MDC Litigation Trust Seeks $23.5M From Debtor’s CEO & Others, Alleges Fraud, Breach of Fiduciary & Seeks Clawback
November 5, 2021, District of Delaware – Plaintiff Trustee RPA Asset Management Services, LLC of the MDC Litigation Trust (the “Trust”), files a complaint against Defendants Mark Siffin (“Siffin”), MDC Acquisition LLC (“MDC Acquisition”), Maefield Development Corporation (“Maefield”), and MDCE Investments LLC. The Trust seeks to recover $23.5M as “fraudulent” and “preferential” transfers allegedly made by Debtor MDC Energy LLC to or for the benefit of Mark Siffin, who at the time of the transfers was Debtor’s CEO and majority interest holder.
The complaint argues that Siffin “directed and caused” Debtor to transfer $23.5 million to Siffin’s wholly-owned company, MDC Acquisition. The complaint further asserts that the transfer was part of an “undocumented cash management arrangement”, allegedly a thinly-veiled effort to defraud secured lenders by placing MDC Energy’s funds beyond their reach. The Trustee claims that although a portion of the funds “improperly” transferred to MDC Acquisition was later paid to some of the Debtor’s trade creditors, Siffin “devised a scheme” to keep a substantial amount of the money for himself.
Accordingly, the Trustee alleges that the Court must avoid $23.5 million as “fraudulent transfers” under § 548 of the Bankruptcy Code. The Trustee also claims that the Debtor transferred $23.5 million on account of an antecedent debt – towards fees for services Siffin allegedly provided to Debtor and for Debtor’s trade creditor obligations. Accordingly, the Trustee contends that the alleged transfer is avoidable as “improper preferential transfer” under § 547 of the Bankruptcy Code. The Trustee also accuses Siffin of “breach of fiduciary duty”, “unjust enrichment”, and “conspiracy”.