          United States Court of Appeals
                       For the First Circuit


No. 17-1334

              IN RE: STEVEN PALLADINO; LORI PALLADINO,

                              Debtors.

                        ___________________

     MARK G. DEGIACOMO, Chapter 7 Trustee for the Estate of
          Steven Palladino and Lori Palladino, et al.,

                             Appellant,

                                 v.

                   SACRED HEART UNIVERSITY, INC.,

                             Appellee.


         APPEAL FROM THE UNITED STATES BANKRUPTCY COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Melvin S. Hoffman, U.S. Bankruptcy Judge]


                               Before

                        Howard, Chief Judge,
                Torruella and Lynch, Circuit Judges.



      Jeffrey R. Hellman, with whom the Law Offices of Jeffrey R.
Hellman was on brief, for appellant.
     Martin P. Sheehan and Sheehan & Nugent PLLC on brief for the
National Association of Bankruptcy Trustees, amicus curiae.
     Elizabeth J. Austin, with whom Jessica Grossarth and Pullman
& Comley LLC were on brief, for appellee.
     Aaron S. Bayer, Benjamin M. Daniels, and Wiggin & Dana LLP on
brief for the American Council on Education, APPA, Association of
American Medical Colleges, Association of Catholic Colleges and
Universities,    Association    of   Community    College   Trustees,
Association of Governing Boards of Universities and Colleges,
Association   of    Independent    Colleges   and   Universities   in
Massachusetts,    Association     of    Independent    Colleges   and
Universities of Rhode Island, Association of Jesuit Colleges and
Universities, Commission on Institutions of Higher Education of
NEASC, Connecticut Conference of Independent Colleges, Council for
Christian Colleges & Universities, Council of Independent
Colleges, Higher Learning Commission, Middle States Commission on
Higher Education, National Association of College and University
Business Officers, National Association of Independent Colleges
and Universities, Southern Association of Colleges and Schools
Commission on Colleges, University Risk Management and Insurance
Association, and WASC Senior College and University Commission,
amici curiae.


                         November 12, 2019
                HOWARD, Chief Judge.        Mark G. DeGiacomo, the Chapter 7

bankruptcy trustee for the bankruptcy estate of Steven and Lori

Palladino ("the Palladinos") and Viking Financial Group, Inc.,

appeals from the bankruptcy court's grant of summary judgment in

favor of appellee, Sacred Heart University.                 The summary judgment

order allowed the university to retain tuition payments made by

the Palladinos for their adult child's college education, payments

that were tendered while the Palladinos were legally insolvent.

                In the fall of 2012, Nicole Palladino, the Palladinos'

18-year-old daughter, enrolled as an undergraduate at Sacred Heart

University in Fairfield, Connecticut.1                 Between March 2012, and

March 2014, the Palladinos paid $64,656.22 in tuition to Sacred

Heart.        In January 2014, however, the Palladinos also pled guilty

in   a       state   court   to   fraud    in     connection   with    operating   a

multimillion-dollar          Ponzi   scheme       through   their     closely   held

company, Viking Financial Group, Inc. ("Viking").

                Following their fraud convictions, Steven was sentenced

to serve ten years in prison and Lori to five years' probation.

The Securities and Exchange Commission also obtained a $9.7 million

civil judgment against the Palladinos for securities violations.


         1The age of majority -- that is, the age below which
parents are expected to provide financial support for their
children -- is a question of state law. See Geltzer v. Oberlin
Coll. (In Re Sterman), 594 B.R. 229, 236 n.8 (Bankr. S.D.N.Y 2018).
In both Massachusetts and Connecticut, that age is eighteen. See
Mass. Gen. Laws ch. 4, § 7; Conn. Gen. Stat. Ann. § 1-1d.


                                          - 2 -
In   April   2014,   the    Palladinos       filed   a    Chapter    7   bankruptcy

petition.      Viking      filed    its    own   Chapter    7   petition    shortly

thereafter.     In May 2014, the bankruptcy court consolidated the

two bankruptcy estates and appointed DeGiacomo to serve as the

Chapter 7 trustee.

             In July 2015, DeGiacomo filed a four-count adversary

complaint against Sacred Heart in bankruptcy court seeking to

avoid, and thus to claw back, the Palladinos' tuition payments to

Sacred Heart.        Two counts of the complaint claimed that the

Palladinos'     tuition     payments       constituted      actual     fraud   under

11 U.S.C.     § 548(a)(1)(A)         and     Mass.       Gen.   Laws     ch.   109A,

§§ 5(a)(1), 8, and 9.2             The other two counts alleged that the

Palladinos'     payments     were    constructively        fraudulent     under   11

U.S.C. § 548(a)(1)(B) and Mass. Gen. Laws ch. 109A, §§ 5(a)(2), 8,

and 9 because the Palladinos did not receive "reasonably equivalent

value" in exchange for their tuition payments.

             The concept underlying fraudulent transfer is easily

grasped.     Where a person cannot reasonably expect to pay his debts

in due course, that person's transfer of his assets to another

person, without receiving equivalent value in return, can if done


      2   Under 11 U.S.C. § 544(a), commonly referred to as the
strong-arm clause, the bankruptcy trustee may exercise the rights
of creditors under state fraudulent transfer or preferential
transfer laws.   Because DeGiacomo is a bankruptcy trustee, the
strong-arm clause allows him to avoid transfers that violate 11
U.S.C. § 548(a)(1) or Mass. Gen. Laws ch. 109A, §§ 5(a) and 6(a).


                                       - 3 -
with bad motive be viewed as a dishonest trick that ought to be

civilly undone and perhaps criminally punished.                 The present case

involved only the civil remedy, namely, the effort of the trustee

to force the school to return the tuition payments.

             The    statutes     or     doctrine   extending      the   remedy     to

"constructive       fraud"     contemplates      the   same    remedy   where     the

insolvent transferor does not have a bad motive.                        This is a

reasonable result on its own terms since the concern is with equity

among claimants and not criminal punishment.              "Constructive" means

that, as only a civil remedy is involved, the court will treat the

situation as if it were fraud and require that the tuition or other

transfer be undone and the money returned to the estate. 5 Collier

on Bankruptcy ¶ 548.01 (Alan N. Resnick & Henry J. Sommer eds.,

16th ed. 2017) [hereinafter Collier].

             In February 2016, DeGiacomo and Sacred Heart each moved

for    summary     judgment.      The    bankruptcy     court    granted   summary

judgment in Sacred Heart's favor on all four counts of DeGiacomo's

complaint.       With respect to the constructive fraud claim -- the

only issue on appeal -- the bankruptcy court found that the

Palladinos paid their daughter's tuition because "they believed

that    a   financially      self-sufficient       daughter     offered    them    an

economic     benefit."        DeGiacomo     v.   Sacred   Heart    Univ.    (In    Re

Palladino), 556 B.R. 10, 16 (Bankr. D. Mass. 2016).                 This belief,

the    bankruptcy     court     reasoned,     satisfied       § 548(a)(1)(B)(i)'s


                                         - 4 -
reasonably equivalent value standard.        The bankruptcy court then

acted sua sponte to certify its decision for direct appeal to this

court under 28 U.S.C. § 158(d)(2).       Because the bankruptcy court's

ruling presents a question of law, our review is de novo.       Irving

Tanning Co. v. Kaplan, 876 F.3d 384, 389 (1st Cir. 2017).

            The   law   prohibiting   fraudulent   transfers   protects

creditors from transactions undertaken by the debtor prior to

bankruptcy proceedings which deplete the pool of assets that will

eventually be available to satisfy the creditors' claims.       Collier

¶ 548.01.    The origins date back to the Statute of 13 Elizabeth,

which "made it fraudulent to hide assets from creditors by giving

them to one's family, friends, or associates." Husky Int'l Elecs.,

Inc. v. Ritz, 136 S. Ct. 1581, 1587 (2016).           Such a transfer

operates to prioritize the friend or family member over bona fide

creditors, which in turn "violates the principle, 'be just before

you are generous.'" Bos. Trading Grp., Inc. v. Burnazos, 835 F.2d

1504, 1508 (1st Cir. 1987) (Breyer, J.).

            Section 548(a)(1)(B)(i) of the Bankruptcy Code provides

that:

            The trustee may avoid any transfer . . . of an
            interest of the debtor . . . incurred by the
            debtor, that was made or incurred on or within
            2 years before the date of the filing of the
            petition, if the debtor voluntarily or
            involuntarily . . . received less than a
            reasonably equivalent value in exchange for
            such transfer or obligation.



                                 - 5 -
11   U.S.C.    § 548(a)(1)(B)(i).     The    term   "reasonably    equivalent

value" is not defined in the statute, but it does not include

intangible, emotional, and non-economic benefits.                  See, e.g.,

Tavenner v. Smoot, 257 F.3d 401, 408-09 (4th Cir. 2001).

              Because fraudulent transfer law's purpose is to preserve

the debtor's estate for the benefit of unsecured creditors, courts

evaluate   transfers    from   the   creditors'     perspective,    Riley   v.

Countrywide Home Loans, Inc. (In re Duplication Mgmt., Inc.), 501

B.R. 462, 483 (Bankr. D. Mass. 2013), measuring value at the time

of the transfer, BFP v. Resolution Tr. Corp., 511 U.S. 531, 545–

46 (1994); see also Cooper v. Ashley Commc'ns, Inc. (In re Morris

Commc'ns NC, Inc.), 914 F.2d 458, 466 (4th Cir. 1990).                Tuition

payments made by insolvent parents have divided the courts,3

although the recent cases have mostly ruled for trustees.

              To us, the answer is straightforward.               The tuition

payments here depleted the estate and furnished nothing of direct

value to the creditors who are the central concern of the code

provisions     at   issue.     The   code    recognizes   five    classes   of




      3   Compare Sikirica v. Cohen (In re Cohen), 2012 Bankr.
LEXIS 5097 (Bankr. W.D. Pa. 2012), and Shearer v. Oberdick (In re
Oberdick), 490 B.R. 687, 711-12 (Bankr. W.D. Pa. 2013) (holding
for parents and universities), with Roach v. Skidmore Coll. (In Re
Dunston), 566 B.R. 624, 637 (Bankr. S.D. Ga. 2017), Boscarino v.
Bd. of Trs. of Conn. State Univ. Sys. (In re Knight), 2017 Bankr.
LEXIS 3324 (Bankr. D. Conn. 2017), and Geltzer, 594 B.R. 229
(holding in favor of trustees).



                                     - 6 -
transactions that confer value: (1) the exchange of property; (2)

the satisfaction of a present debt; (3) the satisfaction of an

antecedent debt; (4) the securing or collateralizing of a present

debt; and (5) the granting of security for the purpose of securing

an antecedent debt.   11 U.S.C. § 548(d)(2)(A).    None are present

here, nor are parents under any legal obligation to pay for college

tuition for their adult children.4

          Payments not for value by insolvent creditors could in

many situations go to worthy causes or, for example, to elderly

parents or needful siblings.   But such payments, absent one of the

exceptions above, will be undone by the rules that allow bankruptcy

trustees to claw back transfers.     Congress enacted the fraudulent

and constructively fraudulent claw back laws.        The members of

Congress were elected by the public and when they have made the

trade-offs which are set forth in the statute, courts must enforce

those statutes.   Absent constitutional challenge, when confronted

with a clear statutory command like the one in the bankruptcy code,




     4    One might argue for a different outcome in the case of
a minor child if, for example, state law required the expenditure.
Cf. Geltzer v. Xaverian High Sch. (In re Akanmu), 502 B.R. 124
(Bankr. E.D.N.Y. 2013). Here, however, no legal obligation exists
in Massachusetts for parents to support adult children at all.
Sacred Heart invokes a "societal expectation" that parents will
pay college tuition for their adult children, but, and again, this
does nothing for the creditors.


                               - 7 -
that is the end of the matter.         See TVA v. Hill, 437 U.S. 153, 194

(1978).5

               The judgment of the bankruptcy court is reversed and the

case       remanded   for   further   proceedings   consistent   with   this

decision.       It is so ordered.




       5  Because we find that DeGiacomo is entitled to avoid the
tuition payments under § 548(a)(1)(B)(i), we do not reach his
argument under Mass. Gen. Laws ch. 109A, § 5(a)(2).


                                      - 8 -
