NEW ORLEANS (CN) - The Golf Channel must return nearly $6 million that convicted Ponzi schemer R. Allen Stanford's paid it for advertising, the 5th Circuit ruled.
Stanford, who turn 65 this month, is serving a 110-year prison sentence after a federal jury in Houston, Texas, convicted him of running a $7 billion Ponzi scheme by selling phony certificates of deposit.
In 2011, the court-appointed receiver for Stanford's companies went after the Golf Channel among others he believed benefited from the scheme.
Ralph Janvey, a partner with Krage Janvey in Dallas, claimed that Stanford's firm paid the cable network $5.9 million for advertising that furthered the scheme while providing "no value to the debtor's creditors."
Though a federal judge determined that the payments at issue were fraudulent transfers under the Texas Uniform Fraudulent Transfer Act, the court credited Golf Channel's defense that it received the payments in good faith and in exchange for services rendered.
"Golf Channel looks more like an innocent trade creditor than a salesman perpetrating and extending the Stanford Ponzi scheme," the court had found.
A three-judge panel for the 5th Circuit reversed Wednesday, however, after finding no showing by the Golf Channel that its services preserved the value of Stanford's estate or had "any utility from the creditors' perspective."
"Golf Channel only brought forth evidence showing the market value of its services," Judge Jennifer Walker Elrod wrote for a three-judge panel. "This was insufficient to satisfy its burden under TUFTA of proving value to the creditors. While Golf Channel's services may have been quite valuable to the creditors of a legitimate business, they have no value to the creditors of a Ponzi scheme."
Stanford's 2006 two-year advertising agreement included 682 commercials per year, live coverage of a championship tournament for which Stanford was a title sponsor, and promotion of Stanford's products and brand. The opinion notes that Stanford targeted the sports audience because "of its large proportion of high-net-worth individuals, the people most likely to invest with Stanford."
Stanford is appealing his conviction from a federal corrections institute in Sumterville, Fla.
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