Tiger Woods Foundation Sues to Keep Proceeds of Ponzi Scheme

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October 22, 2014; Bloomberg

NPQ has previously written about the responses of nonprofits to “clawbacks” of contributions made with the proceeds of Ponzi schemes. There have been any number of such case, and, in a way, it is perhaps more understandable when a direct services organizations sues to keep such money—but what about the Tiger Woods Foundation?

A week and a half ago, U.S. District Judge David C. Godbey denied a motion made by the Tiger Woods Foundation to dismiss a suit brought on behalf of those who had lost money in the $7 billion scheme run by R. Allen Stanford, on the grounds that the receiver working on the case had waited too long to file a claim. Stanford, who apparently preyed in part on professional athletes, was sentenced to 110 years in 2012.

Ralph Janvey, the court-appointed receiver, sued the foundation in April, calling the contributions “fraudulent transfers…because the funds used were those of innocent, unwitting investors in the bank’s fraudulent Ponzi scheme.” Also being sued, according to Courthouse News, are the Miami Heat basketball team, Texas A&M University, the University of Miami, the PGA Tour, and the ATP Tour

Judge Godbey, however, decided that it was “perfectly reasonable to surmise that the generally complex and obfuscated nature of the Stanford financial records made these particular transfers difficult to discover.”

There were hundreds of charity groups hurt in the Madoff scandal, and Irving Picard, the trustee charged with recovery of funds in that case, said that he recovered $80 million in settlements with “a number of charities and nonprofit organizations.” Woods’ foundation has not been accused of participating in any illegal activity, but is it entitled to the money more than those from whom it was stolen?—Ruth McCambridge