After 17 years of litigation, Hangley Aronchick, led by shareholders Matt Hamermesh and Jason Levine, prevailed in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania defending CitiMortgage against a claim by a bankruptcy trustee seeking to recover millions of dollars against the company.
From 1988 to 2007, Image Masters, a now-defunct mortgage company, orchestrated a Ponzi scheme defrauding hundreds of homeowners and investors. The scheme eventually collapsed during the months leading up to the 2007-2008 housing crisis, and Wesley Snyder, the mastermind behind the scheme, was charged and pled guilty to fraud.
Prior to the criminal charges, Image Masters sought relief under Chapter 7 of the Bankruptcy Code. After filing for bankruptcy, a Chapter 7 trustee was appointed to prosecute claims against CitiMortgage and several other financial institutions seeking to recover allegedly fraudulent and preferential transfers arising from Image Master’s Ponzi scheme. Hangley Aronchick vigorously defended against these claims, as CitiMortgage merely serviced the homeowners’ mortgages and was one of the many persons and entities harmed by Image Masters’ fraud.
After more than a decade of litigating in both the District and Bankruptcy courts, Hangley Aronchick filed a summary judgment motion in June 2018. On December 31, 2022, the Bankruptcy Court issued a 100-page decision recommending that the District Court grant summary judgment to CitiMortgage on all claims except for a few hundred dollars in servicing fees, vindicating CitiMortgage from the Ponzi scheme.
