Federal National Mortgage Association v. Olympia Mortgage Corporation
United States District Court for the Eastern District of New York
792 F. Supp. 2d 645 (2011)
Abe Donner served as president and 32-percent shareholder of Olympia Mortgage Corporation (defendant), which made substantial payments over several years -- direct payments, healthcare-insurance payments, and mortgage payments -- to seven of Donner's relatives, none of whom ever worked for Olympia. Olympia was insolvent throughout the period these payments were made. The relatives argued the payments were really part of Abe Donner's own salary as president, but offered no supporting evidence. Fannie Mae (plaintiff) sued Olympia, and Olympia crossclaimed against the Donner relatives, seeking summary judgment to avoid the transfers as constructively fraudulent.
Whether payments made by an insolvent debtor to third parties who provided no services and offered no evidence of consideration constitute a constructive fraudulent transfer.