Ponzi Scheme Clawback Defense

When a Ponzi scheme collapses, the court-appointed receiver or bankruptcy trustee usually sues to recover money that went out of the scheme before it failed. Investors who were paid more than they put in, the so-called net winners, are common targets, along with insiders, sales agents who were paid commissions, and others who received the scheme's money. Many of the investors who receive these demands did nothing wrong. Reiser Law, P.C. represents investors and others facing clawback claims in California and Florida, from offices in the San Francisco Bay Area and Miami.

Why receivers sue investors

A receiver's job is to collect what is left of the scheme and distribute it fairly among the victims. Payments to early investors came from later investors' money, so receivers treat profits paid to net winners as money that belongs to the investors who lost. Recovering those payments is how the receiver evens out the losses.

The legal tool is fraudulent transfer law. In California, a transfer is voidable if the debtor made it with actual intent to hinder, delay or defraud any creditor. Cal. Civ. Code § 3439.04(a)(1). Florida's Uniform Fraudulent Transfer Act uses the same actual-intent standard. Fla. Stat. § 726.105(1)(a) (2026).

The Ponzi scheme presumption

Receivers rarely have to prove what the operator intended with each payment. In both circuits that cover our offices, courts treat proof that a transfer was made in furtherance of a Ponzi scheme as establishing actual intent to defraud.

Ninth Circuit (California). Applying California's fraudulent transfer statute, the Ninth Circuit held that "the mere existence of a Ponzi scheme is sufficient to establish actual intent" to defraud. Donell v. Kowell, 533 F.3d 762, 770 (9th Cir. 2008).
Eleventh Circuit (Florida). Under Florida's statute, "proof that a transfer was made in furtherance of a Ponzi scheme establishes actual intent to defraud under § 726.105(1)(a) without the need to consider the badges of fraud." Wiand v. Lee, 753 F.3d 1194, 1201 (11th Cir. 2014).

Because intent is presumed, most clawback defenses focus on other questions: how much the investor actually received in excess of what he or she invested, whether the investor acted in good faith, and whether the claim is timely.

Net winners and net losers

Courts generally use what the Ninth Circuit calls the netting rule: amounts the scheme paid to an investor are netted against the amounts the investor put in. Donell, 533 F.3d at 771. An innocent investor who received less than his or her principal back is a net loser and generally faces no claim for those payments. An investor who received more than principal is a net winner, and the excess, often called fictitious profits, is the usual target.

Good-faith investors generally may keep payments up to the amount they invested and must disgorge only the profits. Id. at 771-72. The Eleventh Circuit, in a bankruptcy case, described the same rule: a defrauded investor gives value in exchange for the return of principal, but not for payments in excess of principal. Perkins v. Haines, 661 F.3d 623, 627 (11th Cir. 2011).

Two practical points follow. First, the netting math can be wrong. Receivers work from the scheme's own records, which were kept by the people running a fraud, and they may miss deposits, combine accounts that should be separate, or misread transfers between related accounts. Second, taxes an investor paid on fictitious profits generally do not reduce the amount owed. Donell, 533 F.3d at 779.

The good-faith defense

Both states protect transferees who took in good faith and for reasonably equivalent value. California provides that a transfer is not voidable under the actual-intent provision against a person who took in good faith and for a reasonably equivalent value. Cal. Civ. Code § 3439.08(a). Florida's statute is to the same effect. Fla. Stat. § 726.109(1) (2026).

For investors, good faith usually protects the return of principal. It generally does not protect profits, because the investor did not give value for them. Good faith can be contested when a receiver argues that the investor ignored red flags, had inside knowledge, or was close to the operator. Commission recipients and insiders face different and often harder questions, because the receiver will argue that what they gave in exchange was not reasonably equivalent value.

Deadlines that can defeat a clawback claim

California. An actual-intent claim generally must be brought within 4 years after the transfer or, if later, within 1 year after the transfer was or could reasonably have been discovered by the claimant, and every claim under the statute is extinguished if not brought within 7 years after the transfer. Cal. Civ. Code § 3439.09(a), (c).
Florida. An actual-intent claim is extinguished unless brought within 4 years after the transfer or, if later, within 1 year after the transfer was or could reasonably have been discovered by the claimant. Fla. Stat. § 726.110(1) (2026).

Each payment is a separate transfer, so the earliest payments may be time-barred even when later ones are not. In federal receivership and bankruptcy cases, other rules can change the calculation, so the deadline analysis is specific to each case.

How we defend clawback claims

Rebuild the account history. We reconstruct every deposit and withdrawal from the investor's own bank records, statements and tax forms, and compare them to the receiver's numbers.
Challenge the netting. We test which accounts were combined, how transfers between family members or entities were treated, and whether credits for reinvested amounts were given.
Raise every available defense. Good faith, limitations, the start date of the alleged scheme, and the nature of each payment all bear on liability.
Evaluate settlement. Receivers often offer a discount for early settlement. We evaluate whether the offer reflects the real exposure.
Coordinate with the investor's own claims. An investor who is a net winner in one account may be a net loser in another, or may hold claims against third parties.

What to gather before you call

The receiver's demand letter, complaint or settlement offer
Every account statement you received from the investment
Your bank records showing each transfer in and out
Tax returns and forms reporting income from the investment
Any communications with the operator or sales agents

Questions clients ask

I had no idea it was a Ponzi scheme. Do I still have to pay?

Possibly, as to profits. Good faith generally protects the return of your principal, but receivers can recover amounts paid to you above what you invested, even from innocent investors.

I paid taxes on the profits. Does that count?

Generally not. Courts have held that taxes paid on fictitious profits do not reduce the amount the receiver can recover. Your tax adviser should review whether amended returns or other tax relief may be available.

Can I offset what I lost in another account?

Sometimes. Whether accounts are netted together depends on ownership, the receiver's methodology and the court's orders, and it is often worth contesting.

Should I accept the receiver's settlement offer?

Not before you have checked the receiver's numbers and the defenses available to you. An early discount can be worth taking, but only if the underlying figure is right.

Talk to us

To discuss a clawback demand, call (305) 726-2003 for our Miami office or (925) 256-0400 for our Bay Area office, email matthew@reiserlaw.com, or use our contact page. If you lost money in the same scheme, see our page on investor fraud and Ponzi scheme recovery and our article on recovering losses after a Ponzi scheme.

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