GVA wins Seven Figure Judgment
After a five day trial stretching over two months, the United States Bankruptcy Court for the Central District of California, entered judgment for GVA’s client, a world and national champion cyclist and Orange County-based real estate investor. The complaint sought to deny a discharge to a Huntington Beach debtor alleged to have operated a “mini-Madoff” style Ponzi scheme that defrauded investors out of more than $8 million from 2003 to 2009. Most of the debtor’s victims were friends and neighbors who thought they were investing in real estate projects during the height of the real estate boom but were in reality supporting the debtor’s lavish lifestyle.
The complaint sought to recover funds allegedly stolen by the debtor in 2008 from an escrow set up to acquire property in Sunset Beach. When the theft was discovered in March 2009, the investor filed suit in Orange County Superior Court to recover the money. In October 2009, the debtor filed his Chapter 7 bankruptcy case, listing assets of less than $1 million and debts in excess of $8.5 million, and sought to discharge all investor claims, including the theft claim.
In its twenty-two page Statement of Decision, the Court held that the debtor obtained the escrow funds by fraud, conversion (theft) and defalcation while in a fiduciary capacity, and awarded GVA’s client a judgment for $1 million plus interest from the date of the theft and costs of suit. The Court held the claim against the debtor to be non-dischargeable in both the still-pending bankruptcy and any subsequent case the debtor might file. GVA also obtained a judgment against the debtor’s wife in the related Superior Court action.