An interesting development in the Rust Rare Coin Silver Ponzi case
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UtahCoin
Posts: 5,366 ✭✭✭✭✭
One investor stands to regain most of his investment by helping the FBI.
https://documentcloud.adobe.com/link/track?uri=urn:aaid:scds:US:8a181722-e812-4176-acce-ff8e36c73bf8
I used to be somebody, now I'm just a coin collector.
Recipient of the coveted "You Suck" award, April 2009 for cherrypicking a 1833 CBHD LM-5, and April 2022 for a 1835 LM-12, and again in Aug 2012 for picking off a 1952 FS-902.
Recipient of the coveted "You Suck" award, April 2009 for cherrypicking a 1833 CBHD LM-5, and April 2022 for a 1835 LM-12, and again in Aug 2012 for picking off a 1952 FS-902.
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synopsis please?
bob
Very interesting. Thanks for posting it.
synopsis please?
bob
Here's a link
https://www.deseretnews.com/article/900069776/rust-rare-coin-owners-face-criminal-charges-in-alleged-dollar200m-silver-trading-scam.html
Recipient of the coveted "You Suck" award, April 2009 for cherrypicking a 1833 CBHD LM-5, and April 2022 for a 1835 LM-12, and again in Aug 2012 for picking off a 1952 FS-902.
The article linked makes no mention of the investor who stands to regain his money by working with the prosecutors.
The synopsis is that the Receiver will reduce the amount of money (over $3,000,000.00) that the Receiver is seeking to "claw back" from one of the investors/creditors (who received from the bad guy a distribution of funds that would be considered "preferential" and thus subject to a claw back) in the Ponzi scheme by $150,000.00.
The investors get to keep $130,000.00 as an advance distribution to them by the Receiver of Receivership assets to be distributed to the victims [after all expenses and fees of the Receivership are first paid] on the investor's creditor claim that they filed. The remaining $20,000.00 is a TOKEN reduction in the amount of the claw back].
In summary, because this investor/creditor agreed to assist the authorities by wearing a wire and having additional dealings with the bad guy (the transcript of the wired conversation with the bad guy is evidence that is used against him); and by choosing not to litigate with the Receiver over whether or not the Receiver is entitled to claw back over $3,000,000.00 paid to the investor/creditor by the bad guy, the investor/creditor gets a $20,000.00 bone thrown to them.
I expect that the investor/creditor has spent more than $20,000.00 in lawyer fees and costs to handle this matter for them. If so, the investor/creditor is not getting much of a benefit at all.
In the end, the investor/creditor (who invested over $3,000,000.00 with the bad guy) will stand at the back of the line with other likely unsecured creditors to receive payment of monies from the Receivership assets remaining after payment of Receivership fees and expenses, secured creditors and priority unsecured creditors are paid first. In these types of cases the unsecured creditors usually end up with no distribution, or a distribution of a few cents on the dollar.
Oops -- didn't see the real lawyer's post, to which I defer.
Uh...nope. The Costanzos agreed to pay to the Receiver essentially all of the money they had gotten in refund from Rust. This places them on the same level as all other creditors, and will likely reduce the total they eventually receive in settlement.
@SanctionII Thank you. I would have to read that motion five times or more to glean that - and I have no dog in this hunt. Thank you.
Oh the tangled web that was weaved those many years will take many more years to untangle and to reveal... what?
I do hope all those affected are made whole but that assumes all monies are recovered to include the phantom ponzi monies. So it will be impossible for everyone to receive 100%.
Now the recovery and whatever scraps are found must be fought for.
So sad... caused by greed by multiple actors.
I’m going to find something much more fun, like the tax code on shell fish harvesting or something.
International migratory turtle agreements are also a fun read !
He is the man
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
When Ponzi schemes fall apart, those investors who were paid back by the bad guy shortly before the scheme falls apart initially feel a sense of relief at the fact that they were paid back their investment before the fall.
This initial sense of relief does not last long.
Once the authorities step in and take over the remains of the failed scheme, someone (usually a court appointed receiver or a bankruptcy trustee) takes over. They first thing that is done after securing whatever assets remain in the failed business is a reconstruction of and an analysis of the financial and other records of the business to follow the money that came into and that went out of the business.
Once the flow of this money is established, the payments of money out of the business that takes place within specified time periods (i.e. 90 days before the failing of the business for anyone who has been paid money other than in the "ordinary course of business" [i.e. the electricity bill for the 2 months before the business failed]; and 1 year before the business failed for "insiders" [i.e. officers, shareholders, directors, partners, family members of those in control, etc.]) are payments which under various laws (including bankruptcy law, fraudulent transfer law and other laws) allow for the recovery of these payments to third persons.
The idea behind a receiver or a bankruptcy trustee to recover (aka "claw back") these payments is to avoid having members in one group of similarly situated creditors (i.e. general unsecured creditors) receive back more than their fair share (i.e. out of 1,000 general unsecured creditors the bad guy pays back his wife, son and/or daughter $10,000,000.00 to pay them back their investment in the scheme, while the other 997 unsecured creditors get nothing). The receiver or bankruptcy trustee can recover the $10,000,000.00 paid to the wife, son and/or daughter of the bad guy. This recovered $10,000,000.00 is then eventually distributed in equal proportion to the 1000 general unsecured creditors (but only after this money is first used to pay the professional fees and costs of the Receivership and/or Bankruptcy,................. cause the folks who make their living as Receivers and Bankruptcy Trustee's and their hired attorneys, accountants, etc just gots to get paid!!!!).
This happened in the Bernie Madoff Ponzi scheme aftermath.
Yes, In the end, the Constanzo's really lost the same as the other unsecured investors. the only difference is that they received 4.28% now, instead of some months or years in the future.
Who knows how much will be clawed back, but given that the ponzi went on for so long and involved up to 200 million dollars, most of that money is long gone. It would just be heartbreaking to work and save for so long to see it all evaporate like that.
There was another investor who wired 1.6 million into the ponzi two hours before Zions bank was notified to close access to the Rust Coin silver pool. That investor's money is in limbo at Zions Bank and the receiver is trying to claw it all into the receivership control. OUCH.
@SanctionII... Thank you for your clarifying posts....These things become a real tangled mess, and, from what I can see, the only real winners are the Receivers, attorneys and trustees....I use the term winners loosely, since they are being paid for their work....Cheers, RickO
Without mentioning any names, there was a large gold dealer in Florida who went bad a few years ago. I remember hearing that the bankruptcy court wanted other dealers who had sold him stuff and gotten paid for it in the six months (?) prior to the bankruptcy to send the payments back but no, you don't get your gold back.
The timing on that Zion bank deposit seems suspicious. That's almost 1% of the total alleged fraud. It's like they waited for a bigger pot of cash before yanking the plug.