About the Author

KBP

Kathy Bazoian Phelps

Partner, Diamond McCarthy, LLP, Los Angeles, California

Admitted to the California Bar, 1991

Juris Doctor, University of California at Los Angeles, 1991

Bachelor of Arts, Pomona College, 1988


Professional Concentration

Kathy Bazoian Phelps has 22 years of experience as a lawyer in bankruptcy law and fraud litigation. Kathy’s practice includes representing trustees and receivers, debtors, and secured and unsecured creditors in bankruptcy cases and other insolvency proceedings. She has served as Chapter 11 trustee and frequently represents operating and liquidating trustees and receivers in the United States District Court, the United States Bankruptcy Court, and the Superior Court of the State of California. She also represents defendants in bankruptcy litigation, including fraudulent transfer defendants in Ponzi scheme cases, and has extensive litigation experience in a variety of bankruptcy litigation matters.

Kathy has lectured widely and written on bankruptcy and receivership matters, with a focus on Ponzi schemes. Her book entitled The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes, co-authored with Hon. Steven Rhodes, has garnered national and international attention as the authoritative work on Ponzi scheme law.

In addition to her roles as lawyer, speaker and author, Kathy also serves as a mediator and is currently on the Bankruptcy Mediation Panel for the Central District of California.


Publications

  1. The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes (LexisNexis® 2012), co-authored with Hon. Steven Rhodes, United States Bankruptcy Judge for the Eastern District of Michigan. www.theponzibook.com
  2. The Depths Of Deepening Insolvency: Damage Exposure For Officers, Directors and Others (American Bankruptcy Institute 2013), co-authored with Prof. Jack F. Williams
  3. Ponzi-Proof Your Investments: An Investor’s Guide to Avoiding Ponzi Schemes and Other Fraudulent Scams (IRR Publishing 2013) www.ponzi-proof.com
  4. FraudNet Compendium, contributing author of chapter on Ponzi Schemes (to be published in 2013)
  5. Author of The Ponzi Scheme Blog at www.theponzischemeblog.com
  6. Handling Claims in Ponzi Scheme Bankruptcy and Receivership Cases, 42 Golden Gate U. L. Rev. 567 (2012)
  7. What Do You Do When the Feds Come For Your Assets? Third-Party Claims in Forfeiture Proceedings, American Bar Association Business Law Section’s Online Resource, Business Law Today (June 21, 2012)
  8. Supplementing the Tools in the Trustee’s Toolbox, NABTalk, The Journal of the National Conference of Bankruptcy Trustees (Spring 2012)
  9. Liability of Professionals and Insiders in Ponzi Schemes, 27 CEB Cal. Bus. L. Prac. 22 (Winter 2012)
  10. Emergence of Mareva by Letter: Banks’ Liability to Non-Customer Victims of Fraud, Business Law International, Vol. 12 No. 2 (May 2011)
  11. In Pari Delicto and The Blame Game: Should Receivers Get Caught in the Fray?, Receivership News (January 2011)
  12. Opportunities for Trustees in Ponzi Scheme Cases, NABTalk, The Journal of the National Association of Bankruptcy Trustees (Summer 2010)


Memberships and Positions

  1. Editor in Chief of Receivership News
  2. International Chamber of Commerce FraudNet global network, www.icc-fraudnet.org
  3. Board of Directors, Los Angeles/Orange County Chapter, California Receivers Forum
  4. Board of Directors, National Association of Federal Equity Receivers
  5. Co-Chair, American Bar Association, White Collar Crime, Asset Forfeiture and Business Bankruptcy Subcommittee
  6. American Bankruptcy Institute, Special Task Chair of Commercial Fraud Section
  7. National Association of Bankruptcy Trustees
  8. Financial Lawyers Conference
  9. Armenian Bar Association
  10. Los Angeles Bankruptcy Forum
  11. Los Angeles County Bar Association
  12. Beverly Hills Bar Association


Speaking – Panels and Presentations

Complex Bankruptcy Litigation: Ponzi Schemes & Other Fraudulent Conveyances, Commercial Law League of America at National Conference of Bankruptcy Judges, October 31, 2013, in Atlanta Georgia.

Mock Trial: Receiver and Investor Class v. Big Bank, National Association of Federal Equity Receivers (NAFER), September 27-28, 2013, in Chicago, Illinois.

E-Discovery Seminar for Federal Judges, Federal Judicial Center, September 10-12, 2013, in Philadelphia, Pennsylvania.

Ponzi Schemes & Fraudulent Transfers, and the conference keynote address, entitled Check Your Wallet! The Dynamics and Psychology of a Ponzi Scheme, Federal Bar Association, Western District of Michigan, on July 24-26, 2013, in Traverse City, Michigan.

Uncovering Fraud in a Turnaround Engagement, 5th Annual TMA Western Regional Conference, July 17-19, 2013, in Laguna Beach, California.

A Spoonful of Sugar: Receivers in Restructurings, Liquidations, and Regulatory Actions, Los Angeles County Bar Association, Remedies Section, June 18, 2013, in Los Angeles, California.

Ponzi Schemes: A Fraud Examiner’s Role, Association of Certified Fraud Examiners, Los Angeles Area Chapter, on May 29, 2013, in Los Angeles, California.

Beverly Hills Cop – Issues in Parallel Criminal, Bankruptcy, Forfeiture Proceedings, the California Bankruptcy Forum on May 17-19, 2013 in Paradise Resort, San Diego, California.

Ponzi Schemes Explained, an interview by Stephanie Cohen on The Not So Legal Show.

Introduction to Fraud, the International Chamber of Commerce FraudNet Conference on Fraud and Asset Recovery on April 26, 2013, in Oslo, Norway.

Exploring the Depths of Deepening Insolvency, a podcast for the American Bankruptcy Institute entitled, published on April 16, 2013.

Working Group on White Collar, Asset Forfeiture Bankruptcy, a meeting of the American Bar Association, Business Law Section, Committee on Bankruptcy Court Structure and Insolvency Process, on April 4, 2013, in Washington, DC.

Ponzi Schemes – How Lawyers Can Protect Their Clients, the Glendale Bar Association, the Burbank Bar Association, and the Glendale Estate Planning Council on February 6, 2013, in Burbank, California.

Ponzi Schemes, the Loyola V Complex Case Symposium of the California Receivers Forum, January 18-19, 2013, in Irvine, California.

Trustee and The Badoff Investor Class v. Bigbank, A Mock Trial, the American Bankruptcy Institute Winter Leadership Conference, November 29 – December 1, 2012, in Tucson, Arizona.

How Accountants Can Help in Receivership Situations, the AICPA Forensic & Valuation Services Conference, November 11-13, 2012, in Orlando, Florida.

Ponzi Scheme Architecture and Pitfalls, on the Money and Business Show on Radio Shalom CJRS radio in Montreal on October 24, 2012.

Ponzi Schemes: Are You or Your Client at Risk? October 22, 2012 in Los Angeles, California.

Latest Wide World of Fraud: Claims and Defenses in Actions Targeting Investors, Bankers, Accountants, and Attorneys, the American Bankruptcy Institute Midwestern Bankruptcy Conference, October 5, 2012, in Kansas City, Missouri.

Forfeited Assets, Yours Mine or Ours: Competition in Parallel Civil and Criminal Proceedings, and Bankruptcy v Receivership: Different Strokes for Different Folks, the National Association of Federal Equity Receivers on September 13-14, 2012, in Fort Worth, Texas.

Protecting Your Assets and How to Avoid Madoff-Like Risk on the Money and Business Show on Radio Shalom CJRS radio in Montreal on August 29, 2012.

The Onslaught Continues: This Year’s Commercial Fraud Cases You Need to Know About, the American Bankruptcy Institute Northeast Bankruptcy Conference, July 12-15, 2012, in Bretton Woods, New Hampshire.

Legal Issues in Ponzi Scheme Litigation, podcast for the LexisNexis Bankruptcy Law Community on May 1, 2012. It is available here.

Ponzi Schemes – What Financial Institutions Can Do to Avoid Liability and Recover Losses, the Association of Certified Anti-Money Laundering Specialists, Southern California Chapter, on April 25, 2012.

How to Avoid a Ponzi Scheme, video with Michael Martin of the Huffington Post, published on April 17, 2012, on the Huff Post Business website.

Bankers That Bank Fraudsters Could Face Costly Liability to Victims, podcast for the Association of Certified Financial Crime Specialists on April 8, 2012. It is available here.

The Potential Pitfalls for Attorneys and Other Professionals in Ponzi Schemes, UCLA Law School on April 5, 2012.

All’s Well That Starts Well: Prejudgment Remedies, the National Association of Bankruptcy Trustees, Spring Seminar, March 29-31, 2012, in Las Vegas, Nevada.

New Law from the Madoff Case and Tips to Avoid the Next Ponzi Scheme, the Beverly Hills Bar Association on March 26, 2012.

The Government Seized the Assets!?! What Can We Do?, the American Bar Association, Business Law Section, Business Bankruptcy Committee, at its Spring Meeting, March 22-24, 2012, in Las Vegas, Nevada.

New Issues in Fraud: Causes of Action and Defenses, the American Bankruptcy Institute Bankruptcy Battleground West, March 16, 2012, in Los Angeles, California.

The Costly Collision of Financial Institutions with Ponzi Schemes, webinar for AML Services International on March 15, 2012.

Ponzi Schemes, Securities Fraud and Other Fraudulent Enterprises: From “A” (Asset forfeiture and avoiding powers) to “B” (Bankruptcy) to “C” (Coordinating multiple court proceedings), webinar for the Business Bankruptcy Committee of the American Bar Association Business Section on March 8, 2012.

Financial Institution, Meet Ponzi Scheme, the Special Assets Management Association on February 7, 2012, in Los Angeles, California.

How Receivers, Trustees and Monitors Use Their Special Powers and Tools to Trace and Recover Assets Worldwide and How to Follow the Fruitful Path of Recovering Assets from (Deep-Pocketed) Third Parties, the International Association for Asset Recovery on November 17, 2011, in Las Vegas, Nevada.

The More We Get Together, The Greater Value We’ll Preserve: Recognizing and Creating Complementary Processes and Distribution and Priority in the Bankruptcy and Forfeiture Context: The Basics at White Collar Crime & Business Bankruptcy: A Cross Disciplinary Dialog, a conference on Ponzi schemes presented jointly by American Bar Association and Golden Gate University School of Law on November 4-5, 2011 in San Francisco, California.

Bringing Third Parties In: Claims for Relief Against Third Parties and the Defenses of Lack of Standing and In Pari Delicto, the National Association of Attorneys General, October 25, 2011.

Non-Traditional Assets, the National Association of Bankruptcy Trustees on September 22, 2011, in Amelia Island, Florida.

Fraud Issues Arising in Ponzi Scheme Cases of Concern to Financial Institutions, the Commercial Finance Corporation of California on September 13, 2011, in Costa Mesa, California.

The Liability of Attorneys, Accountants and Other Professionals in Ponzi Schemes: I Wish I Had Become a Doctor!, the Beverly Hills Bar Association and the Association of Certified Fraud Examiners on August 3, 2011.

What Did You Know and When Did You Know It? The Liability of Professionals and Insiders in Ponzi Cases, the Los Angeles County Bar Association on March 16, 2011.

Fraudulent Transfer Claims and Defenses in Ponzi Schemes Cases, the National Association of Bankruptcy Trustees on September 29, 2010, in San Francisco, California.

Fraudulent Transfer Claims and Defenses in Ponzi Schemes, Standing and In Pari Delicto Issues Arising in Ponzi Scheme Cases, and Deepening Insolvency as a Cause of Action and as a Theory of Damages, the Association of Insolvency and Restructuring Advisors on June 9-12, 2010, in San Diego, California:

Media Quotations

The New York Times, July 18, 2013, in an article entitled, Bank in Madoff Case Settles With Some Plaintiffs and Gets Favorable Jury Ruling, by Susan Antilla.

The Deseret News, June 14, 2013, in an article entitled, In Faith Communities, Fraudsters Prey on Trust, by Devon Merling.

The Ponzi Blog was cited in the Concord Monitor on March 21, 2013, in an editorial entitled, Lawmakers Should Reject Fund for FRM Victims.

The Art Newspaper, February 27, 2013, in an article entitled, Gauguin in Alleged Fraud by Former NFL Star, by Riah Pryor.

The Wall Street Journal, March 19, 2012, in an article entitled, Attorney Who Wrote the Book on Ponzi Schemes Discusses Mets Deal, by Jacqueline Palank.

The Wall Street Journal, January 5, 2012, in an article entitled, The Madoff Liquidation, Three Years Later, by Jacqueline Palank.

The Memphis Commercial Appeal, February 17, 2011, in an article entitled, Legal Opinions Favor Stanford Investors, Not Charities, by Toby Sells.

The Wall Street Journal, January 3, 2011, in an article entitled, Prosecutors, Trustees Fight For Dominance In Ponzi Bankruptcies, by Jacqueline Palank.

The Pasadena Weekly, March 20, 2008, in an article entitled, Smoke Screen, by Chip Jacobs.

Representative Cases

  • Chapter 11 trustee of Sonya D. International, Inc., Hazlaha LLC and Sonya Dakar, where Kathy ran the operations of a skin care clinic, investigated the business operations and inter-company transfers, and facilitated a complex settlement which will result in payment in full to creditors.
  • Counsel for federal equity receiver in Diversified Lending Group, Inc. an SEC action in a $250 million Ponzi scheme case, where Kathy supervised the winding down of the business, the reconstruction of missing and incomplete records, the analysis and tracing of investor funds, the liquidation and recovery on various investments made by the debtor, and the prosecution of litigation to recovery funds for the benefit of the investors and creditors.
  • Counsel for group of defrauded investors in bankruptcy case of Vincent Singh and Perfect Financial Corp, defending them against the chapter 7 trustee’s fraudulent transfer, preference and usury claims.
  • Counsel for state court appointed receiver in Unicorp, Inc., a fraud litigation matter, reconstructing missing records and tracing over $9 million of funds removed by the defendant prior to the receiver’s appointment.
  • Counsel for chapter 11 trustee, and thereafter successor chapter 7 trustee, in the bankruptcy case of Persistence Capital, LLC, involving the unwinding of a Ponzi scheme, where the debtor sold a fictitious investment product related to pools of life insurance policies. Kathy assisted the trustee in establishing the nature of fraud, unwinding a series of complex financial transactions, tracing the funds, and pursuing litigation to recover funds in the case. The principals of this debtor were both ultimately convicted and sentenced.
  • Counsel for Chapter 11 trustee and thereafter the successor chapter 7 trustee, in the bankruptcy case of Eonxchange, LLC, where she investigated the fraudulent Ponzi-like activity of the debtor related to an emission credit trading program through the SCAQMD where over $90 million was misappropriated from customers and investors. Substantial funds were recovered for the benefit of the creditors and the principal of the debtor was ultimately convicted.
  • Counsel for chapter 11 and chapter 7 trustees in a multitude of bankruptcy cases, handling:
    – operating going concern businesses
    – winding down various types of businesses
    – tracing funds
    – selling real estate
    – prosecuting fraudulent conveyance and preference litigation
    – addressing countless administrative issues arising in those cases.
  • Counsel for various insolvent corporate and high net worth debtors, assisting them in out-of-court workouts, preparing for an assignment for benefit of creditors, and guiding them into a chapter 11 reorganization bankruptcy.

Bar Admissions 

  • State Bar California, 1991
  • United States District Court, Central District of California, 1991
  • United States District Court, Southern District of California, 2011
  • United States District Court, Eastern District of California, 2011
  • United States District Court, Northern District of California, 2012
  • United States District Court, Western District of Michigan, 2010

Educational Background

Pomona College (B.A. 1988)

University of California at Los Angeles (J.D. 1991)

Interests

Kathy’s personal interests and accomplishments include extensive travel and the study of the Chinese Mandarin language.