Janvey v. Golf Channel, Inc. (Opinion)Annotate this Case
The Golf Channel, Inc. entered into an agreement with Stanford International Bank Limited (Stanford) under which Golf Channel received $5.9 million in exchange for media-advertising services. It was later discovered that Stanford used a classic Ponzi-scheme artifice. At issue in this case was whether Golf Channel must return all remuneration paid for services rendered absent proof the transaction benefited Stanford’s creditors. The Fifth Circuit initially ordered Golf Channel to relinquish its compensation, concluding that media-advertising services have “no value” to a Ponzi scheme’s creditors despite the same services being potentially “quite valuable” to the creditors of a legitimate business. On rehearing, the Circuit vacated its opinion and certified a question to the Supreme Court regarding the Texas Uniform Fraudulent Transfer Act (TUFTA), under which an asset transferred with intent to defraud a creditor may be reclaimed for the benefit of the transferor’s creditors unless the transferee took the asset in good faith and for “reasonably equivalent value.” The Supreme Court held that TUFTA does not contain separate standards for assessing “value” and “reasonably equivalent value” based on whether the debtor was operating a Ponzi scheme and that value must be determined objectively at the time of the transfer and in relation to the individual exchange at hand.