Opinion ID: 1317891
Heading Depth: 1
Heading Rank: 3

Heading: Mackenzie's Cross-Appeal: The Transfer From AFI to Mackenzie was an Actually Fraudulent Transfer Under 548(a)(1)(A).

Text: Mackenzie argues that he may be entitled to the entire transfer, including the fictitious gain made on account of his investment. The thrust of that argument is that genuine issues of material fact exist as to whether AFI transferred the $89,824.18 to Mackenzie with the actual intent to hinder, delay, or defraud an entity or creditor under § 548(a)(1)(A). We do not find that argument persuasive. We allow a finding of fraudulent intent under section 548(a)(1) [the analog to § 3439.04(a)] on the basis of circumstantial evidence. Agretech, 916 F.2d at 534. Furthermore, the mere existence of a Ponzi scheme is sufficient to establish actual intent under § 548(a)(1) or a state's equivalent to that section. Id. at 535. Here, Eisenberg's plea demonstrates the existence of fraudulent intent and a Ponzi scheme, and Mackenzie failed to identify evidence in the record that created a genuine issue of material fact as to either issue. Eisenberg admitted the following in his plea: Eisenberg solicited investors for partnerships knowing that the businesses of AFI, AFHI, and the partnerships were not profitable from inception. As early as 1996, Eisenberg knew that the factoring business of AFI, AFHI, and the partnerships had already incurred $4 million to $5 million in operating losses and that he was running a ponzi scheme, that is, paying investors purported interest payments with funds raised from other investors, rather than from the profits of the factoring business as Eisenberg represented to investors. (emphasis added). Thus, the record shows Eisenberg's operation was a Ponzi scheme before Mackenzie invested in the partnership, well before the transfers were made from AFI to Mackenzie. That by itself is enough to establish the transfers were made with actual fraudulent intent. See Agretech, 916 F.2d at 535. We find Mackenzie's cross-appeal without merit, and we continue to the issue in the Trustee's appeal: the application of the good faith exception under CAL. CIV. CODE § 3439.08(a), which is the equivalent to 11 U.S.C. § 548(c).