Investors in a real estate Ponzi scheme brought a motion for certificates of pending litigation against three properties allegedly transferred to family and friends after the collapse of the scheme.
Applying the test for fraudulent conveyance CPL relief, the court found a high probability of success on the underlying breach of contract claim and strong evidence of badges of fraud supporting an intent to defeat or delay creditors.
The court rejected assertions that the transferees had paid fair market value or were unaware of the fraud, except that the balance of convenience did not justify encumbering one residence occupied by a family with a young child.
CPL relief was granted for one property, substitute trust preservation relief was ordered for sale proceeds from another, and relief was denied for the third property.
