American Cancer Society Gets To Keep Donations to Cattle Baron's Ball From Oil and Gas Fraudsters
The 5th U.S. Circuit Court of Appeals struck down a federal district court's order forcing the American Cancer Society to return some $240,000 donated by Irving-based Giant Operating, an oil and gas company the Security and Exchange Commission says defrauded investors of more than $13 million.
The ACS donations were made over the course of three years to its Cattle Baron's Ball in Dallas, billed as the "world's largest single-night fundraiser for cancer research..."
The SEC says George Wesley Harris and Stephen Plunkett made unsolicited phone calls from 2007 to 2009, hawking interests in oil and gas drilling programs that didn't exist. They promised a 100 percent return on investment within the first year. Instead, they blew at least $2 million on themselves. No investor ever received a cent in return. The two were charged with multiple securities violations. Their assets were frozen and placed in receivership.
The attorney charged with following the money trail claimed ACS should forfeit the donations from Harris because it was a "fraudulent transfer," intended only to net new suckers for Giant's "Ponzi-like scheme."
The federal appeals court decision hinged in part on whether Giant was, in fact, a Ponzi scheme. Turns out, it disagreed with the federal district court. A Ponzi scheme, the judges found, at least pays somebody a return.
"As noted above, there is no evidence that Giant's contributions furthered
any fraudulent scheme or were otherwise made with intent to defraud investors," the order reads. "ACS relied upon Giant's contributions in hosting the Cattle Baron's Ball and
incurred considerable expense in connection with receipt of those funds. These
circumstances, combined with ACS's status as a charitable organization, tilt the
equities in its favor."