November 20, 2015

Casino Not Liable to Return Proceeds of Fraudulent Transfers

Philadelphia and Wilmington partner Andy Kassner and associate Joe Argentina recently published an article in The Legal Intelligencer titled, “Casino Not Liable to Return Proceeds of Fraudulent Transfers.” The article discussed the recent review by the Court of Appeals for the Seventh Circuit of whether a bankruptcy trustee could recover over $8 million from a casino where the debtor’s principal regularly gambled for years with funds obtained by fraudulent transfers from a debtor.

The bankruptcy trustee argued that the player passed or walked with over $6 million in chips at the casino, that the casino was aware that the player and his wife  gave false information on their credit applications with the casino, and that the casino had reason to believe that the player’s money came from the debtor’s business.

The court, however, concluded that the casino did not have sufficient reason to suspect that the player’s money was obtained by fraud and that if they investigated, it was highly unlikely that it would have uncovered said fraud.

Andy and Joe conclude that “both the District Court and Seventh Circuit applied the law concerning subsequent transferee liability, and ultimately concluded that gambling millions at a casino is no different than spending millions to buy a Rolls Royce—the subsequent transferee who gave value should not be held liable.”

Read “Casino Not Liable to Return Proceeds of Fraudulent Transfers."

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