Ponzi Clawback Verdict Against Bayou Investors Stands

Law360, New York (February 6, 2012, 7:13 PM EST) -- A New York federal judge on Monday upheld a jury verdict in a bankruptcy clawback suit against investors in Bayou Group LLC who cashed out before the public learned its hedge funds were a $450 million Ponzi scheme.

U.S. District Judge Paul G. Gardephe said several investors who withdrew more than $8 million from Bayou funds prior to its 2005 collapse had reason to believe that Bayou, which catered to institutional investors, was insolvent. That knowledge makes the withdrawals fraudulent under bankruptcy law.

The decision denies...
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Case Information

Case Title

In Re: Bayou Group, LLC


Case Number

1:09-cv-02340

Court

New York Southern

Nature of Suit

Bankruptcy Appeal (801)

Judge

Paul G. Gardephe

Date Filed

March 13, 2009

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