In Re: Cynthia Cohen, Debtor. Robert P. Abele, Trustee/movant v. Modern Financial Plans Services, Inc.

In a case of first impression in this Circuit we are called upon to determine whether the person listed on the purchaser line of a cashier’s check exercises dominion over the funds for the purpose of determining who may be subject to a voidable preference in a bankruptcy adversary action. Robert P. Abele, the debtor’s Trustee, seeks to avoid a fraudulent transfer, under 11 U.S.C. § 548 , which was made to settle a debt owed to appellee Modern Financial Plans Services (“Modern”) by the debtor’s husband. The debtor, Cynthia Cohen (“Cynthia”) assisted her husband by purchasing a cashier’s check payable to Modern (with separate funds not listed as an asset in her husband’s bankruptcy), and designating her husband, Jeffrey Cohen (“Jeffrey”), as the purchaser on the face of the check.

The Trustee appeals the district court’s decision affirming the bankruptcy court’s judgment in Modern’s favor. The district court held that Jeffrey was the initial transferee of the funds and that Modern was the subsequent transferee who accepted the funds in good faith, pursuant to 11 U.S.C. § 550 (b). We have jurisdiction under 28 U.S.C. §§ 158 (d) and 1291, and we reverse and remand. We hold that…