Clawback Proceedings Initiated in CFO Management Holdings’ Bankrupt “Ponzi Scheme”
February 17, 2021, Eastern District of Texas – Trustee, David Wallace for the bankruptcy estate of CFO Management Holdings, LLC and its affiliates (the “Debtors”), initiated approximately 40 adversary proceedings against many creditors last month. The Trustee seeks to avoid and recover “preferential and fraudulent transfers” made by the Debtor.
Debtor CFO Management Holdings, LLC, a real estate development company focused on developing and selling residential and commercial real estate in North Texas and Southern Oklahoma. Debtors were controlled by Phillip Carter or by entities that Carter controlled, managed, or owned.
Allegedly, Carter participated in a “massive years-long multi-million-dollar consumer-fraud scheme.” He was seemingly “aided and abetted in this scheme by brokers and lenders” who were all too eager to “enrich themselves at the expense of the scheme’s victims, typically senior citizens whose investments represented, in some cases, their life savings.” Carter ostensibly either “misappropriated investor funds to pay off personal tax liens and fund his lifestyle or used funds from new investors to pay the interest and obligations owed to other investors” in the form of “Ponzi payments.”
The biggest claim amount in the group, so far, is for a return of $1,500,000, filed against TBG Funding, LLC. Honorable Judge Brenda T. Rhoades presides over the Debtors’ bankruptcy cases in the United States Bankruptcy Court for Eastern District of Texas. The Debtors filed for bankruptcy two years ago in February 2019.