In re: iCap Enterprises, Inc., et al.

Analysis Group was retained on behalf of real estate investment firm iCap Enterprises and its debtors and debtors-in-possession in a Chapter 11 bankruptcy case. iCap filed for bankruptcy after investors sued the firm, alleging mismanagement by former executives of the company,  including failure to make required interest payments and not completing real estate projects that could have been sold to repay investors.

An Analysis Group team led by Manager Erik Martino supported Managing Principal Jeffrey Kinrich, who submitted reports and testified at the bankruptcy hearing as to whether or not iCap functioned as a Ponzi scheme. Mr. Kinrich reviewed iCap’s financial data and opined that “at least as early as October 2018, [iCap] was sustaining a Ponzi scheme in which it repeatedly repaid subscribers not from legitimate investment proceeds but through the commingling of funds and intercompany transfers.”

Citing Mr. Kinrich’s report and testimony, a judge in the US Bankruptcy Court for the Eastern District of Washington held that iCap had operated as a Ponzi scheme and approved the firm’s amended liquidation plan. The bankruptcy trustee said that the company plans to use the Ponzi finding to pursue fraudulent conveyance actions against entities who received payouts from the Ponzi proceeds.