The plaintiff trustee and defendant in this fraudulent conveyance action clash on the elemental question of who was the “initial transferee” of payments made by checks issued with the payee left blank. At stake is the availability to Defendants of the “good faith” subsequent transferee defense under Section 550(b)(2). These adversary proceedings arise out of the infamous Ponzi scheme and bankruptcy case of Marc S. Dreier pending in the Southern District of New York (Manhattan) before the Honorable Stuart M. Bernstein.
[Update April 18, 2012: The Honorable Stuart M. Bernstein, United States Bankruptcy Judge for the Southern District of New York sides with the Trustee. The Plaintiff Trustee’s motion for partial summary judgment was granted; the Defendant’s cross motion for partial summary judgment was denied. The three page order generally references the Plaintiff Trustee’s briefing and supporting affidavits but otherwise is without any discussion of the legal issues. LaMonica v. Hemby, Adv. Proc. No. 11-01504 (SMB) Dkt. No. 47 (Bankr. SDNY April 18, 2012).]