FINRA Arbitration: What To Expect And Why You Should Choose Our Law Firm

If you are reading this article, you are probably an investor who has lost a substantial amount of money, Googled “Securities Arbitration Attorney,” clicked on a number of attorney websites, and maybe even spoken with a so-called “Securities Arbitration Lawyer” who told you after a five minute telephone call that “you have a great case;” “you need to sign a retainer agreement on a ‘contingency fee’ basis;” and “you need to act now because the statute of limitations is going to run.” You may want to ask yourself whether that attorney is as bad as the stockbrokers you were concerned about in the first place. Some attorneys will rush you to hire them before you speak to anyone else and not tell you about the clause in their contract that allows them to drop you as a client later on if they cannot get a quick settlement. They will solicit you without a real case evaluation and/or without any explanation of Financial Industry Regulatory Authority (“FINRA”) proceedings. The scenario above is not the way for attorneys to properly serve clients, and it is not the way we do business at The Law Offices of Robert Wayne Pearce, P.A. If you are planning on speaking or meeting with us or any other attorney, let us introduce you to the FINRA arbitration proceeding by giving you some information in advance to help you understand the different stages of FINRA arbitration, what you should expect from skilled and experienced FINRA securities arbitration lawyers, and what you should expect to personally do in order to have the best outcome: 1. CASE REVIEW Before we accept any case, our attorneys conduct a thorough interview of you to understand: the nature of your relationship with your broker; the level of your financial sophistication; the representations or promises made to you in connection with any investment recommendation; and your personal investment experience, investment objectives, and financial condition at the time of any recommendation or relevant time period. We will review your account records, including, but not limited to: account statements; confirmations; new account opening documents; contracts; correspondence; emails; presentations; and marketing materials that you may have received in connection with your accounts and the investments made therein, etc. Investors rarely contact our office without knowing whether they have suffered investment losses, but sometimes that occurs because the particular investor does not have all their records and/or is unsophisticated, inexperienced, and unable to decipher the account records they retained. If you retained your account statements and provide them, we should be able to at least estimate (under the different measures of damages) the amount you may be able to recover if you win your arbitration proceeding. If you do not have those records, we will help you retrieve them without any obligation so that all of us are fully aware of the amount we may possibly recover for you if we are successful in arbitration. In addition, we will spend the time necessary to get to know you and the facts of your dispute to have a good chance of success in proving your case. After all, it does not benefit either you or our law firm to file an arbitration claim that, months or years later, we discover has little chance of success. Ultimately, we want to know, and so should you, whether or not you have a claim with merit and are likely to recover damages if we go through a full arbitration proceeding. The fact is Attorney Pearce does not take cases unless he and his team believe you suffered an injustice and are likely to succeed at the final arbitration hearing. 2. THE STATEMENT OF CLAIM Many of these young and/or inexperienced attorneys with flashy websites and Google Ad Word advertisements (to get them to the top of the page) are more interested in marketing and signing up cases to settle early than they are in going all the way and winning your case at a final arbitration hearing for a just result. Oftentimes, they will insert your name in a form pleading, one that they use in every case, which states little more than if you (the “Claimant”) were an investor with brokerage firm ABC and stockbroker XYZ (the “Respondent(s)”) made misrepresentations, failed to disclose facts, made unsuitable recommendations, and violated laws 123, you are entitled to damages. They are unwilling and/or fail to take the time necessary to study the strengths and weaknesses of your case and write a detailed Statement of Claim (also referred to as the “Complaint”) with all of the relevant facts necessary to inform the arbitrators what happened and why you are entitled to recover your damages. That is not the way Attorney Pearce, with over 40 years of experience with investment disputes, files a Statement of Claim, the first and sometimes the only document that the arbitrators will read before the final arbitration hearing. 3. THE ANSWER After we file the Statement of Claim and it is served, the brokerage firm and/or stockbroker will have forty-five (45) days to file the Answer to your allegations. Oftentimes, the Respondent(s) will ask for an extension of time to file the Answer and we will give it to them provided no other deadline is extended, particularly the deadlines associated with the selection of arbitrators and scheduling of the initial pre-hearing conference, where all of the other important deadlines and dates of the final arbitration hearing are scheduled. Some clients have asked why would you give them extra time to file their best Answer? Well, we believe after 40 years of doing these FINRA arbitrations, that it is better to know the story they intend to tell the arbitrators early on and lock them in so we can come up with the best strategy and all the case law necessary to overcome their best defenses and win your arbitration. In other words, we would rather know about the defense early on than be surprised at the final hearing. Besides, Respondent(s) can always try to file...

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EquiAlt Private Placement Investments

We are investigating and representing investors against FINRA-registered brokerage firms and financial advisors who offered and sold securities issued by affiliates of EquiAlt, LLC (EquiAlt), a private real estate company which organized at least four private placements: EquiAlt Fund, LLC; EquiAlt Fund II,LLC; EquiAlt Fund III, LLC; and EA Sip, LLC (collectively referred to as the EquiAlt Funds). According to a recent SEC Complaint, Brian Davison (Davison) and Barry Rybicki (Rybicki) offered and sold $170 million of unregistered debentures issued by the EquiAlt Funds to over 1,100 investors nationwide. The SEC alleged that Davison, Rybicki, and others committed securities fraud by misrepresenting the debentures as “secure,” “safe,” “low risk,” and “conservative.” Further, while investors were promised “that substantially all of their money would be used to purchase real estate in distressed markets in the United States and their investments would yield generous returns … EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit.” According to the SEC, the revenues that were generated by the EquiAlt Funds became insufficient to pay the interest owed to investors. As a result, the SEC alleged “the Defendants resorted to [a Ponzi Scheme] fraud, using new investor money to pay the returns promised to existing investors.” While many of the sales were solicited by unregistered EquiAlt salespersons, it is reported there were many sales by small offices of registered salespersons associated with large independent FINRA-registered stockbrokerage and insurance firms primarily located in Florida, Arizona, California, and Nevada, and many other states nationwide. It is alleged that EquiAlt salespersons received “commissions of anywhere between 10%-14%,” which is extraordinarily high for the sale of any investment product. Thus, there was such a strong incentive to sell these debentures by any means. It is likely that many of the FINRA registered brokerage firms did not authorize sales of the EquiAlt Fund debentures and that no due diligence or any other investigation of the company or its investment offerings were ever conducted. Consequently, it is very likely that the EquiAlt Funds were sold via misrepresentations and misleading statements. We have learned that investors who purchased the EquiAlt Funds debentures through FINRA-registered brokerage firm representatives also received the same sales pitch; that is, the debentures are “secure,” “safe,” “low risk,” and “conservative” investments, which was untrue which constitutes securities fraud. If you invested in any of the EquiAlt Funds private placements, you may be able to recoup your losses through a FINRA arbitration proceeding. Mr. Pearce has over 40 years of experience with private placement investment disputes and recovering money for investors lost in Ponzi Schemes. The cases we accept will be filed against FINRA registered broker-dealers for misrepresentation, omissions due to failed due diligence, unsuitable investment recommendations, and unauthorized private securities transactions otherwise known as “selling away.” If Attorney Pearce accepts your case there will be no attorney’s fee or arbitration expenses unless we recover funds for you in a settlement with the brokerage or through an arbitration award. Call 1-800-SEC-ATTY (1-800-732-2889) or email us now and get your questions answered and top notch representation in connection with your EquiAlt Funds private placement investments. If you purchased your investment directly from EquiAlt or BR Support Services, your recovery will probably be limited to what assets the Court Appointed Receiver is able to locate, liquidate, and distribute to investors. However, please call us to find out what recourse is available for this investment fraud.

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SEC Halts Alleged EquiAlt Ponzi Scheme: How do Investors Recover Their Losses?

On February 11, 2020, the United States Securities and Exchange Commission (“SEC”) filed a Complaint for injunctive relief to halt an alleged ongoing fraud conducted by EquiAlt LLC (“EquiAlt”), a private real estate investment company that controlled the business operations of EquiAlt and its four real estate investment funds: EquiAlt Fund, LLC (“Fund I”); EquiAlt Fund II, LLC (“Fund II”); EquiAlt Fund III (“Fund III”); and EA SIP, LLC (“EA SIP Fund”) (collectively referred to as the “EquiAlt Funds”). Simultaneously, the SEC and filed an Emergency Motion to freeze all of the Defendant assets and appoint a Receiver to marshall all of the assets and take control of EquiAlt and the EquiAlt Funds. The Court entered an Order that granted the SEC’s request for Temporary Restraining Order and Asset Freeze and another Order Appointing a Receiver. According to the SEC, beginning in 2011 and up until it filed suit, Defendants EquiAlt, Brian Davison (“Davison”), and Barry Rybicki (“Rybicki”), through fraudulent unregistered securities offerings, raised more than $170 million from over 1,100 investors nationwide. The Defendants were supposed to invest all of the investors’ money in the EquiAlt Funds by purchasing real estate in distressed markets throughout the United States. The managers of the EquiAlt Funds were supposed to manage the real estate, pay high rates of returns to investors, sell the real estate for a profit, and then liquidate the EquiAlt Funds. Instead, according to the SEC, EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit. According to the SEC, the revenues generated by the EquiAlt Funds were insufficient to meet the interest rate obligations of the debentures sold to the investors. In addition, the SEC alleged Defendants Davison and Rybicki paid themselves millions from the EquiAlt Funds and spent it on automobiles, jewelry, and private jets. The insufficient cash flow due to operations and alleged misappropriation of funds supposedly led the Defendants to perpetrate the Ponzi Scheme fraud. As time went by, the Defendants allegedly sold more and more debentures and used the sales proceeds to pay the interest obligations to the earlier investors in the EquiAlt Funds. The SEC further alleged the investments – unregistered securities in the form of debentures issued by four real estate investment funds managed by EquiAlt – were falsely touted to investors as “secure,” “safe,” “low risk,” and “conservative.” The Defendants paid significant sales commissions to numerous unregistered sales agents who allegedly repeated the same misrepresentations and sold investments to unaccredited and unsophisticated investors in various states. Sadly, the combined assets of EquiAlt and its three active funds (Fund I, Fund II, and the EA SIP Fund) are insufficient to repay the principal and interest owed to investors. By December 2020, investors in these three funds will be owed approximately $167 million in principal and interest. However, as of November 2019, the assets of EquiAlt, Fund I, Fund II, and the EA SIP Fund total only $6.8 million in cash and real property purportedly worth $145 million based upon EquiAlt’s own inflated valuation. Thus, the combined assets of the three active EquiAlt Funds are insufficient to pay investors the principal and interest owed to them at the end of this year. The SEC suit has resulted in an Asset Freeze and appointment of a Receiver who has taken control of EquiAlt and all of the EquiAlt Funds. Since that appointment, the Receiver, in a letter to all investors, said he has stopped making any interest payments and will not return any principal invested in the EquiAlt Funds to investors while the suit is pending. The length of time before any investor will see any of their money again is uncertain and will depend upon: 1) whether the SEC proves its case of fraud or the Defendants settle and relinquish all right to the assets of EquiAlt and the EquiAlt Funds; 2) the Court Orders a liquidation of EquiAlt and the EquiAlt Funds and all other assets marshalled by the Receiver from the Defendants; and 3) the time it takes the Receiver to liquidate the assets and distribute the proceeds. It is fair to say this process will take years to complete. But one thing is certain, and that is investors will not receive back their entire investment due to the Defendants’ dissipation of assets and the Receiver’s fees and expenses, including attorney fees, to marshal the assets and liquidate them. And so, the investors in the EquiAlt Funds will need to take charge of their own case and hire their own attorneys to recover their losses from those who offered and sold the investment, such as attorneys, accountants, stockbrokers, insurance brokers and other salespersons. Attorney Pearce has over 40 years of experience with private placement investment disputes and recovering money for investors lost in Ponzi Schemes. If you invested in any of the EquiAlt Funds, you may be able to recoup your losses through a FINRA arbitration proceeding. We are reviewing and accepting EquiAlt Fund cases on a contingency fee basis, meaning you do not pay any fees or expenses unless we are successful in recovering money for you in a court or arbitration proceeding or settlement. The cases we accept will be filed against FINRA registered broker-dealers for misrepresentation, omissions due to failed due diligence, unsuitable investment recommendations, and/or unauthorized private securities transactions otherwise known as “selling away” in a FINRA arbitration proceeding. We may also group investors in lawsuits to be filed with the Receiver or other counsel against attorneys, accountants, and other unlicensed salespersons who are not subject to mandatory arbitration. Please complete the Contact Us form below for help recovering your EquiAlt Fund investment losses. Alternatively, call 1-800-SEC-ATTY (1-800-732-2889) or email us now and get your questions answered along with top-notch representation in connection with your EquiAlt Funds private placement investments. If Attorney Pearce accepts your case there will be no attorney’s fee or expenses charged unless we recover funds for you by judgment, award, or settlement.

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GPB Capital Fund Investors: How Do You Recover Your GPB Capital Investment Losses?

Recently, we have received telephone calls from investors inquiring about whether they have suffered losses in one or more of the GPB Capital Holdings, LLC sponsored private placement investments known as: GPB Automotive Portfolio, LP GPB Waste Management Fund, LP GPB Holdings Fund I, LP GPB Holdings Fund II, LP GPB Holdings Fund III, LP GPB New York Development, LP, GPB Cold Storage, LP. GPB Holdings Qualified, LP For some reason, these investors still believe their $50,000, $100,000 or $250,000 investments in one or more of the above-listed limited partnerships (the “GPB Funds”) are still valuable even though they invested in a company: that stopped making the promised distributions with no audited financial statements for years with no Audit Committee because they quit due to perceived risks in the firms books and records that failed to send out Form K-1s so now some IRA investors are going to be penalized whose Chief Compliance Officer was indicted for Obstruction of Justice whose former business partner sued alleging it has been engaged in a massive Ponzi -like scheme for some time that has failed to file mandatory SEC annual and quarterly statements for two years that last reported 39% and 25% declines in valuations of its two biggest funds two years ago and given no valuations since that time whose funds will no longer be permitted on broker-dealer platforms because they cannot be valued whose 2015 and 2016 financial statements admittedly needed to be restated because they were wrong that is under investigation by the FBI, SEC, FINRA, State of Massachusetts and NYC Business Integrity Commission that is a defendant in multiple class action lawsuits GPB Capital investors are shocked when we tell them they lost 8 to 10% of their investment the second they delivered the check due to the excessive commissions paid the broker who sold them. It’s true, GPB Capital has not filed bankruptcy and the company itself has not been indicted or proven to be a Ponzi-like scheme but we will bet (dollars for doughnuts) GPB Capital investors have investment losses and so, you do not have to wait for someone to tell you it’s all gone. But first, what exactly were those so-called investments in the GPB Funds and when are you supposed to get your money back? Investors purchased limited partnership interests that are not transferable and cannot be sold in any public market. The GPB Funds were never obligated to make any redemption or repurchase any investor’s interest in any of the funds. Yet investors were led to believe they would get all of their money back with a nice dividend up until the point of termination. However, there was never any definite termination date for return of those funds. For example, the GPB Automotive Fund stated: While we generally expect the Dealerships to operate for approximately 2 to 5 years, the company’s term will expire on the earliest of: (i) a determination by GPB that the Company should be wound up, (ii) the date we divest our ownership interest in all of the Dealerships, (iii) the termination, bankruptcy, insolvency or dissolution of GPB, (iv) the sale of substantially all of our assets, (v) upon written consent of all our partners to terminate, (vi) an event of withdrawal of GPB, or (vii) a court decree requiring our winding up or dissolution. This appears to be nothing more than an illusory promise about termination and when there will be a return of investor’s capital. Further, if any investment capital is going to be returned, it will not be for years and probably only after a bankruptcy, insolvency or other court ordered dissolution of GPB Capital and the funds it sponsored. Notwithstanding, there is a way for investors to recover the amount they invested in one or more of the GPB Funds before the termination date, whenever that may be in the future. According to SEC filings, more than 60 brokerage firms sold investments in the various GPB Funds. The major players were financial advisors associated with Royal Alliance, FSC Securities, SagePoint Financial, Cetera Advisors and Woodbury Financial Services. These broker-dealers and the others who sold the limited partnership interests (otherwise known as securities) in the GPB Funds were all subject to the federal and state securities laws and regulations, as well as the Financial Industry Regulatory Authority (FINRA) rules governing the offer and sale of securities. They were responsible for conducting due diligence to make sure these investments were reasonable investments for individuals and not a fraud. These broker-dealers and their financial advisors who actually offered and sold the investments were obligated to make sure they did not misrepresent the investment and that these limited partnership interests were suitable investments for the person to whom they were offered and sold. Did they act properly or were the firms conflicted and their advisors blinded by the huge 8-10% commissions? The only avenue for investors to recover their capital invested before the termination date of the GBP Funds is to file a FINRA arbitration proceeding. Many GPB Fund investors are reporting that the stockbrokers and investment advisors who recommended the GPB Funds to them are telling them to hold off and not be so quick to file any suit or arbitration claim. Investors are being told the funds have assets and they have suffered any losses. Why any investor would continue to believe any salesman (who received a 8 to 10% commission) is beyond comprehension given all the bad news, inaccurate financials and now the absence of any meaningful financial information? Investors need to understand those salesman are conflicted in giving you any advice. Any further delay in filing claims could be detrimental to your case and ability to obtain certain remedies under the law like rescission. If you file a timely claim under certain securities statutes you could be entitled to rescind the investment transaction and receive a return of your entire investment plus legal interest from the date of purchase (less any income received) plus attorney...

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Wells Fargo Advisors Ordered to Pay $2.8 Million to Limited Partnership

By Dow Jones Business News, July 09, 2013, 04:07:00 PM EDT By Corrie Driebusch NEW YORK–An arbitration panel has ordered Wells Fargo Advisors to pay $2.8 million to a family limited partnership that accused the firm of negligence in connection with alleged thefts from its investment account. The Miami , Fla.-based partnership had sued a former secretary, accusing her of forging signatures to transfer money out of its accounts, and won a $21 million judgment in a Florida district court in 2010. That suit alleged the secretary, Esther Spero, took the money for her personal use from accounts at Wachovia Securities and elsewhere between 2005 and 2008. Wachovia was later acquired by Wells Fargo & Co. (WFC ). In its separate arbitration claim against Wells Fargo, the partnership, called College Health and Investment Ltd., said the brokerage was negligent in failing to detect the alleged theft. The Financial Industry Regulatory Authority arbitration panel found Wells Fargo to be liable and ordered that it pay $ 2.3 million in damages and prejudgment interest. Wells Fargo also must also pay $419,000 in margin interest and $35,000 in costs. College Health and Investment Ltd. had requested $4.4 million, according to the arbitration panel ruling. As is customary in the FINRA claims system, the written award did not explain the panel’s reasoning. Robert Wayne Pearce, lawyer for the partnership, said it showed the panel agreed with the negligence claim. A Wells Fargo spokesman said in a statement, “We’re disappointed in the panel’s decision and don’t believe it was warranted by the facts presented during the hearing.” Write to Corrie Driebusch at corrie.driebusch@dowjones.com. Dow Jones Newswires 07-09-131607ET Copyright (c) 2013 Dow Jones & Company, Inc.

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Madoff: The Trojan Horse and The Lion

What do Madoff, the Trojan Horse and the Lion have in common? Answer: Irving H. Picard, the Trustee for Bernard L. Madoff Investment Securities, LLC (“Madoff Firm”). Mr. Picard as the Trustee appointed to liquidate the Madoff Firm pursuant to the Securities Investor Protection Act (“SIPA”). Last month, Mr. Picard delivered a Trojan Horse to investors of the Madoff Firm. He mailed claims packages to investors to ostensibly return securities and cash to investors from the Madoff Firm liquidation proceeds and Securities Investor Protection Corporation (“SIPC”) 1. The claims procedure, however, requires investors, among other things, to “provide all documentation or information regarding all withdrawals you have ever made or payments received from [the Madoff Firm]” which the Lion will use to “claw back” funds paid to investors to pay the Trustee’s fees, administration expenses and other investors. Thus, the question for many investors who received funds from the Madoff firm: Will the SIPA Trustee be able to require them to return money already paid out to them? THE STATUTORY BASIS FOR RECOVERY Mr. Picard’s authority to “claw back” funds is derived from SIPA which incorporates by reference sections of the U.S. Bankruptcy Code (the “Bankruptcy Code”). Section 78eee(a)(3) of SIPA provides that when a broker-dealer “has failed or is in danger of failing to meet its obligations to customers,” SIPIC shall file an application with a court of competent jurisdiction and the court shall, in response to that application, take various actions, including appointment of a trustee to oversee the liquidation of the broker-dealer. Section 78fff-1(a) of SIPA further provides that the trustee shall be vested with the same powers and title with respect to the debtor and the property of the debtor, including the same rights to avoid preferences, as a trustee in a case under Chapter 11 of the Bankruptcy Code. Those provisions give Mr. Picard the ability to recover funds formerly paid out by the insolvent entity. Generally, there are three sources of authority for such a recovery: Section 547(b) of the Bankruptcy Code, which provides for the avoidance of preferential transfers; Section 548 of the Bankruptcy Code, which provides for the avoidance of fraudulent conveyances; and various state fraudulent conveyance laws. 1 A maximum amount of $500,000.00 for each customer, including up to $100,000.00 BANKRUPTCY CODE SECTION 547(B): AVOIDANCE OF PREFERENTIAL TRANSFERS Section 547(b) of the Bankruptcy Code generally provides that a trustee may “avoid any transfer of an interest of the debtor in the property: (1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made; (3) made while the debtor was insolvent; [and] (4) made (A) on or within 90 days before the date of the filing of the petition. 2 The avoidance actions under Section 547(b) are “strict liability” actions, meaning that a recipient of a payment from the Madoff Firm may be liable for return of that payment regardless of his/her mental state. In other words, if any Madoff investor received any amount (not limited to profits) from the Madoff Firm after September 15, 2008 that sum is going to be “clawed back” by Mr. Picard if he discovers the transfer. The policy behind the provision is to prevent a debtor approaching insolvency from cherry picking among its creditors, and to preserve the estate so that distribution may be made in accordance with relevant bankruptcy law. 2 The Trustee can recover funds transferred to “insiders” within one year of filing the Petition. 11 U.S.C. §547(b)(4)(B). BANKRUPTCY CODE SECTION 548: AVOIDANCE OF FRAUDULENT CONVEYANCES Section 548(a) of the Bankruptcy Code will permit Mr. Picard to avoid a distribution to a Madoff investor that was made or incurred within two years of the date of the filing, if the Madoff Firm “made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted . . . .” When the existence of a Ponzi scheme is proven by a preponderance of the evidence, a presumption of actual fraudulent intent is applied. In re: Agricultural Research Tech Group, Inc., 916 F.2d 528, 535-36 (9 th Cir. 1990); Cuthill v. Greenmark, LLC (In re: World Vision Entertainment, Inc.), 275 B.R. 641, 656 (Bankr. M.D. Fla. 2002). Section 548(c) provides an investor with a “good faith” defense to an action to avoid an allegedly fraudulent conveyance under Section 54 8(a), to the extent the “transferee or obligee” (1) took the transfer “for value and in good faith” and “gave value to the debtor in exchange for such transfer or obligation.” Generally, in a Ponzi scheme, the good faith defense can protect an investor from having to return his/her invested principal. But, the defense will not protect against the return of any profits made to the investor. The burden of establishing “good faith” falls on the investor. STATE FRAUDULENT CONVEYANCE LAW The Trustees third source of authority is state fraudulent conveyance laws. Most states also have statutes provided for the avoidance of fraudulent conveyances or transfers. Most state fraudulent conveyance statutes require proof of intent on the part of the transferor to “hinder, delay or defraud” and also provide the transferee with a “good faith” defense. The time period for the “claw back” under state law is generally longer than under the Bankruptcy Code and governed by each state’s statutes of limitation. The big question with Madoff’s Ponzi scheme is what state law will apply. The six year statute of limitations under New York law or in the case of Florida investors, the shorter limitations period applicable to the Florida Uniform Fraudulent Transfer Act Section 726.101 et. seq., Fla. Stats. (“FUFTA”). Generally, the Trustee’s cause of action under FUFTA will extinguish within four (4) years of the transfer except where the Trustee alleges fraudulent intent which could extend the period to “claw back” funds under Florida law. THE...

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