Schwartz v. McGregor was filed in the District Court of Denver County, Colorado on January 10, 2022, seeking relief under Colorado’s Uniform Fraudulent Transfer Act, C.R.S. § 38-8-101-112 (“CUFTA”), including a turnover and accounting and damages for actual and constructive fraud.

Plaintiff Gary Schwartz is a court-appointed Receiver (“Receiver”) on behalf of a multi-million-dollar fraudulent investment scheme perpetrated by Mark Ray (“Ray”).  The Receiver was appointed over Mark Ray, Custom Consulting & Product Services, LLC, MR Cattle Production Services, LLC, Universal Herbs, LLC, DBC Limited, LLC, RM Farm & Livestock, LLC, Sunshine Enterprises (the “Estate entities”). Defendant Eric McGregor (“Defendant”) was an investor in the Ponzi scheme who allegedly received numerous avoidable transfers from the Estate entities.

Ray operated a Ponzi scheme from 2014 to March 2019 involving fictitious cattle trading.  The scheme involved the sale of unregistered securities to purported investors through investment contracts and promissory notes, which were primarily advertised through word of mouth.  Hundreds of millions of dollars were raised from investors, who were promised high rates of return over short periods of time.  However, investors’ money was not used for any legitimate purpose; it was used to repay earlier investors in a Ponzi-like fashion or for Ray’s personal purposes.

On September 30, 2019, the State of Colorado filed an enforcement action against Ray, alleged co-conspirator Reva Stachniw, and the businesses used in the scheme.  The U.S. Securities and Exchange commission filed a parallel action on the same day against those parties plus another alleged co-conspirator, Ron Throgmartin.

Defendant allegedly made several investments in the scheme from 2017 to 2019 wherein one of the Estate entities would repay a principal investment plus interest within a few weeks.  The civil complaint alleges Defendant communicated with Ray in connection with the Ponzi scheme prior to its collapse and received a total of $1,538,389 in fictitious profits from the scheme.  The complaint avers the “high rates of return over short periods of time promised by Ray and paid to [Defendant] were too good to be true and inherently suspect.”

The complaint asserts the transfers, in the amount of the net profits of $1,538,389, were avoidable and recoverable under applicable provisions of CUFTA, particularly C.R.S. §§ 38-8-105, 38-8-106, 38-8-108, 38-8-109, and 38-8-110.  The complaint asserts (i) one count for relief for turnover and accounting, (ii) one count for actual fraud, and (iii) one count for constructive fraud under these provisions.