Bad Brad’s Revenge: "Molly's Game" Ponzi Schemer’s Poker Losses Helped Victims Recover | Episode 101

Описание: Beverly Hills, April 2009. A hedge fund manager known in Hollywood poker circles as “Bad Brad” from "Molly's Game" surrenders to the FBI after running a Ponzi scheme for six years, stealing more than $25 million from over 20 investors. But this isn’t just another fraud case—Bad Brad became a real-life character in Molly’s Game, and his massive poker losses created one of the most unusual recovery opportunities in financial crime history.

For three years (2006–2009), Bad Brad played in exclusive, high-stakes underground poker games at luxury suites in the Four Seasons and Beverly Hills Hotel. Hollywood actors, billionaires, and wealthy entrepreneurs all wanted him at the table. He was the dream “big fish,” losing over $5.2 million—but every chip he lost came from stolen investor funds.

THE THREE MAJOR COURT CASES

• Criminal Case: Four felony convictions for wire fraud and investment advisor fraud
• SEC Civil Case: Two counts of federal securities violations
• Bankruptcy Litigation: 15 lawsuits targeting poker winners to claw back illegal transfers

THE BAD GAMBLING

• Buy-ins: $100K–$250K per game
• Total losses: $5.2M
• Player X’s winnings: Over $300K, including $100K from one hand
• Bad Brad's actual bank balances: Often near zero or negative

THE BAD PONZI SCHEME

• Total scheme size: ~$44M
• Investor losses: $25M
• Fake returns promised: 15%–61% annually
• Real hedge fund value by end of 2008: Only $650K
• Personal spending: $8.7M diverted for luxury homes, Porsches, credit cards, and lifestyle expenses

He recruited friends, family, and even other poker players—people who trusted him—while providing fabricated statements to hide the truth.

THE CREATIVE LEGAL STRATEGY

When the hedge fund collapsed and entered involuntary Chapter 7 bankruptcy, the trustee faced a unique problem: poker winners never invested in the fund, never met the investors, and had no contractual relationship with Bad Brad’s hedge fund. So how could the trustee legally recover $5.2M from them?

The trustee argued:
• The poker players gave no value to the hedge fund in exchange for the money
• Gambling debts are unenforceable in California
• The poker games were illegal because Molly Bloom never held the required gaming license
• Transfers to winners delayed and defrauded creditors, meeting the definition of fraudulent transfers

THE MOLLY'S GAME LINK

As Molly Bloom later said on Ellen:
“The feds first found out because a guy in my LA game was running a Ponzi scheme. He lost $5 million and they came after all of us.”

In the film, the games are portrayed as legal in California until she takes a rake in New York. But the bankruptcy trustee argued that the LA games were illegal from the start, creating a path for clawback lawsuits.

BAD BRAD & THE MADOFF TIMELINE

• Dec 2008: Madoff arrested
• March 2009: Madoff pleads guilty
• April 2009: Bad Brad’s fund collapses
• June 2009: Madoff sentenced
• Aug 2009: Bad Brad pleads guilty
• Jan 2010: Bad Brad sentenced to 10+ years, with Madoff referenced as deterrence

LAWSUIT RESULTS

All 15 poker winners settled.
• Player X: Paid $88K (vs. $311K claimed)
• Total recovered for victims: ~$1.7M of the $5.2M

QUOTES FROM THE GAME

“The irony is that we finally found the biggest fish ever—and now he’s turned the tables on us with no skill, just stupidity.”

CRITICAL LESSONS FOR WEALTH PROTECTION

Red Flags:
• High-stakes gambling with no visible income to support it
• Negative balances despite luxury spending
• Using business accounts for personal expenses
• Refusal to provide transparent accounting

Legal Risks for Winners:
Even if you win fairly, you may not be legally entitled to keep the money if it came from fraud, illegal gambling, or if a bankruptcy trustee proves it was a fraudulent transfer.

WHY THIS CASE MATTERS

This case shows how bankruptcy and fraud laws interact in unexpected ways. Poker winners had no knowledge of the Ponzi scheme, yet still faced clawbacks because the money they won was stolen. For advisors, attorneys, and fiduciaries, understanding these intersections is essential for protecting client assets.

ABOUT THE HOST

Professor Kelly Lise Murray, JD is a lawyer, legal scholar, and retired Vanderbilt Law School faculty member (18 years) who specializes in wealth preservation and has trained over 2,500 professionals nationwide. She is a Stanford Phi Beta Kappa graduate and Harvard Law School alum.

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Disclaimer: Educational only. Not legal, tax, or financial advice. No attorney-client relationship.

Keywords: Ponzi scheme, bankruptcy clawback, fraudulent transfer, Molly’s Game, illegal gambling, hedge fund fraud, wealth protection