In Re The Personal And Business Insurance Agency

334 F.3d 239 (3rd Cir. 2003)

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Nature of the Case

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Facts

Personal & Business Insurance Agency (PBI) was used as a vehicle in an illegal scheme perpetrated by its CEO and sole owner, Emil Kesselring, who caused PBI to make payments totaling $580,000 to Premium Finance Specialists (PFS) in putative repayment for loans that Kesselring had fraudulently obtained from PFS. PBI would sometimes obtain for its clients' financing for the insurance premium payments necessary to secure coverage. PFS was one of two financing companies that PBI used for this purpose. PBI would prepare an application and Kesselring would either sign the application on behalf of the client or obtain the client's signature by delivering a copy of the application. PBI would then send the application to PFS for approval. Upon such approval, PFS would arrange to bill the borrower. PFS would transmit the loan monies to PBI by wire transfer or check and, normally, PBI would then transfer the funds, less its commission, to the insurer. Kesselring prepared false applications for finance company loans in the name of actual PBI clients or fictitious entities, either forging the borrower's signature or signing as the borrower's agent/broker. He submitted the applications to PFS and obtained the loan proceeds. Kesselring then pocketed the money. Kesselring caused PBI to make payments on the fraudulent loans using PBI funds. Kesselring made a total of $580,000 in such payments to PFS. Kesselring was indicted by a grand jury for mail and wire fraud. In August 1999, P, filed a complaint against PFS, seeking to recover the funds Kesselring had transferred to PFS pursuant to his illegal scheme alleging a claim for fraudulent conveyance under 11 U.S.C. § 548 and the Pennsylvania Uniform Fraudulent Conveyance Act. PFS moved to dismiss the fraudulent conveyance count of the second amended complaint. The motion was granted. P appealed to the District Court, which affirmed. P appealed.