Steven l. tribler1/27/2024 ![]() Federal jurisdiction is based on the ancillary jurisdiction of the federal courts, Pope v. That law was repealed the following year when Illinois adopted the Uniform Fraudulent Transfer Act, 740 ILCS 160, and later we shall consider the possible bearing of the new law on this case. ![]() The law under which the receiver proceeded is the Illinois law of fraudulent conveyances as it stood in 1989. The appeals that we have consolidated for decision arise from the receiver's efforts to recover additional assets from Douglas's ex-wife (Lisa Lehmann) and her husband, from one of the investors in the Ponzi scheme who was lucky enough to make money (Joseph Phillips), and from five religious corporations. Douglas was prosecuted for fraud, pleaded guilty, and is serving a 12-year federal prison sentence. The scheme was launched in 1987 and by the time it crashed in 1989 Douglas's corporations had raised $30 million from the sale of limited-partner interests. These payments gave the scheme credibility, enabling Douglas to sell additional limited-partner interests. Although some trading of commodities was done, most of the money raised from the sale of the limited-partner interests was used simply to pay the promised return. The corporations represented to prospective investors that the limited partnerships would trade commodities and yield the limited partners a return of 10 to 20 percent per month on their investment. ![]() Douglas created three corporations and caused them in turn to create limited partnerships in which the corporations would be the general partners and would sell limited-partner interests to the investing public. Here is how the scheme operated (approximately-we shall simplify the facts for the sake of clarity). Michael Douglas masterminded a Ponzi scheme that has given rise to the interesting and important issues of fraudulent-conveyance law which these appeals require us to consider.
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