The husband of the former Owen County auditor, who was found to have purchased about $346,000 worth of personal items with county-issued credit cards, must repay the full amount of money he received from the sale of land that his wife fraudulently transferred to him.
The Indiana Court of Appeals reversed a special judge’s order in Owen Circuit Court that had allowed Larry Lawson to keep half of the sale proceeds from his share of the property in 2017. The sale came after Lawson’s wife, former Owen County Auditory Angela M. Lawson, lost her job due to misappropriation of public funds. The State Board of Accounts found Lawson had misspent the money between 2009 and 2014.
Both Angela and Larry were named as defendants in proceedings that resulted in a default judgment entered in April 2017, awarding the state nearly $1.16 million, which included treble damages. The trial court found that although Angela fraudulently transferred land she owned to Larry, he was equitably entitled to half of the $15,000 in sale proceeds, with the state likewise receiving $7,500.
Judge Edward Najam wrote that the trial court was correct to find the land transfer was fraudulent but erred in determining Larry was entitled to any of the land sale proceeds under the Uniform Fraudulent Transfer Act.
“Accordingly, we must agree with the State that, under Indiana Code Section 32-18-2-18, a defrauded creditor is entitled to the full value of the fraudulently transferred property at the time of the transfer, and an ‘equitable adjustment is permitted only when an inequitable windfall would result by granting the creditor the full value of the property,’” Najam wrote for the panel.
Specifically, Larry would have been entitled to an equitable share of the proceeds had he made notable improvements after the fraudulent transfer, but that did not happen here. “Because there is no evidence that Larry’s gardening, landscaping, repair work, or maintenance done after the fraudulent transfer increased the value of the property or the sale proceeds, we conclude that the equities did not require that Larry be reimbursed. We therefore hold that the State is entitled to recover the entire $15,000 from the sale of Larry’s one-half interest in the property,” the panel concluded.