p e o f r e c o v e ry: to the extent that a transfer is avoided under section 54 4.. .the trustee m ay re co ve r fo r the be ne fi t of the e state pr ope rty

tr an sf er re d, or if the c ourt so o r d e r , th e v a l u e o f

s u c h p r o p e rt y, f

r o m - (1 ) the ini tia l transf

er ee of suc h tr an sf

er or the e nti ty

f or w hose be ne fi t su chtr an sf

er w as m ad e; or (2) any im m ediate or m ediate transfer ee of such initial transfere e A s § 5 50( a) ind ic at es , onc e a tr an sa ct ionha s be ena voi de d, the bankr upt cy e state m ay r ec ove r fr om : ( a) the ini tia l transf er ee ; ( b) the party

f or w hose be ne fi t the ini tia l transf

er w as m ad e; and/ or

( c) any sub se que nt transf

er ee . I n r e In t’ l M gm

t. Assoc. , 399 F. 3d 12 88 (11th Cir. 2005 ); In re Te ligent, Inc. 307 B.R. 744 (Bankr. S. D . N . Y . 200 4) . O bvi ousl y , apla int if f in an avoi danc e ac tio n m ay r ec ove r fr om the initial transferee. In re Model Im perial, Inc. , 250 B. R. 776 (Bankr. S .D . F la. 2000 ); I n r e Re d D ot S ce nic , I nc . , 293 B. R. 116 ( S. D . N . Y . ), a ff ' d, 351 F . 3d 5 7 ( 2d Ci r. 20 03 ). If t he re i s n ot an affi rm at iv e g oo d fa it h d efen se , th en § 5 50 (a) a ll ows25

re co ve ry f ro m sub se que nt transf

er ee s a s w el l. I n r e W ill ae rt , 944 F . 2d 4 63, 464 (8 th C ir . 1991 ). T he que sti on tha t l ing er s, how ev er , is w he the r ana ct ionm ust f ir st be brough t against the init ial transfer ee as a prere quisi te to seeking recovery against oth er parties who m ay be liable. In re R ichm ond Produce Co., 195 B.R. 455 (N . D . Ca l. 199 6) ; I n r e Re sour ce , Re cy cl ing & Re m ed ia tio n, I nc . , 314 B. R. 62 (Bankr. W .D . P a. 2004 ). T he c ru x of

the D ef en dants ’ arg um en t i s th at the T ru ste e fa ile d to f

ir st s ue the initial transferees, Te dder’ s law f irm and a T edder entity

nam ed Te xas I n t e rn a t i o n a l P e r s o n n e l C o r p o r a t i o n ( “T I P C O ” ) , b e f

o r e a s s e rt i n g th e c l a i ms ag ai nst I BT and S CS D , the sub se que nt transf er ee s. I f, a s th e D ef

en dants c ont en d, the m one y

f ir st f ilt er ed f ro m I A S to T ed de r an d T IP CO , the n th e T ru ste e m ust f ir st av oid thi s in iti al tr an sf

er . A cc or din gly , and a s th e D ef en dants ’ arg um en t go es , pur suant t o S ec tio n 55 0 of the Bankr

upt cy Co de , the T ru ste e cannot pur sue subs equent transferee s without avoid ing th at initial transfer. Section 550(a) plainly

states that “ to the extent that a transfer is avoided unde r se ct ion544 . . . of

thi s ti tle . ” (e m

pha sis a dde d) . D ef

en dants pr im ar ily

r el y upo n In re T rans-E nd Technology , I nc., 230 B.R. 101 (Bankr.N .D .O hio 19 98), which interpreted this provis ion as requiring th e actual avoid ance of an initial transfer be fo re r ec ove ry

is soug ht f

ro m sub se que nt transf

er ee s. T he D ef

en dants c ont en d26

that by allowing the Tr

ustee to recover f

rom them , the bankruptcy

court im pr ope rl y r ea d th e w or d “ av oid ab le ” (r athe r than “ av oid ed ”) int o § 5 50( a) . Whil e T rans- E nd c hara ct er iz es the langua ge of § 55 0( a) a s “ unarg uably . . . unam big uous an d pl ai n, ” a re vie wof

r el ev an t c as e lawde m onstrate s an arr ay of int er pr et at ion s. 230 B. R. a t 10 4. S ee I n r e Ri ch m ond Pr oduc e Co . , I nc . , 195 B. R. 455 ( N . D . Ca l. 1996 ) (f indin g that “ once the trustee proves that a transfer is avoidable... he m ay se ek to re co ve r ag ai nst

any tr an sf er ee , ini tia l or

im m ed ia te , or

an e nti ty f or w hose b en ef i tth e t ra n s fe r i s m ad e” ); Impe ri al Co rp . o f A m er i ca v . S h i el d s , 1 9 9 7 WL 8086 28 ( S. D . Ca l. 199 7) ( sam e) ; I n r e A dvanc ed T el ec om m . N etw ork, I nc . , 321 B.R . 308, 328 (Bankr. M. D. Fla. 2005 ) (sam e). But see In r e Slac k-Horner Foundries Co., 971 F.2d 577 (10th Cir. 1992) (holding that wher e a de bto r- in- poss es sio n or

atr ust ee ha s br ough t an a dve rs ar y pr oc ee din g to se t a sid e a tr an sf er a ft er ata x sa le , the pla int if

f m ust f ir st s ee k r ec ove ry

f ro m the go ve rn m en ta l en ti ty tha t h adso ldth e p ro pe rty for t ax es ). A lth oughthe D ef

en dants a lso r el y

on the S la ck -H or

ne r de ci sio n, w e m

ust m ention what the dissent ing judge so neatly point ed out. N am ely , that there we re no oth er c ases to supp ort the m aj ority ’ s decision, and instead lis ted several ca ses that did n ot preclude recovery from the subsequ ent transfere e because the tr ustee did not go a ga ins t the ini tia l transf er ee . 971 F . 2d at 58 3 ( Se ym our , J. , dis se nti ng)27

(citing In re H all, 131 B. R. 213 (Bankr. N .D . F la. 1991 ); In re Allegheny Int'l Cr ed it Co rp . , 128 B. R. 125 ( Bankr . W . D . P a. 199 1) ; I n r e W ar E ag le F loats, 104 B. R. 398 ( Bankr . E . D . O kl. 198 9) ; I n r e L oui s L . L as se r & S tanle y M. K ah n, 68 B. R. 492 ( Bankr . E . D . N . Y . 198 6) ). I t se em s a s th oughT rans- E nd i s th e onl y c as e sin ce S la ck -H or

ne r to e ndor se the D ef

en dants ’ arg um en t i n th is c as e. W e w ill not , how ev er , be the thi rd

c ourt t o e ch o th at

hol din g. T he str ic t i nte rp re ta tio n of § 55 0( a) pr oduc es ahars h and i nf le xib le r es ult that runs coun terintuitiv e to the nature of avoidance ac tions . I f the initial transaction m

ust be avoid ed in the first instance, then any streetw ise transfer ee w oul d si m

ply r e- tr an sf er the m one y

or a sse t i n or de r to e sc ap e lia bil ity . T he c ha in of transfer s would be endless. Ne vertheless, this result presents a bit of a quandary . T he re are tw o a ppr oa ch es that a ch ie ve the e nd, and w e m ust de te rm ine which is the m ost so und, both legally and logically , f

or this case. Se ve ra l c ourts, inc lud ing abankr upt cy c ourt f ro m thi s C ir cu it, have a d v o c a t e dth e “av o i d ab l e ” v i e wo f § 5 5 0 ( a ) . S e e I n r e A d v a n c e dT e l e c o mm. N etw ork, I nc . , 321 B. R. 308 , 328 ( Bankr . M. D . F la . 200 5) O n th e oth er hand, other courts, including this Court, have applied the “ m ere condui t” concept. I n re Ch as e & S anbor

n C or p. , 904 F . 2d 5 88 ( 11th C ir . 199 0) ; N or dbe rg v. S oc ie te G en er al e, 848 F . 2d 1 196 (1 1thCi r. 198 8) . W e w ill e va luate e ac h intur n.28

Si nc e th e co nd ui t n ot io n i s t he law i n t hi s C irc ui t, we wi ll ad dr es s i t fi rs t. As w iththe ins tant c as e, apla int if f’ s a bil ity to m ak e a ca se und er

§ 55 0, m ay

be co m pr om ise d by

the c hara ct er iz at ionof

apot en tia l de fe ndant a s an in iti al , im m ed ia te , or

m ed ia te tr an sf

er ee . I n r e A dvanc ed

T el ec om m . N etw ork, I nc . , 321 B. R. 308 ( Bankr . M. D . F la . 200 5) T he de te rm inatio n w he the r a part ic ular party is an “ initial transferee” within the m eaning of § 550 (a)( 1) has not been as straightforwar d as the language itself m ight su ggest. Id. A strictly literal interpretation of the statutory term would sugg est that the “ initial transferee” of a tr an sf er is the f ir st p ar ty w hic h r ec ei ve d po sse ssi on o f the pr ope rty in que sti on after it left the hands of the debtor. In r e O gden, 314 F.3d 1190 (10th Cir. 2002). Ge nerally , c ourts are disinclined to construe the statute in su ch a rigid m anner be ca use in m an y

ins tanc es the ini tia l r ec ipi en t m ay have nothin g to do w iththe de bt or ’s pro pe rty oth er t ha n fa ci li ta ti ng it s t ran sf er. In re J etFlo rid a Sy st em , Inc ., 69 B.R. 8 3 (B an kr . S.D. Fla. 1 98 7) . Thus, c ourts have created a m ore m alleable approach to § 550(a), re co gni zi ng tha t su cha“ m er e co ndui t” c an not be c onsi de re d an “ ini tia l r ec ipi en t” fo r pur pose s of an avoi danc e ac tio n. I n r e Ch as e & S anbor n C or p. , 904 F . 2d 5 88 (1 1thCi r. 199 0) ; I n r e Co lum bia D at a Pr oduc ts, I nc . , 892 F . 2d 2 6, 28 ( 4th Ci r. 1989 ) (“ a party

c an not be an in iti al tr an sf

er ee if he is a m er e co ndui t f

or the29

pa rty who h ada di rect bu si ne ss rel at io ns hi p wi th th e d eb to r”). T hus, ale ga l f

ic tio n is c re at ed , and the log ic al f lowof the “ m er e co ndui t” ru le is that the party

w ho r ec ei ve s th e pr ope rt y f ro m the c ondu it is l ike ly

to be co nsi de re d th e “ ini tia l transf er ee , ” al be it se ve ra l st ep s r em ove d. T he m er e co ndui t ru le is use d m ost

f re que ntl y in sit ua tio ns whe re banks ac t a s an in te rm ed iary in transferr ing assets. See In re E rie Mar ine Enterpr ises, Inc. , 216 B. R. 529 (Bankr. W .D . P a. 1998 ); In re Coutee, 984 F.2d 138 (5th Cir. 1993 ); Bonded Financial Service s, I nc. v E uropean Am erican Bank, 838 F. 2d 89 0 (7th Cir. 1988). Where a bank r ec ei ve s ac he ck , w ir e tr an sf er , e tc . , f ro m the de bto r, w ithins tr

uc tio ns t o pa ss it al ong to anothe r tr an sf

er ee , c ourts t en d to im

m uni ze the bank f

ro m li ab ili ty under § 550 as an “ initial transferee” because it never e xercised any control over the Debtor’ s funds. See In re Auto-Pak, I nc., 63 BR 321 (Bankr. D. D. C. 1986 ), rev ’d on ot he r gr ou nd s,7 3 B .R. 52 (D.D.C.). In order f or this exception to apply , then, we m ust determ ine whether G ive ns, T ed de r, T IP CO and H A C are m er el y c ondu its of

the I A S funds, and w he the r IB T and S CS D are the r es ult ing “ ini tia l transf er ee s. ” A s w e re ad

it , the co ndui t r ule pr es um es that the f

ac ili ta tor of f unds a ct s w ith out

ba d f ai th, and i s s i mp l y an i n n o c e n tp a rt i c i p a n tt o th e u n d e r l yi n g f r au d . S e e I n r e M a c h i n e ry & Steel S ervice, Inc. , 112 B. R. 478 (Bankr. D . Ma ss. 1990) (finding th at a union was30

not an “ ini tia l transf

er ee ” of paym en ts f

or be ne fi t of

e m plo y ee w el fare and p en sio n funds be ca

use it ne ith er r ec ei ve d paym en ts the m se lve s no r an y be ne fi t f ro m paym en ts; the uni on o nly a ct ed a s ac ondu it of

c he ck s) ; se e al so H ooke r A tlanta Co rp . v. H oc ke r, 155 B. R. 332 ( Bankr . S . D . N . Y . 199 3) . W e cannot vie wG ive ns, T ed de r, and c om

pany in that l igh t. T he se ini tia l transf

er ee s do not

c onj ur e im ag es of

w el l- int en tio ne d, but gul lib le , part ie s w ho m ist ak en ly f el l vi ct im to a m as siv e co nspi ra cy

be tw ee n th e D eb tor and the D ef

en dants . T o th e co ntr ar

y , the se e nti tie s ha d in tim at e an d thoroug h kno wledge of the tr ansactions and th eir desired e ffec t. Money changed m ult ipl e hands, tw en ty -thr ee e nti tie s f ilt er ed I A S funds aw ay

f ro m c re dit or s. Te dder and Givens we re the architects of a m asterful plan aim ed at dilutin g IAS ’ co ff er s and l ini ng the ir

ow n po ck et s. T o ho ld t

he m to be inn oc en t part ie s w oul d co ntr av en e the c hara ct er

of af ra udul en t transf

er a ct ion , the pur

pose of w hic h is to expose fraudulent dealing s. A s such, w e cannot deem Givens, HA C, and TIP CO as

“ m ere condui ts” who naively transfer red funds to Van D am

who then transfer

red the sam e funds to I BT and S CS D . T his c as e doe s no t m er it the “ m er e co ndui t” di st in ct io n t ha t we ca rv edou t i n C ha se & Sanbo rn or No rdbe rg . N otw ith standi ng o ur

ana ly sis of

the appl ic at ionof

the c ondu it ru le , the Tr ustee’ s case does not fail. T he m ore tenable re sult in this case is that the Tr ustee31

m ay sim ult an eo usl y

a voi d atr an sf

er und er § 54 4 and s ee k r ec ove ry und er § 55 0. Ri ch m ond Pr oduc e, 195 B. R. a t 46 3; A dvanc ed T el ec om m . , 321 B. R. a t 32 8. T his ap pr oa cha llo w s apla int if f to r ec ove r pr ope rty

f ro m tho se c onsi de re d to be

“ m ediate” transferee s of the initial transferee . I n short, once the plaintiff proves that an avoi dable tr an sf

er e xis ts h e can th enski p ov er the ini tia l transf

er ee and reco ve r fro m

th os e n ex t i n l in e. T he c ourt i n R ic hm ond Pr oduc e af fi rm ed the bankr

upt cy c ourt' s de ci sio n perm itting the trustee to rec over a fr audulent transfer fr om a m ediate transfer ee, ir re spe ct ive of

w he the r the tr

ust ee ha d su ed

the ini tia l transf

er ee of the r el ev an t property . I n the case at bar , the bankruptcy court adopted the Richm ond Produce analy sis: Under § 550, “ once a trustee proves that a transfer is avoidable.. .he m ay se ek to re co ve r ag ai nst

any tr an sf er ee , ini tia l or

im m ed ia te , or

an e nti ty f or w hose be ne fi t the tr an sf

er is m ad e. ” Id . a t 46 3. A n in te rp re ta tio n of S ec tio n 55 0 m andating actual avoid ance of initial transfer s, “ conflates Chapter 11's avoidance an d r ec ove ry

se ct ion s. ” Ri ch m ond Pr oduc e furthe r cl ar if ie d th at the langua ge “ to the e xte nt tha t” sim

ply appr ec ia te s “ that transf

er s so m et im es m ay

be a voi de d on ly in p ar t, and tha t on ly

the a voi de d po rt ionof

atr an sf er is re co ve ra

ble . ” Id . ( ci tin g Inr e Su fo lla , I nc . , 2 F . 3d 9 77, 982 ( 9thCi r. 1993 ) (quot ing I n r e D ep ri zi o, 874 F. 2d 1 186, 119 5- 96 ( 7thCi r. 1989 )) ). T he Ri ch m ond Pr oduc e co urt the n lo oke d to32

the legislative his tory

of Sec tion 5 50 to exp lain the operative language. T he court observed that Cong ress took “ to the extent” to m ean that “ liabilityis not im posed on a transfere e to the extent that a transfer ee is protected under a provision... which gr an ts a goo d f ai th transf

er ee f or va lue of the tr an sf

er that i s avoi de d on ly

a s a frau du le nt tra ns fer, a l ie n o n t he pro pe rty tran sf erre d t o t he ex te nt of v al ue gi ve n.” 124 Con g. Re c. H. 11,097 (Sept. 28, 1978 ), S 17414 (Oct. 6, 1978). In the instant case, the bankruptcy court agree d with Richm ond Produce, not ing : N oth ing in the langua ge of S ec tio n 55 0 r equir es apla int if f in a f ra udul en t transfer adversary

proceeding to avoid the transfer rec eived by

the initial tr an sf er ee be fo re c ont inu ing w itha voi danc e ac tio ns d ow n th e lin e of tr an sf er s. Ce rt ai nly , the pla int if f can purs ue the ini tia l transf er ee , but the pla int if f is n ot o bli ga te d to do s o. T he pla int if f is f re e to p ur sue any

of the im m ed ia te or

m ed ia te tr an sf

er ee s, and n oth ing in the statut e re qui re s a dif fe re nt r es ult . A lth oughthi s in te rp re ta tio n tr eats I BT and S CS D a s su bse que nt transf

er ee s, the distin ction between initial transfere e and m ediate transfer ee f or avoidance pur pose s is ir

re le vant. T he D ef

en dants ne ed

onl y be tr an sf er ee s. I n or de r to i nc ur lia bil ity a s atr an sf

er ee , aparty

m ust have e xe rc ise d ade gr ee of dom ini on and control over the property transfer red, or held som e sort of beneficia l right in it. In re P aram ount Citrus, I nc., 268 B.R. 620 (M.D . F la. 2001 ). He re, IBT and SCSD m ee t tha t t es t. T he D ef

en dants r ec ei ve d $1 . 050 m ill ionof I A S’ m one y

and u se d it33

to i nve st i n th e G uil d pr ope rty . O nly ac ontro lli ng e nti ty

w oul d be able to do s o, an d th e T ru ste e m ay

r ec ove r fr om

the D ef en dants . W e think th is interpretation is correct. W e em phasize that this rulin g does not e ro de the c ondu it the or

y . Rathe r, it

a cc om m oda te s ac as e inv olv ing am ult itu de of patently

fra udul ent transfers. Not all c ases can conveniently be chara cterize d as inv olv ing a“ co ndui t” in or de r to r ea chpr ope rty f ro m la te r tr an sf

er s. T hus, the de ci sio n to day

a llo w s am or e pr ag m at ic and f le xib le appr oa chto av oid ing tr an sf er s; f or if the Bankr

upt cy Co de c onc ei ve s of

apla int if f sui ng i nde pe nde ntl y to avoi d and r ec ove r, the n br ing ing the tw o a ct ion s to ge the r onl y a dvanc es the ef fi ci en cy of the pr oc es s and f

urthe rs the “pr ote ct ion s and f or giv en es s inhe re nt i n the bankr upt cy law s. ” Inr e W al dr on, 785 F . 2d 9 36, 941 ( 11th C ir . 198 6) . “ T he co rn er sto ne of

the bankr

upt cy c ourts h as a lw ay s be enthe doi ng o f equity , ” an d in sit ua tio ns s uc h a s th is, w he re m one y is spr ea d th ro ugho ut the glo be , f ra udul en t tr an sf er or s sh oul d no t be a llo w ed to use § 55 0 a s bo th a

shi el d and a

sw or d. I d. N ot o nly w oul d su bse que nt transf

er ee s avoi d in curr ing li ab ili ty , but the y w oul d al so d ef eat r ec ove ry

and f urthe r dim ini sh the a sse ts o f the e state . A n op posi te re sul t w oul d f

ost er the c re at ionof

sim ilar en te rp ri se s, f

or c re dit or s w oul d de sig n increasingly

com plex transactions, with the knowledge that m ore transfe rs decrea se the likelihoo d of a successful avoidance action. Mor eover, the increasedAs a re viewingcourt, we should not restrict ourselve s to ex amining a particula r 7 statutory provision in isol ation when de terminingwhether Congr ess has spec ifically addre ssed the qu e sti on

at is su e . T he me anin g , o r l a c k th e re of , o f c e rt a in w or ds or

phra se s ma

y on ly c ome to light whe n place d in the appropriate conte x t. I t is a “fundamental ca non of statutory

construction that the words of

a statute must be re ad in their c ontextand with a view to their place in the overa ll statutory

scheme .” F DA v. B rown & Wil liamson Tobacc o Corp., 529 U.S. 120, 132-33, 120 S.Ct . 1291, 146 L .Ed.2d 121 (2000) ( citations omitt ed). We must there fore interpre t the statut e “ a s a

sy mme tr ic a l and

c oh e re nt r e gulator

y sc he me ,” .. . a

nd “ fi t, i f p os sib le , a ll p art s into an har monious whole.” I d. 34 co st i n li tig at ionand the de lay s a sso ci at ed w ithpr olo nge d in ve sti ga tio ns w oul d onlycontribute to a debto r’ s shrinki ng estate. W e ar e m indful th at our rea ding of § 550(a) does not em brace a strict co nstru ct ion . W e be lie ve , how ev er , that i t do es a ddr es s th e am big uity of the w or ds

“ to the e xte nt tha t a

tr an sf er is av oid ed . ” Be ca

use tho se w or ds are a m

big uous , it

is ap pr opr ia te to loo k be y ond the pla in l an gua ge of the statut e. S ee U nit ed

S ta te s v. D BB , I nc . , 180 F . 3d 1 277, 128 1 ( 11th C ir . 1999 ) (“ W e do n ot l ook at one w or d or te rm in iso la tio n, but

ins te ad w e loo k to the e nti re statut or y c ont ex t. . . . W e w ill onl y loo k be y ond the pla in l an gua ge of astatut e at

e xtr ins ic m at er ia ls t o de te rm ine the c ongr es sio na l i nte nt i f: ( 1) the statut e' s langua ge is am big uous ; ( 2) appl y ing it according to its pl ain m eaning would lead to an absurd result; or (3) ther e is clear evidence of contrary

legislative intent .” ) (c itations om itted). The results here 7 w oul d be absur d, and, a s th e bankr upt cy c ourt pu t i t, “ a biz ar

re e xe rc ise in futility .” Af

ter looking at the statute as a whole, w e think Cong ress contem plated35

“ to the e xte nt tha t a

tr an sf er is av oid ed ” to b e a sim

ult an eo us a s w el l a s su cc es siv e pr oc es s. T he T ru ste e he re did not have to pur sue li tig at iona ga ins t E ur okr ed it, H A C, and T IP CO , or

the oth er T ed de r ope ratio ns, to suc ce ssf ull y a voi d th e transfers of assets to IBT and SCSD . T herefor e, we hold th at Sec tion 5 50(a) does not m an da te apla int if

f to f ir st p ur sue r ec ove ry

a ga ins t the ini tia l transf

er ee and successfully

avoid all prior transfers against a m ediate transfer ee.

D. Tracing of Fu nds IB T and S CS D a lso arg ue that the T ru ste e fa ile d to tr ac e ev er y pe nny de posi te d in to the V anD ana cc ount s and transf er re d to I BT . Be ca

use the tr an sa ct ion s a sso ci at ed

w iththi s c as e ar e num er ous an d di ff ic ult , w e fi nd i t necessary to re-e xam ine the chain of IA S funds to IBT: As part of the defer red co m p en s at i o n s ch eme, w h er eb y IA S l ea s ed Gi v en s ’ se rv i ce s fr o m two o f T ed d er ’s entities, H AC Adm inistrative Finance, ( “ HA C”) and TIP CO, IA S transfe rred funds to T IP CO and T IP CO the n tr an sf er re d m oni es to H A C. H A C, in tur n, t ra n s fe rr ed th e I AS fu n d s t o Eu ro kre d i t . Eu ro kre d i tth en p as s ed fu n d s t o Te d d er ’s H.D ., I n c. Fr o m

H.D ., I n c. , t h e f

u n d s we n tt o Va n Da n , yetan o t h ero f T ed d er ’s com panies. Finally , T edder m oved the fund s from Van Dan to IB T. IBT and SCSD stipu lated that IBT rec eived $1,050,000 from these transfer s, and adm itted that IB T sub se que ntl y

tr an sf er re d th e funds to an a cc ount he ld b y S CS D to pur ch as e36

units in the Guild. T he De fendants contend th at the m onies so ught by the Tr ustee ha ve be enc om

m ing le d w ithunr ec ove ra ble m oni es . F urthe rm or e, a cc or din g to the D ef en dants , any

f unds inc lud ed

in the r ep ort f

or tr an sf er s oc curr ing be fo re Jun e 20, 1992, are unreachable beca use of the Uniform

Fra udul ent Tr ansfer A ct’ s foury ear statut e of

li m itatio ns. F ina lly , the D ef en dants poi nt o ut tha t $6 59, 000 of the m oney cam e fr om

an entity called CJG O C anada, and not th e D ebtor. Inan a ct ionse ek ing r ec ove ry , the pla int if f ha s th e bur de n of

tr ac ing f unds it cl ai m s to be pr ope rty

of the e state . F ir st F ed . of

Mi ch igan v. Barr ow , 878 F . 2d 9 12 (6th Cir. 1989 ). Although we agre e w ith this proposi tion, it is also true that proper tr ac ing doe s no t r equir e dol lar- fo r- dol lar ac co unt ing . I d. ; I n r e Fi n. F ed er at ed T itl e & T ru st, I nc . , 273 B. R. 706 ( Bankr . S . D . F la . 200 1) ; I n r e Br idg e, 90 B . R. 839 (E . D . Mi ch . 198 8) . T he bankr upt cy c ourt de te rm ine d th at

the T ru ste e suc ce ssf

ull y pr ove d by

apr ep onde ranc e of

the e vid en ce that the $1. 050 m ill iontr an sf er re d to IBT from the Van Dan ac counts, originated so lely with IA S. W e cannot find that co nc lus ionc le ar ly

e rr one ous. G ive ns and T ed de r pe rp etrate d af ra ud tha t c anonl y be described as m assive. It is not fatal to the T rustee’ s case that dollar for dollar, th e ex actfun ds can no t b e tr aced . T he e vid en ce de m onstrate s th at the f unds use d to pur ch as e the G uil d pr ope rty or igi na te d inH . D . , I nc . and V an D ana cc ount s, and the m oni es in tho se37

accounts origin ated with the D ebtor. T edder and G ivens cy cled substant ial am ount s of

m one y thr oughne ar ly

tw o do ze n e nti tie s onar eg ular ba sis . D ur ing that t im e, I A S’ de bt i nc re as ed in loc k- ste p w ithG ive ns’ bur ge oni ng tre as ur e ch es t, all in an effort to hid e assets fr om cre ditors. That m oney

eventually

found its way to I BT and S CS D . “ It

is unde nia

ble that e qui ty

w ill f oll owaf und thr oughany num be r of tr an sm utatio ns, and p re se rv e it fo r the ow ne r as lon g a s it c anbe ide nti fi ed . ” Br idg e, 90 B . R. a t 84 8 ( ci tin g F ar m er s & Me ch an ic s N at ion al Bank v . K ing , 57 P a. 202 ( 1868 ) (quot ed in N at ion al Bank v . I nsur an ce Co . , 104 U . S. 54, 69, 26 L . E d. 693 ( 1881 )) ). T he T ru ste e ha s id en tif ie d r el ev an t pathw ay s and pr op erl y tra cedth e fu nd s. Furtherm ore, we find no m erit in the De fendants’ argum ent that the m onies the T ru ste e se ek s to r ec ove r ha ve be enc om m ing le d w ithf

unds that are not re co ve ra ble due to the ope ratio n of F lor ida ’ s f

ra udul en t transf

er law . U nde r 11 U . S. C. § 54 4, atr an sf

er m ay onl y be a voi de d w ith in f

our y ears of the f ili ng o f bankrupt cy

petition per Fla . S tat. § 726.110(1). What Def endants fail to recognize is tha t the se co nd c lause of F la . S ta t. § 72 6. 110( 1) , pr ovi de s an e xc ep tio n to the ge ne ra l l im itatio ns p er iod , w he re the c la im an t c oul d no t r ea sona bly have dis co ve re d th e re le vant transf er s. I n su chac as e, a voi danc e ac tio ns m ay be br ough t fo r one y ear fr om

the ti m e the pla int if

f dis co ve rs or

r ea sona bly c oul d have38

dis co ve re d th e fr au dul en t transf er s. T he ove rwhe lm ing e vid en ce de m onstrate s th e pe rv as ive f

ra ud that t ook pla ce in thi s c as e, w hic h e sse nti al ly para ly ze d th e T ru ste e’ s a tte m

pts to undo the tangl ed

m es s of tr an sf er s. G ive n th e sit

ua tio n, the ex ce pti on a

ppl ie s, and a ll tr an sf

er s r el ev an t t o th e G uil d purc ha se w er e pr ope rl y avoidable. T he D ef en dants ’ la st s tand w ithr es pe ct to ch al le ngi ng the a voi danc e of the tr an sf er s is the arg um en t tha t so m e $659 , 000 of the f unds that the T ru ste e soug ht fo r rec ov ery cam e fro m

a so ur ce o th er t ha n t he Debt or- CJ GO Can ad a. Aga in , we hark enba ck

to the bankr

upt cy c ourt’ s c onc lus ionthat “ the f unds inv olv ed

in the fr au dul en t transf

er . . . did not or igi na te f

ro m any of T ed de r’ s othe r cl ie nts or f ro m G ive ns’ oth er

bus ine sse s. T he m one y

c am e fr om

I A S al one . ” T he D ef

en dants have the bur de n of

de m onstratin g c le ar

e rr or in thi s f ac tua l f ind ing , I n r e JL J, I nc . , 988 F. 2d 1 112, 111 6 ( 11th C ir . 1993 ), but br ing no s uppo rt

f or thi s bare a lle ga tio n. H en ce , the bankr

upt cy c ourt’ s f ind ing stands. E. P re ju dg m en t In te re st A s af ina l m atte r, w e ad dr es s w he the r the bankr upt cy c ourt i m pr ope rl y ch ar ge d in te re st f

ro m the ti m e of

the tr an sf

er s to the Appe llants , A ugus t 20 , 199 3, rathe r than f

ro m the ti m e the Appe llants w er e ac tua lly nam ed in the c om

pla int , A ugus t 17 , 199 9. O rd inari ly , the a llo w an ce of pr ej udgm en t i nte re st and the f ixi ng39

of the ti m e fr om

w hic h in te re st s ha ll ac cr ue are dis cr et ion ar

y w iththe c ourt. In dustri al Ri sk I nsur er s v. M. A . N . G ute hof fnungs hut te G m

bH , 141 F . 3d 1 434, 1446 ( 11th C ir . 199 8) ; se e al so I n r e Be llanc a A ir cr af t C or p. , 850 F . 2d 1 275 (8 th Cir. 1988 ); In re Industrial and Mun. Engineering, I nc., 127 B.R. 848, 851 (Bankr. C.D. Ill . 19 90 ). In re In de p. Cl eari ng Hou se , Co., 4 1 B .R. 98 5, 1 01 5 (B an kr . D. U tah 19 84) . T he bankr

upt cy c ourt m ay

aw ar d in te re st f

ro m the da te of

de m an d, the ins tit uti on o f the sui t, or

f ro m the poi nt at whic h th e tr an sf er ee c oul d be sa id t o holdthe transfer

wr ongfull y . I ndep. Clear ing House, 41 B. R. at 1015; In re Model Im perial, Inc. , 250 B. R. 776 (Bankr. S .D . F la. 2000 ). A lth oughthe Bankr

upt cy Co de doe s no t e xpl ic itl y pr ovi de f or pr ej udgm en t interest, it has becom e a c omm on practice, especially when transfers have been m ad e w iththe a ct

ua l i nte nt t o hi nde r, de lay , or de fr au d c re dit or s. S ee Matte r of Te xas Gen. Petroleum

Corp., 52 F.3d 1330, 1339 -40 (5th Cir. 1995 ); In re Cy be rm ach , Inc ., 13 F.3d 81 8, 8 22 (4t h C ir. 1 99 4) ; In re In ve st m en t Ba nk ers , Inc ., 4 F.3d 1556, 1566 (10th Cir. 1993); Inr e A gr ic ult ur al Re se ar chand T ec hnol ogy G ro up, I nc . , 916 F . 2d 5 28, 541 ( 9thCi r. 199 0) . T his c as e ca lls f or the aw ar d of suc h in te re st. O ur Ci rc uit ’ s pr ec ed en t ho lds that “pr ej udgm en t i nte re st i s no t a pe na lty , but co m pe ns at io n t o t he pl ai nt iff

forth e u se of f

un ds th atwere ri gh tfu ll y

hi s.”40

In dustri al Ri sk I nsur er s, 141 F . 3d at 14 46- 47. W e thi nk tha t po lic y is ap pr opr ia te he re , to co m

pe nsate “ the de bto r' s e nti re e state f or the use of

the f unds f or the pe ri od o f tim e in whic h th ey w er e w ro ngf

ull y w ith he ld. . . ” Inr e H MH Mo tor Se rv ic es , I nc . , 259 B. R. 440 , 453 ( Bankr . S . D . G a. 200 0) ( ci ta tio ns o m itt ed ). I n th e ab se nc e of

ac ontro lli ng s ta tut e, the c hoi ce of ar at e at w hic h to se t the a m ount

of pr ej udgm en t i nte re st i s a lso w ith in the dis cr et ionof af ed er al c ourt. I ndus tr ia l R isk In sur er s, 141 F . 3d at 14 47. T ha t de ci sio n is “ usua lly gui de d by

pr inc ipl es of reas on ab le ne ss an d fa irn es s, b y rel ev an t s ta te law, an d b y th e rel ev an t fi fty-two w ee k U nit ed

S ta te s T re as ur

y bon d r at e, w hic h is the r at e that f ed er al c ourts m

ust use in aw ar din g po st-

j udgm en t i nte re st. ” Id . ( ci tin g 28 U . S. C. § 19 61) . T he bankr upt cy c ourt c al cu la te d th e rate a cc or din g to the T re as ur y bon d r at e. F ai rn es s an d e qui ty

m an da te the a sse ssm en t of pr ej udgm en t i nte re st i n th is c as e, and the pr ej udgm en t i nte re st s houl d be c al cu la te d f ro m the da te of

the los s, A ugus t 20 , 1993 . III . C on cl us ion Ba se d up on the f

or eg oin g r ea sons , w e fi nd tha t the T ru ste e tim el y f ile d th e adve rs ar y pr oc ee din g, that the T ru ste e sim ult an eo usl y

c oul d avoi d th e tr an sf

er and re co ve r fr om

the m ed ia te tr an sf

er ee s, that the T ru ste e fu lly sa tis fi ed his bur de n of tracing the De btor’ s funds, and that the bankrup tcy court properly

aw arded41

pr ej udgm en t i nte re st f

ro m the da te the D ef

en dants r ec ei ve d th e fr au dul en tly tr an sf er re d f unds . A cc or din gly , w e A FF IRM the de ci sio ns o f the bankr upt cy and dis tr ic t c ourts. AFFIRMED.