The end of August means two things to many parents—the annual family vacation and the semi-annual ritual of writing those large tuition checks to the college of their children’s choice. As many of us load our cars with our children’s random belongings and drive them to school, today we report on an interesting decision issued on Aug. 10, by U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts. The beginning of the court’s opinion in In re Palladino frames the issues presented: “This is a lawsuit over the meaning of value. It raises the question, when parents pay for the college education of their adult child, do they receive anything of value? To complicate the question, does it matter if the parents happen to be convicted Ponzi scheme felons who, at the time they paid the tuition, had been engaged in perpetrating the Ponzi scheme?” In this case, the court held that tuition payments made to the university could not be avoided as fraudulent transfers.
The Mom-and-Pop Ponzi Scheme
According to the opinion, the undisputed facts are as follows. Beginning in 2012, Nicole Palladino was enrolled at Sacred Heart University (SHU) in Fairfield, Connecticut. Palladino was over 18, but she lived at home with one or both of her parents when not at school. Her parents (the Palladinos) submitted applications for parental loans to help fund her education. They also paid a portion of her tuition and charges directly to SHU. Between March 1, 2012, and March 31, 2014, the Palladinos paid a total of $65,696.22 to SHU.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
