- 8 -
covered with hardened foam and dirt. She then concluded that M&L
was a ponzi scheme and that it had no inventory assets from which
creditors' claims could be satisfied. On February 4, 1991, she
halted the ponzi scheme.
Ms. Jobin continued to operate M&L's business machine repair
service in the hope of generating assets for creditors. It did
not perform as she hoped, and she ceased its operation in March
1991.
When Ms. Jobin discovered that M&L had no inventory in
February 1991, she believed that the only recovery for M&L
creditors would be through adversary proceedings based on the
legal theories of preferential transfers or fraudulent
conveyances. See 11 U.S.C. secs. 547 and 548 (1994). M&L's
assets were then valued at less than $100,000 and were encumbered
by RTC's security interest.
On September 26, 1991, M&L's bankruptcy case was converted
to Chapter 7.
Approximately 1,600 investors were involved in M&L's ponzi
scheme. Ms. Jobin estimated that about 540 of these investors
received promised interest payments. In September 1992, she
began filing adversary proceedings against some of these 540
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