A Texas bankruptcy court has barred a debtor tied to a multi-million dollar Ponzi scheme from wiping away his debts, siding with federal officials who argued he tried to exploit the system through lies and concealment.
The decision follows a push by the U.S. Trustee Program (USTP), the Department of Justice’s bankruptcy watchdog, to prevent what it called a blatant abuse of the process.
The case centers on Fuller, whose investment platform Privvy collapsed under allegations of fraud. Fuller filed for bankruptcy in October 2024 after a court-appointed receiver took control of his assets in lawsuits brought by angry investors. But instead of gaining a financial reset, his conduct in court triggered even greater scrutiny.
During contempt hearings, Fuller admitted that Privvy was nothing more than a Ponzi operation. He acknowledged fabricating paperwork, providing false testimony, and even altering bankruptcy documents in an attempt to mislead the court and obstruct the trustee’s work. The USTP accused him of hiding assets, failing to keep proper records, and lying under oath in both his personal and business filings.
When the Department of Justice filed a complaint against him, Fuller never responded. On August 1, the U.S. Bankruptcy Court for the Southern District of Texas issued a default judgment, leaving him personally responsible for his debts. That outcome means creditors can continue pursuing repayment directly rather than seeing their claims erased.
Kevin Epstein, the U.S. Trustee for Region 7, said the ruling sends a clear message: bankruptcy is meant to help honest debtors rebuild, not to serve as a safe haven for fraud. “Fraudsters seeking to whitewash their schemes will not find sanctuary in bankruptcy,” Epstein emphasized.
For investors who lost money in Privvy, the judgment does not instantly recover their funds. But by blocking Fuller’s discharge, the court ensures he remains accountable — a step officials argue is vital to protecting the integrity of the bankruptcy system.
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Source: https://coindoo.com/texas-court-blocks-bankruptcy-escape-for-ponzi-operator-fuller/