(CN) - A woman who owes a judgment more than $62 million to Wells Fargo and Regions Bank must answer claims she fraudulently transferred funds to avoid payment, a federal judge ruled.
Wells Fargo and Regions Bank sued Sabrina Barber and her company, Blaker Enterprises LLC, for making fraudulent transfers in order to avoid paying a judgment owed to the banks.
The deficiency comes from a 2010 foreclosure judgment.
After the judgment was entered, Barber allegedly transferred substantial amounts to at least three different accounts.
The banks also allege Barber received $1 million in a divorce settlement that should have been put toward paying the outstanding judgment, but instead she withdrew sums of more than $200,000 at a time.
The banks filed a complaint seeking injunctive relief, for Barber's interest in Blaker Enterprises to be foreclosed, and to have Barber ordered to stop making withdrawals on the basis of their being fraud and constructive fraud.
Barber asked the court to dismiss the case due to lack of subject matter jurisdiction and failure to state a claim.
The judge declined to give the banks injunctive relief, but upheld all other claims.
In doing so, U.S. District Judge Paul Bryon said injunctive relief would be inappropriate because liability in the case has yet to be proven. He also held that because Barber and Blaker Enterprises reside in Florida, subject matter jurisdiction is proper.
According to the order, the banks sufficiently pleaded their claim regarding a charging order and foreclosure of Barber's interest in Blaker since she is the sole member and a charging order would not timely allow the judgment to be paid.
Judge Byron concluded that Barber did in fact make the transfers to avoid paying the judgment since the transfers were to an insider, she retained possession of the funds, and she was insolvent at the time she made the transfers.
Byron further reasoned that Barber transferred the money shortly after the judgment was entered against her, but shortly before the banks sued for deficiency judgment.
Barber has until February 18 to answer the complaint.
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