No Ponzi Presumption Under MN Fraudulent Transfer Law

Minnesota case law summary by Attorney Richard Clem: MN fraudulent convenyance, Ponzi presumption.

Patrick Finn and Lighthouse Management Group, Inc., v. Alliance Bank, et al.. MN fraudulent convenyance, Ponzi presumption

In this appeal, the Minnesota Supreme Court unraveled a Ponzi scheme perpetrated by First United Funding, LLC, and Corey N. Johnston. However, not all of the interests in the scheme were undersubscribed, and this case involves payments made to investors from the non-fraudulent portion of the scheme. The Minnesota Supreme Court held:

  1. Minnesota's Uniform Fraudulent Transfer Act ("MUFTA"), Minn. Stat. 513.41 et seq., does not contain a "Ponzi-scheme presumption."
  2. The limitations period applicable to MUFTA claims based on actual fraud shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud. target = "_blank"> Minn. Stat. 541.05.

The court declined to apply federal cases such as Perkins v. Haines, 661 F.3d 623 (11th Cir. 2011) recognizing such a presumption.

Nos. A12-1930 and A12-2092 (Minn. Feb. 18, 2015)

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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