The bankruptcy trustee that’s attempting to unwind an alleged Ponzi scheme will have the authority to calculate the amounts that investors who made money from the scheme must pay back — following a process that was adopted in another recent case — a British Columbia court ordered.
The Supreme Court of B.C. granted relief to Campbell Saunders Ltd. — the trustee in the bankruptcy of Curtis Gordon Quigley — which is seeking to recover funds from the “net winners” in a Ponzi scheme that was allegedly run by Quigley.
According to the court, the scheme, which operated between 2008 and 2020, promised to generate high, short-term returns from investing in properties — seniors selling their homes at low prices before moving into care facilities — but actually just used the proceeds from new investors to pay returns to earlier investors.
While Quigley was charged with fraud and money laundering, he never stood trial, as he drowned in June 2024 before the case was heard. The charges were stayed as a result.
The scheme, which involved the movement of $174 million over 12 years, resulted in investors collectively losing $8.3 million, the court noted. And, the trustee determined that the only potential source of recovery for those investors was clawing back money from the scheme’s winners.
So far, it has reached settlements with 28 winners involving the return of over $1.4 million, and it’s pursuing another $2.5 million from 12 other investors.
In its decision, the court ruled that the payments to investors who made money from the scheme are considered fraudulent conveyances, are declared void, and must be returned to the estate.
It also approved a process for the trustee to calculate how much investors owe, rather than pursuing a series of separate civil actions against the investors.
According to the court, while the “net winners” didn’t oppose the order voiding the profits they received from the scheme, they did oppose the implementation of the process for the trustee to make these determinations, rather than requiring it to establish these claims in litigation.
The option of allowing the trustee to determine what investors owe in a bankruptcy-type process, rather than through litigation, only occurred to the trustee after the B.C. Supreme Court granted similar relief in the case of My Mortgage Auction Corp. (MMAC) last year. So, rather than depleting the estate’s modest resources with litigation, the trustee applied to the court for similar relief as in the MMAC case.
The court has now granted that relief, ruling that instead of litigating, the trustee’s process — which includes a mechanism for investors to dispute its calculations — “is appropriate and consistent with the goals” of bankruptcy law.
“I find that the trustee’s approach properly and fairly balances the interests of the persons involved in this scheme, whether net winners or net losers, in this very difficult situation and that this approach will allow for a just and fair outcome to all of them,” the court said.
Alongside the decision to allow the trustee to use its own process to determine what the winners owe, the court also stayed the existing legal actions against them.