Sims
Sims v. De Armond (In re Lendvest Mortgage, Inc.)
Opinion
Lead Opinion
Jaroslovsky, J.
MEMORANDUM OF DECISION
Before its collapse, the debtor operated a mortgage brokerage. Much of its operational financing came from individual investors. In this adversary proceeding, the Trustee seeks to recover as a preference $50,000.00 from defendant investors Willard and Norma De Armond.
In 1986, the debtor made a $300,000.00 loan to its president, David Hansen. The loan was secured by a deed of trust to Hansen’s property. The debtor then sold fractional interests in the note and its deed of trust to individual investors; the De Armonds purchased a Vg interest for $50,-000.00 in July, 1987.
The debtor was the trustee under the deed of trust. In addition, the De Armonds gave the debtor a special power of attorney to manage their investment and sign all papers relating to it.
In January, 1988, Hansen paid off the loan in full; all funds went to the debtor. A full reconveyance executed by the debtor was recorded on January 22,1988. Instead of paying the De Armonds their share, however, the debtor instead gave them its unsecured note for $50,000.00 and kept the cash for itself.
On May 5, 1988, just a few weeks before the bankruptcy filing, the debtor and the De Armonds entered…