The Collapse of Financial Fraud: Measuring Bankruptcy Avoidance Actions

This Article analyzes bankruptcy avoidance actions in the context of Ponzi schemes and the competing interests of the government and creditors. Forfeiture statutes are helpful for collecting assets in Ponzi schemes. Once fraud enters the picture, the government has the long arm of the law on its side and it can, almost immediately begin to seize assets related to the Ponzi scheme. But bankruptcy avoidance actions can also marshal and distribute property of the estate. Both sets of rules can in many instances create a fair division between all creditors and victims. The two sides may never agree on who should win, but at lease there is recognition between the two cams that more can be done to reconcile the approach of two very different systems in the same case