The receiver for a convicted fraudster and his entities will not be able to recover a $2 million donation the fraudster made to a small Minnesota college. See Kelley v. College of St. Benedict, D. Minn., Civ.;’ No. 12-822 (RHK/LIB), 10/26/12, and http://docs.justia.com/cases/federal/district-courts/minnesota/mndce/0:2012cv00822/125281/34/.
The federal district court found that the receiver lacked the ability to bring this action, and that only the United States could bring such claim under the Federal Debt Collection Procedures Act. The receiver had sued under this statute, and the college opposed. The tortured history of this case– like most Ponzi schemes– left the court to remark that there were no winners or losers in Ponzi schemes only losers. Nonetheless, in rejecting the receiver’s attempt to collect, the court stated that, given the interplay of the receivership, bankruptcy, and parallel criminal forfeiture order, there was reason to believe the receiver was not the appropriate party to maintain this action.
We have likely not seen the last of this case, and wonder if this result would be upheld on appeal.