Photo of Nellie E. Hestin

Nellie represents financial industry clients in state and federal courts around the country, in all stages of litigation and alternative dispute resolution.

McGuireWoods’ Ponzi Litigation team launched its Ponzi Perspectives blog in early 2021 to track key decisions and new cases in Ponzi civil and criminal litigation.  Ponzi Perspectives focuses on cases and decisions that have the potential to influence controlling law on Ponzi-related issues.  The blog also offers analysis of key decisions and practical considerations when

February 3, 2021 – Rotstain v. Mendez, 2021 WL 359989 (5th Cir.)

On February 3, 2021, the United States Court of Appeals for the Fifth Circuit issued an opinion in Rotstain v. Mendez, holding in part that a receiver had standing to bring claims on behalf of investors in connection with a Ponzi scheme.

In the context of denying a motion to intervene, Rotstain clarified that receivers and their assignees have standing to bring claims on behalf of investors when the investors’ claims are against alleged conspirators for conduct in furtherance of that scheme and are derivative of and dependent on the claims of the receivership estate.

Continue Reading Fifth Circuit Holds that Receiver Has Standing to Bring Derivative Claims on Behalf of Investors Harmed by Ponzi Scheme

June 1, 2020 – Isaiah v. JPMorgan Chase Bank, N.A., 960 F.3d 1296 (11th Cir.)

On June 1, 2020, the U.S. Court of Appeals for the 11th Circuit issued Isaiah v. JPMorgan Chase Bank, N.A., a precedential opinion that draws sharp limits on court-appointed receivers’ ability to bring claims against financial institutions that provided banking services to customers later discovered to be running a Ponzi scheme.

As the economy transitions from its nearly decade-long bull run to a swift and unanticipated recession, Ponzi schemes previously kept afloat by investments of new money are likely to collapse as investors seek to withdraw their principal. When these schemes collapse, investors often sue the companies created by the fraudsters in an attempt to recoup their investments. Because these companies are often nothing more than sham fronts with no assets of their own, state courts appoint receivers and empower them to bring litigation to marshal the companies’ assets to satisfy judgments for creditors. These receivers, in turn, frequently bring claims against the banks utilized by the fraudsters. Such lawsuits present significant exposure for financial institutions, as large-scale Ponzi schemes can involve the movement of tens or even hundreds of millions of dollars through bank accounts set up by the schemers.
Continue Reading 11th Circuit Curtails Receivers’ Ability to Bring Ponzi Scheme-Related Claims Against Banks