Tiger Woods Foundation Inc. and Tiger Woods Charity Event Corp., charities founded by golfing legend Tiger Woods, may be sued for unknowingly receiving donations acquired from a Ponzi scheme. The organizations received $500,000 in charitable donations from R. Allen Stanford’s Ponzi scheme and were unable to sway a federal judge to dismiss a suit seeking to recover the donations as fraudulent transfers.

Under other circumstances, receiving such funds would not constitute a fraudulent transfer. For instance, if the operator of a Ponzi scheme buys goods or services, the payments are not fraudulent because consideration was given in return. Since charitable organizations do not necessarily provide consideration for receiving donations, these donations can be fraudulent transfers.

The charities argued in front of U.S. District Judge David C. Godbey in Dallas that the Stanford trustee’s claims were time barred. Godbey, however, disagreed and denied the charities’ request for dismissal earlier this month, finding that the trustee sufficiently showed a basis for reliance on the discovery rule.

That rule provides an exception for statutes of limitations giving the trustee one more year to sue after he discovered or could have discovered the payment. He realized that the charities received contributions when his team found an article mentioning that Stanford was a sponsor. Godbey stated 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.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.