Trustee Schwartzer Brings A Lawsuit to Recover Alleged “Fraudulent Transfers” in Welscorp “Ponzi Scheme”
November 22, 2021, District of Nevada – Trustee Lenard E. Schwartzer for the bankruptcy estate of Welscorp, Inc. initiates an adversary proceeding against Adam Schug for avoidance and recovery of $174,015.89 under Bankruptcy Code sections 544(b), 548(a), 548(b),550(a), and 551 and state laws as alleged “actual and constructive fraudulent transfers.”
The complaint alleges that Debtors Welscorp, Inc. and its co-debtor affiliates and principals were operated as a “Ponzi scheme” and that Welscorp principals allegedly “raised about $29.5 million from over 600 investors by offering investors pooled investment proprietary sports betting system.” The complaint further asserts that investors were allegedly “enticed with the possibility of extraordinary returns”, but in reality, “the entities used less than 15% of the capital raised to bet on sporting events,” and the Debtors’ principals allegedly “stole the rest.”
The Trustee argues that Defendant Schug received money from the Debtors as “broker commissions” for bringing new money into the “fraudulent scheme” and other compensation. Additionally, the Trustee accuses Schug of allegedly being the top transferees in the Debtor’s “fraud”, having received regular transfers worth $174,015.89 within the two years prior to the Debtor’s petition date.
In re WELSCORP, INC., Case No. BK-S-19-18056-ABL