In light of established Fifth Circuit precedent providing that transfers made by the perpetrator of a Ponzi scheme are fraudulent for purposes of the UFTA, the parties stipulated that the payments by Stanford to The Golf Channel were fraudulent. The parties also stipulated that The Golf Channel acted in good faith in accepting the payments. Consequently, the only issue in the dispute was whether, in providing advertising and marketing services to Stanford, The Golf Channel gave reasonably equivalent value in exchange for the payments.
In finding that The Golf Channel did not give reasonably equivalent value, the court held that the market value of the marketing and advertising services failed to meet the standards for “value” under the statute. The court held that “value,” for purposes of the UFTA is measured “from the standpoint of the creditors, not from that of a buyer in the marketplace.” Further, the court held that services—even legitimate services provided by an entity which has no knowledge of the fraudulent scheme—which further the scheme, have no value as a matter of law. When dealing with a Ponzi scheme, which is inherently illegitimate and insolvent from its inception, the court stated that the “primary consideration . . . is the degree to which the transferor’s net worth is preserved.” As a result, the fact that The Golf Channel’s services would have been valuable to legitimate businesses in the marketplace was of no moment. In the context of a Ponzi scheme, they had no value as a matter of law.
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