In Re Bullion Reserve of North America, a California Corporation, Debtor. Curtis B. Danning, Chapter 7 Trustee v. Michael L. Miller

This dispute arose from a transaction in which Alan Saxon, the president of Bullion Reserve of North America (“BRNA”), agreed to contribute $1.5 million to The Commercial Bank of California (“CBC”) in exchange for an ownership interest in CBC.

Arnold Kopelson and Michael Miller were members of CBC’s Board of Directors. CBC was desperately in need of capital, and Kopelson approached Saxon for a capital contribution. Saxon agreed. He caused BRNA to transfer $1.5 million to his personal account, and in turn made a non-recourse loan of $1.5 million to Miller and Kopelson. The money was placed in Kopelson’s personal bank account, and used to purchase stock in Kopelson’s and Miller’s names. In accordance with the controlling agreement, the stock was immediately pledged to Saxon as security for the loan.

BRNA then filed a petition under Chapter 7 of the Bankruptcy Code. During the liquidation proceedings, Curtis B. Danning, bankruptcy trustee for BRNA, and Saxon’s estate stipulated the initial transfer from BRNA to Saxon was fraudulent under 11 U.S.C. § 548 . Danning then brought an adversary proceeding against Miller under 11 U.S.C. § 550 , which allows a bankruptcy trustee to recover…