In re Mushroom Transportation Co.
United States Bankruptcy Court for the Eastern District of Pennsylvania
227 B.R. 244 (1998)
- Written by Rose VanHofwegen, JD
Facts
After Mushroom Transportation Company (Mushroom) (debtor) filed for bankruptcy, trustee Jeoffrey Burtch (plaintiff) sued Fidelity Bank, A1 Discount Company, and A-1’s pension and profit-sharing plans (collectively A1) (defendants) claiming they received proceeds from funds stolen by Mushroom’s former counsel, Jonathan Ganz. Ganz had deposited stolen funds in his personal bank account commingled with other deposits before paying multiple individuals and other entities. Some deposits were legitimate, but some Ganz stole from other bankruptcy estates. In total, Ganz had paid out more from the account than the amount stolen from Mushroom when he paid off Fidelity and A1, and the account reached a zero balance years before Mushroom filed for bankruptcy. Burtch asserted common-law claims for conversion and constructive trust and for turnover and unauthorized transfer under the federal bankruptcy code. Fidelity and the A1 entities countered that they had loaned money to Ganz, and no evidence showed Ganz repaid them with money stolen from Mushroom. Fidelity also argued that it was a good-faith transferee that received the funds for fair value.
Rule of Law
Issue
Holding and Reasoning (Fox, J.)
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