FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: EPD INVESTMENT                      No. 22-55944
COMPANY, LLC AND JERROLD S.
PRESSMAN,                                 D.C. No. 2:21-cv-
00848-DSF
Debtor.
______________________________
OPINION
POSHOW ANN KIRKLAND, as
Trustee of the Bright Conscience Trust
Dated September 9, 2009,
Appellant,
v.
JASON M. RUND, Chapter 7 Trustee,
Appellee.
Appeal from the United States District Court
for the Central District of California
Dale S. Fischer, District Judge, Presiding
Argued and Submitted October 18, 2023
Pasadena, California
Filed August 23, 2024
2                     IN RE: KIRKLAND V. RUND
Before: Richard R. Clifton and Gabriel P. Sanchez, Circuit
Judges, and Edward R. Korman, * District Judge.
Opinion by Judge Sanchez;
Dissent by Judge Clifton
SUMMARY **
Bankruptcy
The panel affirmed the district court’s order affirming a
judgment of the bankruptcy court, and remanded for further
proceedings, in a fraudulent transfer action in which a jury
determined that debtor Jerrold S. Pressman operated his
business, EPD Investment Co., LLC (EPD), as a Ponzi
scheme.
EPD was forced into Chapter 7 bankruptcy by its
creditors. The Trustee, Jason M. Rund, filed an adversary
proceeding against Poshow Ann Kirkland (Ann) and her
husband, John Kirkland (John), seeking to avoid fraudulent
transfers made by EPD to John, who had assigned his
interest in EPD to the Bright Conscience Trust.
The Trustee argued that Ann did not have standing to
pursue this appeal because she was not a party to John’s jury
trial. Ann was not a party to John’s trial because, over her
*
The Honorable Edward R. Korman, United States District Judge for the
Eastern District of New York, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
IN RE: KIRKLAND V. RUND                    3
objection, the district court granted the Trustee’s motion to
bifurcate the trial of the fraudulent transfer claims against
her and John. The panel held that Ann had standing to
appeal in light of Ann’s significant involvement in the case
and her interest in the issues presented.
At trial, the district court instructed the jury that a Ponzi
scheme is a financial fraud that “consists of transferring
proceeds received from new investors to previous investors,
thereby giving investors the impression that a legitimate
profit-making opportunity exists, where in fact no such
opportunity exists.” The jury was also instructed on the
long-standing Ponzi-scheme presumption, which recognizes
that a debtor’s actual intent to hinder, delay, or defraud its
creditors may be inferred by the mere existence of a Ponzi
scheme.
The panel rejected Ann’s argument that the district court
erred by failing to include a mens rea instruction that would
have required the jury to find that Pressman knew he was
operating a Ponzi scheme that would eventually
collapse. The panel held that the proposed mens rea
instruction was not required because, as the Ponzi scheme
presumption reflects, fraudulent intent may be inferred by
evidence of the existence of a Ponzi scheme established
through objective criteria. Implicit in the jury’s finding that
EPD was a Ponzi scheme was its finding that Pressman
harbored the intent to defraud his investors by operating a
scheme that had no legitimate profit-making opportunity.
The panel also rejected Ann’s argument that the district
court erred by instructing the jury that lenders are investors
for purposes of a Ponzi scheme because there is no question
that lenders can be victims of a Ponzi scheme as a matter of
law.
4                  IN RE: KIRKLAND V. RUND
The panel held that the evidence at trial was more than
sufficient to support the jury’s Ponzi scheme finding, and
that the district court did not err in its evidentiary rulings.
Dissenting, Judge Clifton concluded that the jury was not
properly instructed on the legal elements of a Ponzi scheme
because it was not informed that a Ponzi scheme promoter
must harbor fraudulent intent. Under the facts of this case, a
finding of intent to defraud was not inevitable and cannot be
presumed.
COUNSEL
Daniel J. Gonzalez (argued), Steven S. Fleischman, and
Peder K. Batalden, Horvitz & Levy LLP, Burbank,
California; Stephen E. Hyam, Hyam Law APC, Granada
Hills, California; Lewis R. Landau, Law Office of L.
Landau, Calabasas, California; for Defendant-Appellant.
Corey R. Weber (argued) and Steven T. Gubner I, BG Law
LLP, Woodland Hills, California; Ryan F. Coy, Saul Ewing
LLP, Los Angeles, California; for Plaintiff-Appellee.
IN RE: KIRKLAND V. RUND                   5
OPINION
SANCHEZ, Circuit Judge:
In a fraudulent transfer action arising from a bankruptcy
proceeding, a jury determined that debtor Jerrold S.
Pressman operated his business, EPD Investment Co., LLC
(“EPD”), as a Ponzi scheme. The jury was instructed that a
Ponzi scheme is a financial fraud that “consists of
transferring proceeds received from new investors to
previous investors, thereby giving investors the impression
that a legitimate profit-making opportunity exists, where in
fact no such opportunity exists.” The jury was also
instructed on our long-standing Ponzi-scheme presumption,
which recognizes that a debtor’s actual intent to hinder,
delay, or defraud its creditors may be inferred by the mere
existence of a Ponzi scheme. The main question in this
appeal is whether the district court erred by failing to include
a mens rea instruction that would have required the jury to
find that Pressman knew he was operating a Ponzi scheme
that would eventually collapse.
We conclude that the proposed mens rea instruction was
not required. As the Ponzi scheme presumption reflects,
fraudulent intent may be inferred by evidence of the
existence of a Ponzi scheme established through objective
criteria. Implicit in the jury’s finding that EPD was a Ponzi
scheme was its finding that Pressman harbored the intent to
defraud his investors by operating a scheme that had no
legitimate profit-making opportunity. A trustee’s action to
recover assets fraudulently conveyed in the course of a Ponzi
scheme does not require that the trustee also prove the Ponzi-
scheme operator was subjectively aware his Ponzi scheme
was destined to fail. Because the evidence at trial was more
6                      IN RE: KIRKLAND V. RUND
than sufficient to support the jury’s Ponzi scheme finding,
and the district court did not err in its jury instructions or
evidentiary rulings, we affirm the judgment below.
I.
This appeal arises from a complicated and extensively-
litigated bankruptcy proceeding that has spawned several
appeals to our court. Appellant Poshow Ann Kirkland, as
trustee for the Bright Conscience Trust (“BC Trust”),
appeals the judgment entered following a jury determination
that Pressman operated EPD as a Ponzi scheme.
In 2010, EPD was forced into Chapter 7 bankruptcy by
its creditors. The Trustee, Jason M. Rund, filed an adversary
proceeding against Ann and her husband, John Kirkland,
seeking to avoid fraudulent transfers made by EPD to John,
who had assigned his interest in EPD to the BC Trust. 1
Following a six-day trial of the Trustee’s claims against
John, the jury returned a verdict finding that EPD was a
Ponzi scheme but that John had received payments from
EPD in good faith and for reasonably equivalent value.
Judgment was entered in John’s favor.
Ann nevertheless appeals the judgment because the
jury’s adverse Ponzi scheme finding will have preclusive
effect in the Trustee’s forthcoming trial against Ann to
disallow or equitably subordinate BC Trust’s proofs of
claim. We begin with a description of EPD’s operations
from 2003-2010, the period in which the jury found that EPD
operated as a Ponzi scheme. We describe the evidence at
trial in a light most favorable to the jury’s verdict. See
1
Consistent with the parties’ briefing, we refer to Ann Kirkland as Ann,
in her capacity as trustee of the BC Trust, and her husband John Kirkland
as John. The BC Trust was created for the benefit of their children.
IN RE: KIRKLAND V. RUND                       7
Harper v. City of Los Angeles, 

533 F.3d 1010

, 1016 (9th Cir.
2008).
A.
Debtor Jerrold Pressman and his son, Keith Pressman,
co-owned EPD. 2 The Pressmans used EPD to borrow
money from individuals in exchange for short-term, thirty-
day promissory notes or demand notes. These notes
promised above-market, mostly double-digit annual interest
rates. EPD called its lenders “investors” and described its
lenders’ funds as “an investment, rather than a loan that
required repayment.” Jerrold Pressman deposited funds
from EPD’s lenders into a single bank account that
comingled investor funds with EPD’s operating funds. EPD
would prepare and circulate periodic account statements
reflecting the amount of money each investor lent EPD,
including interest accrued in their accounts.
EPD offered a few services for its lenders. EPD ran a
bill-pay service in which EPD made payments on mortgages,
credit card statements, and other recurring bills. EPD also
facilitated “equipment leases” in which investors loaned
money to EPD to acquire an ownership interest in a piece of
equipment, and EPD purported to make periodic lease
payments to lenders.
Jerrold Pressman used EPD to loan money to himself,
which he then used to personally invest in other businesses
in which he held partial ownership interests, including ice
rinks, night clubs, marketing companies, and a commercial
2
Debtor Jerrold Pressman operated EPD Investment Company as a sole
proprietorship beginning in the 1970s. In June 2003, Pressman
transferred assets from the sole proprietorship to EPD, which he then
structured as a California limited liability company.
8                   IN RE: KIRKLAND V. RUND
real estate development firm (the “related entities”). The
Pressmans also used EPD to pay off their own credit cards,
mortgage payments, car payments, and other personal
expenses. Jerrold and his son paid themselves $6,848,000
from EPD’s bank account over the seven-year period in
question.
EPD was never profitable during this period. Between
2003 and 2010, EPD lost money each year and accrued a
total net loss of $14.4 million in income. EPD’s liabilities
also significantly exceeded its assets every year, with
negative net equity ranging from $3 million to $24.2 million.
Most of the assets booked by EPD were promissory notes
from Jerrold Pressman himself, which were secured against
his assets. Pressman’s assets, in turn, primarily consisted of
his partial ownership interests in the related entities.
The evidence at trial established that Jerrold Pressman
could not repay his loans to EPD. During the relevant
period, Pressman was $48 million in debt, which he kept
afloat through loans, notes, and lines of credit. Pressman
admitted on cross-examination that virtually all of his assets,
including his ownership interests in the related entities, were
subject to security interests that substantially exceeded the
real market value of his assets. Pressman also acknowledged
that none of his ownership interests in the related entities had
any saleable value because of the liens upon them and
because he had no controlling stake in these investments.
EPD’s business operations and assets could not sustain
its growing obligations to its investors. EPD accordingly
relied on an ever-growing supply of investor money to stay
afloat. The Trustee’s expert, a forensic accountant, testified
that the only way the Pressmans could pay themselves
millions of dollars and repay EPD’s lenders was by
IN RE: KIRKLAND V. RUND                   9
consistently shifting money from lenders to pay other
lenders.
EPD collapsed in 2009. At the time of its bankruptcy
filing, EPD had approximately $32 million in assets and
approximately $70 million in liabilities. The $32 million
listed as EPD’s assets, however, consisted almost entirely of
debt from Jerrold Pressman and his related entities.
Pressman personally owed EPD $25 million, but he had no
ability to repay EPD because he reported only $27,000 in
assets against $144 million in personal liabilities.
Prior to EPD’s collapse, John Kirkland made a series of
loans to EPD between September 2007 and July 2009
totaling $2,055,000. John was an attorney admitted to
practice law in California, and he periodically represented
entities controlled or partially owned by Jerrold Pressman.
In return, EPD made mortgage payments on John’s behalf.
John later assigned his credit interest in the EPD loans to the
BC Trust, for which his wife Ann is the sole trustee. Ann
filed secured claims seeking $3,529,000 from EPD’s estate,
which included interest on the loans John had assigned to the
BC Trust.
B.
In December 2010, certain lenders initiated involuntary
bankruptcy proceedings against EPD. The bankruptcy court
consolidated EPD’s and Jerrold Pressman’s bankruptcy
estates and appointed Jason M. Rund as trustee. In October
2012, the Trustee sued John Kirkland individually and Ann
Kirkland in her capacity as trustee of the BC Trust to claw
back certain transfers of funds from EPD to the Kirklands
executed ahead of bankruptcy.
10                    IN RE: KIRKLAND V. RUND
The Trustee’s complaint alleged in relevant part that
(1) EPD operated as a Ponzi scheme and, in mid-2009,
stopped making payments to all but a few favored creditors;
(2) while acting as counsel for EPD and Pressman, John
invested or lent at least $150,000 to EPD; (3) after EPD
stopped making payments to creditors, John transferred his
interests in EPD to his family trust (the BC Trust) and/or his
wife as trustee; (4) the trust filed a financing statement
against all assets of EPD and Pressman; (5) John knew about
the Ponzi scheme and knew that filing the financing
statement was a fraudulent conveyance; and (6) John
arranged for Pressman, through EPD, to make John’s
monthly mortgage payments to his lender while John was
aware of the Ponzi scheme. See In re EPD Inv. Co., LLC,

821 F.3d 1146

, 1148 (9th Cir. 2016). 3
Because John had not filed a claim in the bankruptcy
proceeding or otherwise consented to the bankruptcy court’s
jurisdiction, John exercised his right to a jury trial before the
district court. See In re EPD Inv. Co., 

594 BR423

, 426
(C.D. Cal. 2018) (citing Langenkamp v. Culp, 

498 VS 42

,
44–45 (1990) (per curiam)). In December 2018, the district
court withdrew the reference of the adversary proceedings
from the bankruptcy court. 

Proof of identity.

 In June 2019, the district
court granted the Trustee’s motion to bifurcate the trials of
the (1) disallowance, equitable subordination, and
fraudulent transfer claims against Ann and the BC Trust, and
(2) the fraudulent transfer claims against John. The district
court explained in its bifurcation order that the first phase
3
Trial was delayed for several years pending the resolution of a motion
to compel arbitration brought by John, which this Court ultimately
denied in May 2016. See In re EPD Inv. Co., LLC, 

821 F.3d 1146

 (9th
Cir. 2016).
IN RE: KIRKLAND V. RUND                  11
would be a jury trial of the fraudulent transfer claims against
John, after which the district court would determine whether
to refer the case back to the bankruptcy court to resolve the
core bankruptcy claims.
The district court conducted a six-day jury trial of the
Trustee’s claims against John. On July 3, 2019, the jury
returned a verdict in favor of John. In reaching its verdict,
the jury made the following findings:
(1)   EPD was a Ponzi scheme;
(2)   John was not an insider of EPD and/or
Pressman;
(3)   EPD and/or Pressman transferred
property to John to hinder, delay, and
defraud one or more of their creditors;
and
(4)   John received the transfers in good faith
and at reasonably equivalent value.
Following the verdict, the district court referred the case
back to the bankruptcy court. The bankruptcy court ruled
that all explicit and implicit jury findings as to John would
remain binding with respect to the Trustee’s claims against
the BC Trust. After some delay, the bankruptcy court
entered a final judgment in favor of John on all claims
against him. Ann appealed from the judgment, seeking
vacatur of the jury finding that EPD was a Ponzi scheme.
The district court affirmed the judgment. This timely appeal
followed. We have jurisdiction under 

28 USC § 158

(d)(1).
12                     IN RE: KIRKLAND V. RUND
II.
Before we address Ann’s contentions on appeal, we must
first determine if she has standing to challenge the jury’s
Ponzi scheme finding in the Trustee’s action against John.
The Trustee argues that Ann does not have standing to
pursue this appeal because she was not a party to John’s jury
trial. Ann did not participate in the jury trial because, over
her objection, the district court granted the Trustee’s motion
to bifurcate the trial of the fraudulent transfer claims against
her and John. Following the jury verdict for John, however,
the bankruptcy court held that all findings from the trial—
including the finding that EPD was a Ponzi scheme—would
be binding with respect to the Trustee’s claims against the
BC Trust. Ann now seeks to appeal the Ponzi scheme
finding. We conclude that she has standing to do so. 4
We allow nonparties to appeal when (1) the appellant,
though not a party, was “significantly involved in the district
court proceedings,” and (2) the equities of the case weigh in
favor of hearing the appeal. United States ex rel. Alexander
Volkhoff, LLC v. Janssen Pharmaceutica N.V., 

945 F.3d
1237

, 1241–42 (9th Cir. 2020). Both elements are satisfied
here.
4
Both parties proceed under the assumption that Ann is necessarily a
nonparty for purposes of this appeal because she was not a party to the
bifurcated jury trial involving her husband. That assumption is
debatable. Ann’s trial was bifurcated, but she was always (and remains)
a party to the adversarial action because she was never severed from the
lawsuit. See 9A Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 2387 (3d ed. 2023) (distinguishing a motion
for separate trials (or bifurcation) from a motion for severance). We need
not address the impact of bifurcation on party status because Ann has
standing to appeal even as a nonparty.
IN RE: KIRKLAND V. RUND                  13
Even if the district court’s bifurcation of the fraudulent
transfer trial rendered Ann a nonparty to that trial, she was
“significantly involved” in the proceedings below. Ann is a
named party in the Trustee’s ongoing adversary action
against the BC Trust, she testified as a witness in John’s trial
below, and she is subject to the consequences of the jury’s
adverse Ponzi scheme finding. The equities also weigh in
favor of hearing Ann’s appeal because the Trustee has
indicated he intends to use the Ponzi scheme finding against
Ann at her upcoming trial which, according to Ann, would
“bar her recovery of millions of dollars in interest on the
loans John had assigned to the BC Trust.” In light of Ann’s
significant involvement in the case and her interest in the
issues presented, we conclude she has standing to appeal.
III.
Ann challenges the district court’s jury instruction
defining a Ponzi scheme on two grounds. She contends the
district court erroneously instructed the jury by failing to
include a mens rea element as part of the definition of a
Ponzi scheme and by instructing the jury that lenders are
investors for purposes of a Ponzi scheme. We address each
contention in turn.
A.
A Ponzi scheme is a financial fraud that induces
investment by promising high returns, usually in a short time
period, where in fact no legitimate profit-making business
opportunity exists. See Winkler v. McCloskey, 

83 F.4e 720

,
723 n.1 (9th Cir. 2023). We have characterized these
schemes as “borrow(ing) from Peter to pay Paul” because
the fraud consists of funneling money from new investors to
pay old investors while cultivating the illusion of a
legitimate profit-making business. See United States v.
14                     IN RE: KIRKLAND V. RUND
Rasheed, 

663 F.2d 843

, 849 n.1 (9th Cir. 1981) (citation and
internal quotation marks omitted).
By definition, a Ponzi scheme is destined to fail because
the pool of available investors is not limitless. When the
Ponzi scheme operator’s pool of investors inevitably runs
dry, the scheme collapses and the swindler and their entities
often end up in bankruptcy or equitable receivership. See
generally David R. Hague, Expanding the Ponzi Scheme
Presumption, 

64 DePaul L. Rev. 867

 (2015). In bankruptcy,
the court-appointed trustee is tasked with taking immediate
control of the entity, ceasing ongoing fraudulent activity,
locating and collecting assets for the bankruptcy or
receivership estate, and achieving a final, equitable
distribution of the remaining assets. See 

11 USC § 704

.
Trustees of a Ponzi scheme estate often rely on the
fraudulent transfer provisions of the Bankruptcy Code or
state fraudulent transfer laws to recover funds lost by Ponzi
scheme investors. See Donell v. Kowell, 

533 F.3d 762

, 767
(9th Cir. 2008); see also Mark A. McDermott, Ponzi
Schemes and the Law of Fraudulent and Preferential
Transfers, 

72 Am. Bankr. LJ 157

, 158 (1998). Fraudulent
conveyance suits, often called “clawback” actions, seek to
recover the false returns received by winning investors so
that the excess proceeds can be redistributed to losing
investors. 5 See Winkler, 83 F.4th at 723 n.1 (citation and
5
There are three main sources of fraudulent transfer law: (1) section 548
of the Bankruptcy Code, (2) the Uniform Fraudulent Conveyance Act
(UFCA), and (3) the Uniform Fraudulent Transfer Act (UFTA). See
McDermott, supra, at 159. Almost every state has enacted either the
UFCA or the UFTA, and there are few substantive distinctions between
the two uniform statutes or between the two statutes and section 548 of
IN RE: KIRKLAND V. RUND                         15
internal quotation marks omitted). Where causes of action
are brought against Ponzi scheme investors, “the general rule
is that to the extent innocent investors have received
payments in excess of the amounts of principal that they
originally invested, those payments are avoidable as
fraudulent transfers.” Donell, 533 F.3d at 770 (cleaned up).
Bankruptcy Code section 548 authorizes a trustee to
avoid any transfer of funds made by a debtor with (a) an
“actual intent to hinder, delay, or defraud” creditors; or
(b) for less than a “reasonably equivalent value,” among
other criteria. 

11 USC § 548

(a)(1)(A)-(B)(i); see also
Henry v. Lehman Commercial Paper, Inc. (In re First All.
Mortg. Co.), 

471 F.3d 977

, 1008 (9th Cir. 2006). In a
clawback suit against a winning investor in a Ponzi scheme,
the trustee may pursue two distinct theories of recovery:
constructive fraud or actual fraud. Donell, 

533 F.3d at 770

.
As relevant here, a trustee pursuing recovery under a theory
of actual fraud must show that the debtor (Ponzi scheme
operator) transferred funds to the transferee (the winning
investor) “with actual intent to hinder, delay, or defraud” the
creditors (the losing investors). 

Proof of identity.

 (cleaned up); see also 

11
USC Article 548

 (a)(1)(A). If the trustee proves that the debtor
operated a Ponzi scheme, the trustee is entitled to the
irrebuttable presumption that the debtor transferred money
with actual fraudulent intent under section 548. Or, as we
the Bankruptcy Code. See 

id. at 160

. The Bankruptcy Code expressly
authorizes a trustee to bring suit under the terms of both section 548 and
applicable state law, including the UFTA or the UFCA. See 

11 USC
§ 544

(b). Our fraudulent conveyance caselaw accordingly draws on
cases interpreting all three sources. See, e.g., Donell, 533 F.3d at 769–
70; Wyle v. C.H. Rider & Family (In re United Energy Corp.), 

944 F.2d
589

, 593–94 (9th Cir. 1991); In re Agric. Rsch. & Tech. Grp., Inc. (In re
AgriTech), 

916 F.2d 528

, 534 (9th Cir. 1990).
16                  IN RE: KIRKLAND V. RUND

have repeatedly put it, “