The Supreme Court held that the participants in Charles Ponzi's famous scheme who cashed out just before the schemes collapse had to repay the money received and join others similarly situated as general creditors of his estate. Ponzi solicited participants in his scheme by offering a 150% return on investment after 45 days of investment. When word got out that the scheme was untenable and after taking in over $9 million in funds, there was a run on the remaining funds of the scheme. Several parties were paid the amounts due to them under Ponzi's terms just before its collapse. Money in Ponzi's accounts consisted of comingled funds of all of his creditors. The Court held that because the participants were unable to directly identify the money that they held a claim to, those who received payment did so unlawfully, and the bankruptcy trustee could demand payment back into the estate for dispersment to the general creditors.
Full case available at: http://www.mlmlegal.com/legal-cases/Cunningham_v_Brown.php
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