Trustee for Ponzi-scheme debtors sought to avoid and recover payments made to defendant, and the bankruptcy court awarded judgment in the amount of all payments, plus interest, to trustee. On appeal, defendant argued that, since all of debtors' funds were obtained through fraud, debtors had acquired no interest in them that could be recovered by trustee. The district court rejected defendant's argument, noting that cases unanimously hold that trustees can recover preferential and fraudulent transfers made by debtors to investors in their Ponzi schemes, because agreements induced by fraud are voidable, rather than void. Thus, where debtor had obtained investments through fraud, mingled them such that they could not be traced, and the investor failed to timely avoid the transaction, the money became property of the estate for avoidance purposes. The district court reviewed the evidence from the parties' trial and determined that, under § 550(a), defendant had been the initial transferee of some of the payments, and a transferee of the initial transferee in others. As a mediate transferee, defendant was entitled to the protection afforded by § 550(b), the elements of which (for value, in good faith, and without knowledge) had been established at trial in defendant's favor. The bankruptcy court's decision was reversed as to transactions determined on appeal to be § 550(a)(2) transactions, and affirmed as to § 550(a)(1) transactions. With respect to the affirmed transactions, the district court concluded that the bankruptcy court had not abused its discretion in awarding prejudgment interest.