LOS ANGELES - Phelps has more than 30 years of practice in bankruptcy law and fraud litigation, representing trustees and receivers, debtors and secured and unsecured creditors. She has particular expertise in complex fraud cases and Ponzi schemes and has written several publications on the topic, including The Ponzi Book: A Legal Resource in Unraveling Ponzi Schemes, co-authored with retired U.S. Bankruptcy Judge Steven Rhodes.
She served as lead litigation counsel for Michael Kasolas, the Chapter 7 trustee of Premier Cru, whose owner ran the world's largest wine Ponzi scheme. In re Fox Ortega Enterprises, Inc. dba Premier Cru, No. 16-40050-WJL (Bankr. N.D. Cal., filed Jan. 8, 2016). Premier Cru took $45 million in orders from about 9,000 customers for which it had no wine. Phelps filed more than 20 adversary proceedings, all of which were ultimately resolved through settlement, resulting in a couple of million dollars of recovery for the bankruptcy estate. One of the adversary proceedings involved two summary judgment motions and resulted in two lengthy opinions from the court, one of which was published.
Kasolas v. Nicholson, Adv. No. 18-04019 (Bankr. N.D. Cal., filed Jan. 5, 2018). "We were able to bring in substantial funds for the creditors in the case based on a relatively sophisticated use of the fraudulent transfer statutes to recover value for the estate," Phelps said. "Fraud transfer law can be very complex and also very nuanced at the same time, and there's really an opportunity for sophisticated thinking and creativity in both the prosecuting and defense of claims. In the Premier Cru case, that was very much the situation. We brought unique claims and unique issues and pushed on some existing laws."
"The case clarified some law, made some good law, and in the process was fun for me," she added.
Phelps also runs a blog, www. ponzischemeblog.com, which provides information and the latest news about complex fraud cases. She handles U.S. Securities and Exchange Commission and Commodity Futures Trading Commission whistleblower claims and hopes the blog can provide a platform for fraud victims to reach out and get help.
In addition to her roles as lawyer and author, Phelps serves on several bankruptcy mediation panels and handles private mediation. While currently comprising only a small part of her practice, Phelps said more businesses and organizations should look to mediation.
"Mediation is the most valuable thing I do in terms of my contribution to the law. It saves so much expense, aggravation and emotional toll on parties," she said. "Really almost everything can be and should be resolved consensually."