FLORIDA'S TOP COURT LIMITS FRAUDULENT-TRANSFER LAW.

Florida's Uniform Fraudulent Transfer Act doesn't allow a creditor to recover from a defendant that allegedly aided and abetted a scam, the Florida Supreme Court ruled Jan. 29.

To rule otherwise "would be to expand the FUFTA beyond its facial application and in a manner that is outside the purpose and plain language of the statute," said the unsigned opinion in Lewis B. Freeman et al. v. First Union National Bank et al. (SC03-896).

The decision came in answer to a question of Florida law certified by the Eleventh U.S. Circuit Court of Appeals.

Freeman and other plaintiffs sued First Union for its role in doing business with a company called Unique Gems, which collected "deposits" of $3,000 from investors who hoped to reap profits by making necklaces from kits and selling them back. It was allegedly a Ponzi scheme, however, in which Unique Gems never marketed the necklaces but used money from new investors to repay initial investors until the scheme collapsed.

Freeman and other plaintiffs contend First Union knew Unique Gems was engaged in illegal activities but continued to let it transfer money to Liechtenstein - a total of $8.6 million - even after the state sued the company.

The Florida Supreme Court, however, said while FUFTA provides a number of protections intended to prevent fraudulent transfers of assets, nothing in the law "suggests an intent to create an independent tort for damages."