UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

 

R. WAYNE KLEIN, the 

Court-Appointed Receiver of U.S. 

Ventures LC, Winsome Investment Trust, 

and the assets of Robert J. Andres 

and Robert L. Holloway, 

 Plaintiff - Appellee, 

v. 

KING & KING & JONES, 

 Defendant - Appellant. 

No. 13-4131 

(D.C. No. 2:12-CV-00051-DBP) 

(D. Utah)

 

ORDER AND JUDGMENT*

 

Before MATHESON, PORFILIO, and PHILLIPS, Circuit Judges. 

 

 R. Wayne Klein (“Mr. Klein” or “Receiver”), the court-appointed receiver for 

Winsome Investment Trust (“Winsome”), filed this action to recover funds paid from 

Winsome to King & King & Jones, P.C. (“KKJ”). The district court granted 

summary judgment in favor of the Receiver. KKJ appeals, and we affirm. 

 

*

 After examining the briefs and appellate record, this panel has determined 

unanimously to grant the parties’ request for a decision on the briefs without oral 

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore 

ordered submitted without oral argument. This order and judgment is not binding 

precedent, except under the doctrines of law of the case, res judicata, and collateral 

estoppel. It may be cited, however, for its persuasive value consistent with 

Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals 

Tenth Circuit 

July 14, 2014

Elisabeth A. Shumaker 

Clerk of Court
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BACKGROUND

 KKJ is an Atlanta, Georgia, law firm. In 2006, an individual named Enrique 

Baca retained KKJ to defend him against pending criminal charges in Georgia state 

court, for a fee of $25,000. The payment to KKJ came in the form of two wire 

transfers of $12,500 each to KKJ from Winsome’s bank account. KKJ’s state-court 

efforts on Mr. Baca’s behalf were successful: in 2007, the charges were dropped. 

 The nature of Mr. Baca’s relationship to Winsome, and Winsome’s reasons for 

paying KKJ to represent him, do not appear in the record. The record does reflect 

that beginning as early as 2005, Winsome was operated as an illegal Ponzi scheme.1

 

Between 2005 and 2011, it collected millions of dollars from investors, much of 

which it lost in a series of ill-fated ventures. It is undisputed that the funds paid to 

KKJ to represent Mr. Baca were derived from this Ponzi scheme. 

 In January 2011, as the result of an action filed by the Commodity Futures 

Trading Commission, Mr. Klein was appointed receiver for Winsome and for a 

number of other related individuals and entities. Among his duties as receiver, he 

was charged with recapturing and returning investor funds that were diverted as part 

of the Ponzi scheme. Mr. Klein then filed this action seeking to recover the $25,000 

KKJ received from Winsome. He theorized that the wire transfers from Winsome 

 

1

 A “Ponzi” scheme is “an investment scheme in which returns to investors are 

not financed through the success of the underlying business venture, but are taken 

from principal sums of newly attracted investments,” and usually attracting investors 

by promising them “large returns for their investments.” In re Hedged-Investments 

Assocs., Inc., 48 F.3d 470, 471 n.2 (10th Cir. 1995). 
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amounted to fraudulent transfers under Utah law, or, alternatively, that KKJ had been 

unjustly enriched by them. 

 The parties filed cross-motions for summary judgment. The district court 

granted the Receiver’s motion for summary judgment and denied KKJ’s motion. The 

district court reasoned that although KKJ received the wire transfers in good faith as 

payment for legal services provided to Mr. Baca, KKJ provided no value to Winsome 

for the funds it received. The beneficiary of the payments from Winsome to KKJ 

was Mr. Baca, not Winsome. The district court concluded that the payments, which 

amounted to both actual and constructive fraudulent transfers, should therefore be 

recouped in favor of Winsome’s investors. 

ANALYSIS

 We review the district court’s summary-judgment determination de novo. 

S.E.C. v. Thompson, 732 F.3d 1151, 1156 (10th Cir. 2013). Summary judgment 

should be granted when “there is no genuine dispute as to any material fact 

and . . . the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

“In making that determination, a court views the evidence and draws reasonable 

inferences therefrom in the light most favorable to the nonmoving party.” Thompson, 

732 F.3d at 1156–57 (internal quotation marks and brackets omitted). 

 A federally appointed receiver may sue under state uniform-fraudulent-transfer 

law to recover assets fraudulently transferred to third parties pursuant to a Ponzi 

scheme. Janvey v. Democratic Senatorial Campaign Comm., Inc., 712 F.3d 185, 190 
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(5th Cir. 2013). Here, the Receiver relies on Utah’s Uniform Fraudulent Transfer 

Act, Utah Code Ann. §§ 25-6-1 to 25-6-14 (“UFTA”). “Because the [UFTA] is 

remedial in nature, it should be liberally construed.” Nat’l Loan Investors, L.P. v. 

Givens, 952 P.2d 1067, 1069 (Utah 1998). 

Under the UFTA, a transfer is actually fraudulent if it was made “with actual 

intent to hinder, delay, or defraud any creditor of the debtor.” § 25-6-5(1)(a). In the 

district court, KKJ conceded that Winsome made the transfers with actual intent to 

defraud its creditors. See KKJ’s Memorandum in Opposition to Plaintiff’s Motion 

for Summary Judgment, Aplee. Supp. App. at 172, 174. The UFTA, however, 

provides a good-faith defense in actions seeking to avoid such fraudulent transfers. 

“A transfer or obligation is not voidable under Subsection 25-6-5(1)(a) against a 

person who took in good faith and for a reasonably equivalent value or against any 

subsequent transferee or obligee.” § 25-6-9(1). KKJ contends that it is entitled to 

the defense because it is both a “person who took in good faith and for reasonably 

equivalent value” and a “subsequent transferee.” 

In evaluating these defenses, we consider first whether KKJ “took in good 

faith and for reasonably equivalent value.” The Receiver concedes that KKJ acted in 

good faith. The question is whether KKJ provided “reasonably equivalent value” for 

the $25,000 it received. 

The district court concluded that to satisfy this requirement, KKJ must have 

provided “reasonably equivalent value” to Winsome. Because the record fails to 
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show that the legal services KKJ provided benefitted anyone but Mr. Baca, the 

district court further concluded that the “reasonably equivalent value” requirement 

was not met. We agree. See, e.g., S.E.C. v. Res. Dev. Int’l, LLC, 487 F.3d 295, 

301–02 (5th Cir. 2007) (“A payment made solely for the benefit of a third party, such 

as a payment to satisfy a third party’s debt, does not furnish reasonably-equivalent 

value to the debtor” (internal quotation marks omitted) (applying Texas UFTA)); 

Dietz v. St. Edward’s Catholic Church (In re Bargfrede), 117 F.3d 1078, 1080 

(8th Cir. 1997) (per curiam) (applying similar provision in Federal Bankruptcy 

code);2 see also Dahnken, Inc. v. Wilmarth, 726 P.2d 420, 422 (Utah 1986) (holding, 

under Utah’s predecessor Uniform Fraudulent Conveyance Act, that “[s]atisfaction of 

an obligation owed the transferee by a third party does not qualify as fair 

consideration” for payment by the debtor).3

Nor is KKJ entitled to the UFTA’s exceptions for subsequent transferees, Utah 

Code Ann. § 25-6-9(1), or subsequent good-faith transferees, id. § 25-6-9(2)(b). As a 

 

2

 Bargfrede interpreted the phrase “reasonably equivalent value” used in the 

fraudulent transfer provision of the Federal Bankruptcy Code, 11 U.S.C. § 548. The 

phrase “reasonably equivalent value” in the UFTA was derived from § 548, and we 

therefore find this interpretation persuasive. See Frank Sawyer Trust of May 1992 v. 

Comm’r, 712 F.3d 597, 608 n.2 (1st Cir. 2013) (stating cases construing § 548 offer 

guidance in interpreting meaning of “reasonably equivalent value” used in UFTA). 

3

 “Fair consideration” is a predecessor term to “reasonably equivalent value,” 

and serves a similar function to the latter term in the fraudulent transfer context. See 

Texas Truck Ins. Agency, Inc. v. Cure (In re Dunham), 110 F.3d 286, 289 (5th Cir. 

1997) (equating “fair consideration” with “reasonably equivalent value” for purposes 

of § 548). 
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direct transferee and recipient of the funds wired from Winsome’s account, who 

obtained dominion and control over the funds once they were transferred, KKJ was 

not a “subsequent” transferee. Rather, KKJ was the “initial” transferee. See, e.g., 

Bailey v. Big Sky Motors, Ltd. (In re Ogden), 314 F.3d 1190, 1202–05 (10th Cir. 

2002) (applying similar “initial transferee” concept in Bankruptcy Code, 11 U.S.C. 

§ 550(a)). 

Also, Mr. Baca was not the initial transferee, as KKJ argues. There has been 

no showing that the wire transfer gave him actual dominion or control over the funds, 

which were wired directly from Winsome’s account to KKJ. See Rupp v. Markgraf, 

95 F.3d 936, 938–40 (10th Cir. 1996) (concluding, based on similar Bankruptcy Code 

provision in 11 U.S.C. § 550, that individual who caused a corporate debtor to make 

a fraudulent transfer to his creditors through his role as corporate principal, but who 

never personally had dominion and control of funds, was the “entity for whose 

benefit the transaction was made,” and that the recipients of funds were the initial 

transferees). 

Finally, we agree with the district court that in addition to being actually 

fraudulent, the transfers were constructively fraudulent under § 25-6-5(1)(b). Under 

the UFTA, a transfer is constructively fraudulent if it was made without the debtor 

receiving “a reasonably equivalent value in exchange” and if either the debtor’s 

remaining assets were unreasonably small in relation to the transaction, or the debtor 

“intended to incur, or believed or reasonably should have believed that he would 
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incur, debts beyond his ability to pay as they became due.” § 25-6-5(1)(b). For 

reasons we have already stated, the transfers were not made for reasonably equivalent 

value. Furthermore, as the district court recognized, “Winsome’s operation as Ponzi 

scheme also shows that Winsome intended to incur, or believed or reasonably should 

have believed that it would incur, debts beyond its ability to pay as they became 

due.” Aplee. Supp. App. at 209 (internal quotation marks and brackets omitted). 

In sum, the district court correctly determined that the transfers to KKJ were 

actually and constructively fraudulent under the Utah UFTA. KKJ is not entitled to 

either the good-faith “reasonably equivalent value” or the “subsequent transferee” 

defenses under the UFTA. We therefore affirm the grant of summary judgment to the 

Receiver, the denial of summary judgment to KKJ, and the judgment of the district 

court. 

 Entered for the Court 

 Gregory A. Phillips 

 Circuit Judge