So says Rakoff USDJ in USA v Dreier (SDNY, 2 July 2013); with fraud, as with dysentery, 'even after the infection is contained, the unpleasant after-effects linger interminably.' In this case those nasty after-effects were the infighting amongst victims of the fraudster for the remaining assets. The fraudster was Marc Dreier, 'convicted swindler', former lawyer and personator of a Canadian pension fund's in-house counsel. The assets: fifteen works of art by big names (including Rothko, Lichtenstein, Warhol) which had been forfeited to the US government. Heathfield Capital, the successor to Elliot International, one of Dreier's victims, sought to satisfy a security interest in the collection which had been granted as part of one of Dreier's fraudulent schemes, to the exclusion of other victims. Naturally, those other victims opposed the Heathfield petition to be awarded the collection in its entirety.

Judge Rakoff granted the petition, on the grounds that Elliot International was a bona fide purchaser for value without notice, against the other victims' contention that it had 'reasonable cause to believe' the collection was subject to forfeiture when it acquired the security interest, had not in fact acquired a valid security interest, gave no value in order to acquire one and was participating in a fraudulent conveyance in trying to do so. When the security interest was granted, Dreier and the transaction had 'the trappings of legitimacy'. The grant of a security interest to Elliot International was not in itself fraudulent -- and therefore untainted by Dreier's forgery of a third party's name on the fictitious promissory notes being sold to Elliot International. Value had been conferred for the security interest, even if it was nothing more than 'a contingent promise of payment conditioned on events that never materialized' -- and anyway, courts 'will not inquire into the adequacy of consideration' that is otherwise valid. Elliot International was innocent of any fraud on Dreier's part, so the fraudulent conveyance argument also failed. Heathfield got the art.