FRAUDS

A "transferor" in a fraudulent transaction need not actually possess the asset prior to a conveyance or hold legal title to the asset prior to the transfer. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

Where one person has equitable or legal possession of an asset, and is able vest the asset in the legal possession of another so as to avoid judgment creditors, a fraudulent conveyance has occurred. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

Equitable principles mandate that the law of “fraudulent conveyance” be extended to the sham business ownership situation. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

Where a court finds (1) that a lender and borrower conspired to place loan proceeds in the name of a family member, (2) that the loan proceeds were actually used by the borrower to generate income, and (3) that the scheme was marked by "badges of fraud" indicating intent to place the borrower's assets and income beyond the reach of other judgment creditors, the court may properly conclude that the loan and its fruits are the property of the borrower and subject to satisfaction of judgments against the borrower. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

Where action involves fraud, direct proof of the parties’ fraudulent intent is impossible. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

In fraudulent transfer cases, proof indicative of fraud must come by inference from the circumstances surrounding the transaction, including the relationship and interests of the parties. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

Adequate circumstantial evidence existed to prove fraud where judgment debtor’s spouse could not speak English or Samoan and did not possess sufficient business experience to run a store, where judgment debtor conceived of the business plan, ran the business, and received considerable non-cash compensation, and where other aspects of the business’ operation were tainted with fraud. G.H.C. Reid & Co., Inc. v. K.M.S.T., 1 A.S.R.3d 106 (1997).

Where defendants hold themselves out as lesser matai in order to gain building permit, but neither had actually obtained registered, family-sanctioned title, such actions constitute a ruse. Pagofie v. Matagi, 1 A.S.R.3d 227 (1997).