RALPH S. JANVEY, In His Capacity as Court-Appointed Receiver for The Stanford International Bank, Limited, et al, Plaintiff - Appellant Cross-Appellee
DILLON GAGE, INCORPORATED OF DALLAS; DILLON GAGE, INCORPORATED, Defendants-Appellees Cross-Appellants
from the United States District Court for the Northern
District of Texas
WIENER, CLEMENT, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge.
case concerns more fallout from Allen Stanford's Ponzi
scheme. Plaintiff-Appellant Ralph Janvey ("Janvey")
is the court-appointed receiver tasked with marshalling and
distributing the assets of the Stanford entities. This suit
relates to Stanford Coins and Bullion ("SCB"), a
coin and bullion company previously owned by Allen Stanford.
SCB sold coins and metals to the public. Defendant-Appellee
Dillon Gage Inc. of Dallas ("Dillon Gage") is a
wholesaler of metals, bullion, and coins and was SCB's
alleges that six transfers from SCB to Dillon Gage were
fraudulent transfers under the Texas Uniform Fraudulent
Transfer Act ("TUFTA") and should be returned to
the receivership. Following trial, a jury disagreed, finding
that the six transfers were not fraudulent. Dillon Gage then
sought attorney's fees, which the district court denied.
Janvey appealed, challenging the jury verdict and
instructions; Dillon Gage cross-appealed, challenging the
denial of the fee award. We AFFIRM.
almost two decades, Allen Stanford and his co-conspirators
perpetrated a multi-billion-dollar Ponzi scheme using a
global network of more than 130 entities. The Ponzi scheme
sold fraudulent certificates of deposit to investors.
Proceeds from investors were used to pay other investors,
fund Allen Stanford's lifestyle, and finance other
entity related to the scheme was SCB. SCB received capital
contributions and loans from other Stanford entities. Indeed,
until late 2008, SCB had a line of credit with Stanford
International Bank. However, SCB did not sell Stanford
certificates of deposit. Instead, SCB operated as an
otherwise ordinary coin and bullion business, buying and
selling coins and metals. It purchased coins and metals from
wholesalers and resold them to retail customers at a markup.
SCB ran its business operations through an operating account,
that is, when SCB received customers' money, it deposited
the funds into SCB's operating account, and the operating
account was then used to pay SCB's business expenses. SCB
was led by its President Joseph Frisard and its Vice
President of Operations Scott Terry. SCB was never
profitable, although by 2009 its revenues were rising.
relevant times, Dillon Gage was managed by its President of
the Metals Division Terry Hanlon and General Manager Ira
Fritz. SCB became Dillon Gage's customer in 2004. The
relationship grew and by early 2009, Dillon Gage was
SCB's largest wholesale supplier. SCB would place orders
with Dillon Gage through Dillon Gage's trading desk.
Dillon Gage would then either supply the goods to SCB or ship
the goods directly to SCB's customers (called
"drop-shipping"). SCB would then pay Dillon Gage
for the orders, with payment usually due ten days to two
weeks after shipment. However, SCB was consistently late in
its payments to Dillon Gage.
this business relationship, Dillon Gage extended SCB a line
of credit, which, by 2009, had grown to $2 million. In
January 2009, SCB's account balance with Dillon Gage had
grown to about $2.3 million. During this time, Hanlon became
increasingly concerned with the age and amount of SCB's
outstanding invoices, and in response, on January 20, 2009,
he traveled to SCB's headquarters to meet with Frisard.
At the meeting, Frisard assured Hanlon that SCB had already
mailed a payment to Dillon Gage and was anticipating a big
order that could be used to pay off the rest of SCB's
balance. Frisard also showed Hanlon SCB's offices; Hanlon
observed significant inventory and a room full of salespeople
taking customers' orders.
turned out, the check that Frisard promised was actually only
for $250, 000. Concerned by the low payment, Hanlon called
Scott Terry on January 22, 2009, seeking further payment.
Hanlon told Terry that he was uncomfortable with SCB's
slow rate of payment and high balance and asked for an
explanation. Terry explained that SCB was suffering from cash
flow problems, in part because it had lost its line of credit
with Stanford International Bank. Terry further explained
that SCB was working on a big deal and that when it received
payment, it could use the money to pay Dillon Gage. Terry
suggested that if the big deal failed SCB could collect its
unpaid accounts receivables, liquidate inventory, or seek
additional capital from Stanford. Hanlon responded that
Dillon Gage could not keep shipping SCB inventory until it
"big deal" referenced by both Frisard and Terry was
a deal with the Pre-War Art Gallery (the
"Gallery"). The Gallery wanted to purchase 101 gold
bars from SCB for approximately $3 million (the "Gallery
after the January 22 phone call, Dillon Gage stopped shipping
orders to SCB and its customers. This was not entirely out of
the ordinary; Dillon Gage had halted shipments to SCB before.
From January 23 until January 30, SCB made three payments to
Dillon Gage, totaling approximately $1.26 million: $501,
326.30 (January 23); $394, 567.40 (January 27); and $368,
491.51 (January 30).
February 2, 2009, the Gallery placed its order with SCB for
101 gold bars, wiring $3, 028, 613 to SCB for the order.
Frisard then ordered the gold bars from Dillon Gage and
provided an upfront payment of approximately $3 million to
Dillon Gage. Although the order was placed on February 2, the
order did not need to be shipped to the Gallery until March
SCB's $3 million payment, Dillon Gage immediately began
shipping SCB's backlogged orders, applying the $3 million
payment to the oldest invoices first. In total, Dillon Gage
shipped $1, 947, 453.65 in coins and bullion to SCB or its
customers in the time between when shipping resumed and when
the receivership was imposed.
February 6 and February 13, SCB made two further payments to
Dillon Gage of $366, 171.50 and $486, 959.86, respectively.
Following these payments, SCB had a credit balance with
Dillon Gage of $1, 069, 355. Nonetheless, SCB still owed
Dillon Gage more money to complete payment on the Gallery
February 17, 2009, SCB was shut down by Janvey, the
court-appointed receiver. At the time it was shut down, SCB
had over $1 million in cash and $300, 000-$400, 000 in
uncashed checks on hand. SCB's management believed that
the company had sufficient cash, or access to capital, to
complete the Gallery Deal.
September 2010, Janvey filed this lawsuit. He alleged that
the following payments from SCB to Dillon Gage were
fraudulent transfers under TUFTA and therefore should be
returned to the receivership:
• January 23, 2009 - $501, 326.30
• January 27, 2009 - $394, 567.40
• January 30, 2009 - $368, 491.51
• February 2, 2009 - $3, 002, 639.10
• February 6, 2009 - $366, 171.50
• February 13, 2009 - $486, 959.86
parties proceeded to trial in July 2015. The jury was asked
two questions: (1) were the transfers from SCB to Dillon Gage
fraudulent transfers?; and (2) did ...