MacKenzie

BACKGROUND

Keith Mackenzie, like many others, invested funds in AFI. AFI was operated by Gary Eisenberg who entered a guilty plea to federal securities and mail fraud charges in 2002 and is currently serving a 63-month prison sentence. In that plea, he conceded that he operated AFI as a Ponzi scheme—paying investors purported profits with funds raised from other inves- tors.

Mackenzie invested $73,400 with AFI in 1995 and 1996 as a purported limited partner. In connection with his subsequent withdrawal from AFI, he received payments totaling $89,824.18 between 1996 and 1997. Of the total payments, $73,400 was a return of Mackenzie’s principal investment. The rest, roughly $16,424, was a fictitious gain on the princi- pal investment.

AFI’s bankruptcy proceedings commenced on October 22, 2001. In October of 2003, the Trustee, Carolyn A. Dye, com- menced adversary proceedings against approximately 170 of AFI’s investors, including Mackenzie, to avoid transfers made to them by AFI.2 The Trustee claimed avoidance and recovery 1 Although the district court’s order remanded the case to the bankruptcy court for further factual findings, and thus was not final, we have jurisdic- tion to…