Chapter 7

DECISION AFTER TRIAL

Introduction

In this adversary proceeding under the umbrella of the chapter 11 case of Fine Diamonds LLC (“Fine Diamonds”), chapter 7 Trustee Gregory Messer (the “Trustee”), pursuant to section 542 of the Bankruptcy Code, seeks the return (or a cash judgment for the value) of diamonds worth more than $37 million that had been entrusted to Defendant Peykar International Co. (“Peykar International”) — pursuant to a consignment agreement negotiated with (and implemented by) Peykar International’s principals, Defendants Mitch Peykar (“Mitch”), and Mehran Peykar (“Mehran,” and together with Mitch, “the Peykars”).2

Along with that federal turnover claim, the Trustee seeks the value of those diamonds under three other legal doctrines:

• (as against Peykar International), two of the Bankruptcy Code’s fraudulent transfer provisions, sections 544 and 548;

• (as against each of Peykar International, Mitch and Mehran), state law conversion; and

• (as against Mitch and Mehran), fraudulent misrepresentation.

After trial, the Court finds that the diamonds were indeed consigned to Peykar International, and neither returned nor paid for. Turnover, or its equivalent, is plainly required. The Court further finds that Defendant Peykar International is liable to the Trustee as the transferee of a fraudulent transfer, and that each of the Defendants Peykar International, Mitch and Mehran, jointly and severally, is liable to the Trustee for conversion. But the Court finds that the Trustee failed to establish his claim for fraudulent misrepresentation.

The Court has no reason to believe that the diamonds can be returned in kind. Judgment should be entered3 *165against Defendant Peykar International for their value (shown to be $37,593,930.34), on the turnover, fraudulent transfer and conversion claims. Mitch and Mehran should be liable, jointly and severally with Peykar International, on the conversion claim.

The Court’s Findings of Fact (or, with respect to the state law claims, proposed Findings of Fact) and Conclusions of Law follow.

Findings of Fact4

1. Background

Fine Diamonds was established as a New York limited liability company in 2003. Doran Meents (“Doran”) was the sole employee of Fine Diamonds during the years 2003 through 2008. The Meents family had a long history of involvement in the diamond industry. Doran Meents’ grandfather, Louis Meents, started Fest-diam Diamond Cutting Works (“Fest-diam”), a South African privately held company, in the early 1960s. Festdiam became a “sightholder” of DeBeers, the largest supplier of diamonds in the world, which enabled Festdiam to source and purchase rough diamonds from DeBeers in order to meet the demand for polished diamonds from Festdiam’s customers. Doran Meents’ father, Jeffrey Meents (“Jeffrey”), and Doran’s uncle, Lester Meents (“Lester”), joined Festdiam in the 1970s.5

In 2003, Jeffrey and Lester established Fine Diamonds in New York, holding 100% of the equity in the company between them. As Fine Diamonds’ sole employee, Doran moved to New York and began selling diamonds supplied by Fest-diam through the new New York-based company.

Doran first developed a business relationship with Mitch and Mehran (collectively, the “Peykars”), brothers who then owned a company called D & M Gems and Jewels, in or about 2001. The Peykars subsequently established Peykar International, based in New York and then in Tel Aviv, Israel, as well. Mehran was responsible for the Tel Aviv office.

*166 2. Dealings Between Fine Diamonds and Peykar International

Between 2003 and 2006, Doran’s business with the Peykars was limited and involved traditional purchase and sale transactions, with credit extended. At the end of 2006, Mehran approached Doran to ask whether Doran would be willing to work with him in a different manner. Mehran said that he did not want the responsibility of taking on credit and asked if Doran would agree to consign diamonds to him “on memo,” as was often done in the diamond business.6

Beginning in early 2007, Doran began providing diamonds to the Peykars on consignment. In testimony the Court finds credible and takes as true, Doran testified:

I would provide Mitch or Mehran with batches of diamonds on consignment. Title to the diamonds remained with Fine Diamonds, but possession was given to one of the Peykars, who would try to solicit sales to customers. Mitch and Mehran would in turn indentify [sic] customers, negotiate and arrange for the sale of the diamonds and remit a previously agreed upon price to Fine Diamonds, keeping any profit above our negotiated price.... In the beginning of the relationship in 2007,1 recall Meh-ran signing a few “memos” for the receipt of the diamonds. That procedure might have lasted for only the first few deliveries. Eventually there came a time when the Peykars and I were doing so much business and I trusted them unconditionally, that I no longer required them to sign a memo.7

With the exception of two individual large stones, the Peykars accepted every single diamond Doran offered them.8

The diamonds Peykar International received from Fine Diamonds were transferred on a consignment basis; indeed, Mitch expressly admitted that,9 and in his answer, Mehran admitted to the consignment relationship without qualifications.10

*167 3. The Relationship Between Fine Diamonds and Peykar International Grows

From approximately April 2007 continuing through the end of 2008, virtually all of the sales and distribution of Fine Diamonds’ diamonds flowed through Peykar International and the Peykars.11 Peykar International became the principal distributor and broker of diamonds for Fine Diamonds.12 Initially, Doran transferred batches of diamonds worth a few hundred thousand dollars only, but when the relationship appeared to be working well, Do-ran began transferring more and more diamonds to Peykar International, with batches of diamonds valued in the millions of dollars.13 The Peykars would sell the diamonds to customers and remit payment back to Fine Diamonds.14

Jb Fine Diamonds’ Records of Diamonds Delivered to Peykar International

Fine Diamonds delivered numerous diamonds to Peykar International in the period from April 1, 2007 through November 2008. The specifics of the deliveries were documented to the Court’s satisfaction. They were shown in Plaintiffs Exhibit 1, a binder containing Microsoft Excel spreadsheets listing all transactions between Fine Diamonds and Peykar International, which were given to the Peykars at the time they were generated,15 with respect to which a foundation was satisfactorily laid to admit them as business records.16

Each of the spreadsheets reflected specific diamonds that Doran delivered to either Mitch or Mehran, along with the cumulative price for each batch that Peykar International agreed to pay Fine Diamonds. The spreadsheets contained line items for each stone, listing the weight (by carat), color, clarity, and other physical characteristics.17 In addition, there was a listing for the “Rappaport” price (which is a trade publication that lists the values of diamonds), along with a discount for the particular transaction and a price for each stone that had been agreed upon between Doran and one or both of the Peykars.18

Doran made contemporaneous handwritten notes of any payments he received from Peykar International with respect to each batch of the Debtor’s diamonds that had been delivered to Mitch or Mehran.19 On the bottom right of most of the spreadsheets was a date indicating the date that the spreadsheet was prepared.20 The diamonds were delivered to Peykar International on that date or shortly thereafter.21

With only one exception, the payments from Peykar International for particular batches of diamonds took place weeks or months after the diamonds were delivered, and after more batches of diamonds were transferred to Peykar International.22

*168The cumulative amount of diamonds consigned to Peykar International, along with the amounts paid on account of earlier consignments, was established to the satisfaction of the Court, as shown in Plaintiffs Exhibit 3, which was admitted, after extensive foundation testimony, at the trial.23 It was a chart that Doran prepared using Microsoft Excel that combined the cumulative value of diamonds consigned to, and payments received from, Peykar International, as of early December 2008.24 As documented by Plaintiffs Exhibit 3, and as explained by Doran at trial, the outstanding balance as of early December 2008 owed by Peykar International to Fine Diamonds for diamonds consigned to them was $37,593,930.34.25 Over the course of the relationship, Fine Diamonds transferred over $125 million in diamonds to Peykar International, and received less than $87 million in payments — leaving $37.6 million owed by Peykar International to Fine Diamonds, after accounting for approximately $2 million in returned diamonds.26

The Defendants presented no evidence to challenge this amount. But the Court nevertheless considered it necessary to gauge Doran’s credibility. After having an opportunity to assess Doran’s testimony with the benefit of cross-examination, the Court found Doran’s testimony to be credible, and had no basis for questioning it.

As a result, the Court finds the outstanding balance — i.e., the value of diamonds not yet returned or paid for by Peykar International — to be $37,593,930.34.27

5. Fine Diamonds Becomes Concerned About Rising Balance

During the early part of 2008, the amount owed to Fine Diamonds by Peykar International began to increase, eventually exceeding $37 million by the end of the summer.28 In September 2008, Doran noticed that the payments from Peykar International were slowing down. Doran expressed his concern on numerous occasions to Mitch and Mehran that the Peykars were holding a large amount of Fine Diamonds’ property while the money was coming in at a much slower pace.29

Doran was told by Mitch and Mehran that the diamonds were being kept safely under their control, locked in safes and available at all times either in New York or Tel Aviv.30 Mitch and Mehran also represented to Doran that Israeli customers and companies had committed to buy many of the diamonds Fine Diamonds had transferred to them.31 Doran spoke with the Peykars during September and October 2008 on an almost daily basis about these matters, and Doran was repeatedly assured of the safety of the diamonds.32

*169On October 11, 2008, Doran sent Meh-ran an email demanding that Mehran wire money to Fine Diamonds to reduce the outstanding balance, and to help alleviate the pressure Fine Diamonds’ suppliers were putting on Fine Diamonds.33 Doran specifically requested that payments totaling $5 million be made that week, and that an additional $3 to $4 million be made the following week.34 Mehran did not respond to the email.35

On October 25, 2008, Doran again emailed Mehran to complain about his failure to make promised payments.36 Meh-ran did not reply in writing to that email either. But Mehran promised during a subsequent telephone conversation that payments would be made when the diamonds were sold.37 Although Mitch provided some polished diamonds to Doran in October, no cash payments were ever made.38

6. Mitch’s Continued Representations About the Safety of the Diamonds

During late October 2008, Doran and Mitch met at Mitch’s office, and Doran again asked about the diamonds Peykar International was holding.39 Mitch reassured Doran that many of the diamonds were in sealed “cachets” in Israel.40 Mitch stated that between the diamonds in Israel and the ones he was holding in New York, Peykar International was holding $41 million worth of Fine Diamonds’ diamonds.41 While Mitch said that not all of the diamonds that he and his brother had were Fine Diamonds’ diamonds, Mitch said, “thank God I have more diamonds than what I owe you and that you are safe.”42

7. Fine Diamonds Experiences Pressure from Suppliers

Fine Diamonds was under increasing pressure from its suppliers to repay its outstanding debts, and Doran was under increasing pressure from his family as the stream of payments coming into Fine Diamonds from the Peykars had slowed dramatically.43 Blue Star Diamonds (“Blue Star”), one of the Debtor’s largest creditors, contacted Lester to convey its concern that the payments from Fine Diamonds for polished diamonds were not *170coming in as regularly as they had been, and that Fine Diamonds was in fact significantly behind in such payments.44 In November 2008, Lester became aware of a dramatic drop off in payments from Fine Diamonds to Festdiam, and became increasingly concerned about the viability of Festdiam’s business in the United States.45

Lester spoke with representatives of Blue Star in late November 2008, at which time the Blue Star representatives advised Lester that Blue Star was willing to take certain diamonds back, and to credit Fine Diamonds for those diamonds.46 Accordingly, Doran shipped certain other diamonds to Blue Star to hold as collateral for the ultimate return of Blue Star’s diamonds, while Doran continued to pursue payment from the Peykars.47

At the same time, the Peykars convinced Doran that they could sell smaller diamonds (in the range of 0.9 to 1.5 carats) more quickly, which in turn would provide needed cash flow to Fine Diamonds.48 Relying on these assertions, Doran shipped larger diamonds to Blue Star, and Blue Star shipped 156 smaller stones to Do-ran.49 Doran delivered these diamonds to Mitch’s New York office on December 1, 2008.50 Doran never received any payments from any subsequent sale of these diamonds, nor did he ever see these diamonds again, despite attempting to retrieve them later.51

8. Doran and Lester Confront Mehran in Israel

On December 2 and 5, 2008, Doran sent Mehran emails asking Mehran to return diamonds that Doran had transferred to Peykar International, so Doran could return them to Fine Diamonds’ suppliers and reduce the financial pressure from Fine Diamonds’ creditors.52

On December 5, 2008, after sending the second email, Doran spoke with Lester, and explained that the Peykars had been repeatedly telling him that most of the diamonds transferred to them by Fine Diamonds were being held in sealed cachets in Israel under Mehran’s control, but that Mehran was not responding to requests to return the goods.53 Lester asked Doran to meet him in Israel to confront Mehran.54

In anticipation of that meeting, Doran sent another email to Mehran that night, attaching his summary spreadsheet indicating the $37,593,930.34 outstanding balance.55 Mehran did not respond to that email either.56

However, on his way to the airport the next day, Doran received a call from Meh-ran, attempting to dissuade Doran from coming to Israel by promising to ship Fine Diamonds’ diamonds to New York.57 Meh-ran asked that he be given time first, though, to contact the potential customers to inform them that he needed to break *171open the cachets.58 Mehran also claimed to have shipped three batches of diamonds the day before to Doran in New York, worth a total of $6 million.59

Doran, Lester, and Lester’s daughter confronted Mehran on December 7, 2008 at the Tel Aviv Diamond Exchange, where Mehran’s office was located. When they did so, Mehran immediately told them that he was holding $47 million of diamonds.60 Mehran then produced a few boxes, trays, and parcels of loose diamonds which he acknowledged belonged to Fine Diamonds, and which he said were being returned as credit for what was owed by the Peykars to Fine Diamonds.61 Mehran also claimed that some diamonds had been given to a broker in the United States to sell to customers there. But Mehran could provide no name for the broker, nor any documentation for this alleged transfer.62 Mehran reiterated that $6 million in diamonds had been shipped to Fine Diamonds in New York two days prior, but he could produce no documentation to support this either.63

Mehran claimed that the remainder of Fine Diamonds’ diamond stock was in sealed cachet boxes being held in a safe in the basement of the building.64 Mehran and Doran made four total trips to the basement to retrieve cachet boxes.65 In Mehran’s office, Mehran refused to allow Doran and Lester to open the cachets, which Mehran asserted contained $8 million in diamonds, claiming that by opening the cachets without the prospective buyers’ permission, the parties would face possible arbitration in Israel.66 But Mehran was reluctant to provide the names of the prospective buyers so that the Meents’ could contact them to request permission to open the cachets.67

Even if believed, the total amount of diamonds that Mehran claimed to have produced that day did not total the $47 million he had originally claimed to have in his possession.68 Doran and Lester inquired about the balance.69 Mehran informed them that the remaining diamonds were in another safe in the building- — -but that he did not have access to the safe, as Mitch, who had been in Tel Aviv the week before, had taken the key back to New York with him.70 As Mehran later admitted in his deposition, no additional safe ever existed. As Mehran admitted, “I used that as an excuse just to calm him down.... I never had another safe.”71

*172By this time, as the building was ready to close, Lester took the loose diamonds and cachet boxes to the local office of Malca-Amit72 in sealed bags for safekeeping for the night.73

Lester decided that Doran should return to New York the following morning, Monday, December 8, to confront Mitch there. Doran thus returned to New York.74 Before leaving Israel, however, Doran called Mitch, who told Doran that he (Mitch) had four boxes of GIA-certified diamonds in his office in New York that he was willing to give to Doran’s father, Jeffrey, who was then in New York.75 While Doran was flying back to New York on December 8, Jeffrey collected 88 stones from Mitch at Mitch’s office, which Mitch claimed to be worth approximately $800,000.76

In the meantime, Lester (who was still in Tel Aviv) met with Barack Sharabi, a Tel Aviv attorney, who advised Lester to open the cachets only in the presence of third parties and to do it on videotape.77 After confronting Mehran again in his office on December 8 — at which time Meh-ran refused to provide any further diamonds or information — Lester had the sealed bags being held by Malca-Amit transferred to the offices of another attorney in Tel Aviv, Gabi Savran, who documented and videotaped the process of inspecting and opening the cachets.78

The cachets’ opening revealed that the cachets maintained by Mehran were empty, except for one box.79 In fact, 85 to 90% of the parcels (small envelopes which would normally contain one diamond each) were completely empty, and those parcels that did contain diamonds were immediately identifiable as diamonds that had been swapped out, because they did not correspond to the value of the diamond listing on the face of the box.80 After inspecting these diamonds, Lester established that these were diamonds of inferior quality having little value.81

Lester also found that some of the boxes simply contained magazines, rather than diamond parcels, in order to give the false impression that they were weighted down with heavy diamond stock.82 Mehran admitted during his deposition that the cachets were not real, and that he and his staff deliberately put them together on the morning of December 7, 2008 with magazines and empty parcel papers to give the appearance of productive business to deceive Doran and Lester Meents.83 Mr. Sharabi took custody of the few diamonds found in the cachets and locked them away in his safe.84 Mr. Sharabi subsequently consulted a diamond company to provide *173independent valuation and to provide a secure place for the diamonds.85

The next day, Tuesday, December 9, 2008, Lester had a phone conversation with Mehran that he recorded using a service available in Israel.86 In this conversation, Mehran did not dispute that Peykar International owed money to Fine Diamonds. Mehran disputed only the amount owed — claiming that the amount was approximately $23 million, rather than the approximately $37 million shown as outstanding in Doran’s records.87

9. Doran and Jeffrey Meet with Mitch in New York

Meanwhile, on Tuesday, December 9, Doran (who, as previously noted, by this time had returned to New York) went to Mitch’s New York office with Doran’s father Jeffrey.88 Doran brought a digital audio recording device with him to the meeting, which he used to record the entire exchange.89 Doran also brought with him the chart that he had sent to Mehran on December 5, listing the batches of diamonds delivered and the payments received.90

Doran began the meeting by asking Mitch to confirm to Jeffrey that Doran had delivered over $100 million worth of diamonds in late 2007 and 2008, as reflected on the chart.91 Mitch did not dispute that he had received over $100 million in goods; however, he wanted to know what the Meents had retrieved from Mehran in Israel.92 Mitch acknowledged on several occasions owing money to Fine Diamonds, but he never agreed on the amount.93 Instead, Mitch claimed that the amount was between $15 and $18 million.94

The meeting concluded with an acknowl-edgement by Mitch that he was holding a two carat stone that was in a cachet to be sold to someone, and he asked that he be able to complete the sale.95 Jeffrey informed Mitch that he did not want Mitch to sell any more of Fine Diamonds’ diamonds, and wanted the stone returned to him.96 When Mitch responded that he could not return the stone (as it was in a cachet being held by someone else), Jeffrey said that he would come back the following day to retrieve the diamond.97

When Doran and Jeffrey returned to Mitch’s office the next day, Wednesday, December 10, Mitch informed Doran and Jeffrey that he could not return the diamond, as he had been instructed by Meh-ran not to return anything further.98 *174Mitch did, however, hand over $2,000 in cash that he had in his safe, which Doran deposited in Fine Diamonds’ bank account.99

10. Criminal Investigation

When subsequent attempts by Lester to meet with Mehran proved fruitless, Lester contacted the Fraud Department of the Israeli police in Tel Aviv and filed a formal complaint.100 On Sunday, December 14, 2008, Mehran was arrested in Israel, and his home and office were searched by the Israeli police, on suspicion of grand larceny.101 The Israeli police confirmed that there was no additional safe at Mehran’s office in Tel Aviv.102

That same day, Mitch called Doran to tell Doran about Mehran’s arrest in Israel, and to seek a possible settlement.103 Do-ran replied that once a settlement was reached in principle, Mitch had to have diamonds or money (or both) readily available to follow through on it, and that the settlement would have to be done in the presence of attorneys for each side.104 Mitch agreed, and said he would be in touch the following day.105 The next day, however, Mitch was apparently admitted to Long Island Jewish Hospital for cardiac problems.106 No further discussions occurred between Doran and either of the Peykars.107

11. Procedural Matters

On February 4, 2009, creditor Nedbank Ltd. (“Nedbank”) filed an involuntary chapter 7 petition against Fine Diamonds LLC. The same day, Nedbank:

(a) moved for the immediate appointment of an interim chapter 7 trustee, under section 308(g) of the Code,108 pending consideration of its request for an order for relief;

(b) filed this adversary proceeding, seeking to recover, on behalf of the Fine Diamonds estate, “over $36 million”109 of diamonds (the “Transferred Diamonds”) allegedly converted or embezzled from the Debtor;110 and

(c) sought an ex parte temporary restraining order (“TRO”) freezing the Debtor’s and Peykar International’s assets.

In the evening of that day, the Court signed an ex parte TRO (after finding that advance notice of the TRO request would cause irreparable harm to the Debtor’s estate and to the Debtor’s creditors) which, among other things:

(a) enjoined the Defendants from disposing of diamonds of any value, and *175any other assets of a value greater than $100, pending a hearing on continuation of the TRO;

(b) authorized the securing of Peykar International’s office;

(c) declined to immediately appoint an interim trustee or to order immediate turnover;

(d) gave Nedbank the authority to sue on behalf of the estate until a trustee was appointed; and

(e) set a hearing on continuation of the TRO, and appointment of an interim trustee, to be held two days later.111

At the hearing two days later, the Trustee was appointed under section 303(g) of the Bankruptcy Code, and the Court continued the TRO, subject to adjustments to allow those restrained to live their daily lives. On July 24, 2009, the Trustee filed an Amended Complaint, substituting himself as Plaintiff, adding Mehran as a defendant, and dropping Doran from the suit.112 From then on, Peykar International, Mitch, and Mehran (collectively, the “Defendants”) were the defendants.

Before the now-relieved Mr. Stanton represented the Defendants, another attorney, Paul Millus, represented them, throughout most of the pre-trial proceedings. In January 2011, 10 days before the trial in this adversary proceeding was scheduled to begin, Mr. Millus too asked to be relieved from his representation of the Defendants, though, duly protecting the attorney-client privilege, Mr. Millus was not specific in saying why he sought to be relieved, other than to attribute it to differences with his clients. The Defendants informed the Court not only that they did not oppose Mr. Millus’ request, but that they supported it. The Court granted the application to withdraw, and upon the Defendants’ request, pushed the trial back by a month, to begin February 17, 2011.113

The Defendants then retained Mr. Stanton, who, a week before the February 17 trial date, requested a further adjournment. After an on-the-record conference call with the parties, and after determining that the appearance of the Trustee’s trial witnesses could be rescheduled with minimal prejudice, the Court granted still another adjournment, rescheduling trial for March 17 and 18, 2011.114

On March 14, 2011, a week before the third trial date, the Defendants’ counsel Mr. Stanton filed a letter request for “Emergency Injunctive Relief’ with the district court, seeking to withdraw the reference and “to stay all proceedings” in this case “pending the same.” Judge Koeltl of the district court denied that request by endorsed order.115 The same day, March 15 (now, two days before the trial on the third date that had been set), Mitch, acting without his counsel, wrote Judge Koeltl making two additional requests for a stay — with each seeking such a stay “pending final determination whether this debtor is properly before the court,” and whether the Bankruptcy Court had jurisdiction over the adversary case.116 Each *176was denied by Judge Koeltl, by endorsed order.117

The trial was held on March 17 and 18, 2011. The Court found the testimony of Doran and Lester (the former of whom Mr. Stanton cross-examined, and the latter of whom Mr. Stanton cross-examined only on evidentiary foundation matters) credible. But the Court had no occasion to consider Mitch’s and Mehran’s credibility, as each failed to appear for cross-examination, and, by reason of that failure, the Court struck their direct testimony declarations.118

Mr. Stanton nevertheless could, and did, file a post-trial brief. It has been duly considered in connection with this Decision.119

Discussion

As noted above, the Trustee seeks relief on four separate grounds:

(1) Turnover, under section 542 of the Code;

(2) Fraudulent transfer doctrine, under sections 548, 544 and 550 of the Code;

(3) Conversion; and

(4) Fraudulent misrepresentation.

The Court considers them in turn.

1. Turnover

Count 1 of the Amended Complaint seeks a judgment for the turnover or value of the Transferred Diamonds under section 542 of the Bankruptcy Code. Section 542(a) provides, in relevant part, that:

[ A]n entity, other than a custodian, in possession, custody, or control, during the case, of property that the trustee may use, sell, or lease under section 363 of this title, ... shall deliver to the trustee, and account for, such property *177or the value of such property, unless such property is of inconsequential value or benefit to the estate.

Under caselaw applying New York law,120 a debtor that consigns goods to another retains title to those goods121— and consequently, those goods still constitute property of the estate, and are property that the trustee can use, sell or lease.

The Trustee asserts in his Post-trial Brief that the “testimony and documentary evidence at trial clearly established that Doran delivered to both Mitch and Mehran on consignment a series of batches of diamonds.” 122 The Trustee continues that “[s]ince title to the diamonds did not pass to the Peykars during these consignment transactions, the diamonds remain property of the estate, subject to the turnover provisions of 11 U.S.C. §§ 541-542.”123

In their Post-trial Brief, however, the Defendants dispute that. In doing so, they argue two things. First they contend that there were no consignments at all, but rather merely sales on unsecured credit.124 Then they argue that if the transfers of the diamonds were in fact on consignment, the requirements under the New York Uniform Commercial Code (“UCC”) for protecting a consignment were not satisfied, and thus that any consignment cannot be regarded as valid.125 The Court is unpersuaded by either contention.

First, Doran’s testimony that the parties intended a consignment126 was undisputed, and in fact each of the Defendants admitted that the transaction was a consignment — Mitch, in his deposition testimony,127 and Mehran, in his answer.128 All of the testimony with respect to intent, and nearly all of the testimony with respect to indicia of consignment, supports the Trustee’s view.

Second, the Defendants’ assertion that Fine Diamonds’ failure to file a financing statement or a security agreement relieved Fine Diamonds of any ownership interest *178in the diamonds is contrary to express terms of the UCC’s provision under which consignments are governed.

A. Existence of Consignment

Under New York law, a “true consignment”129 is essentially an agency with a bailment.130 If there were a dispute as to whether that was the arrangement here, the Court would engage in a factual inquiry to determine whether the parties intended a consignment, with the associated agency relationship,131 and, to the extent that it was inconclusive, perhaps look at other indicia. But here, of course, in testimony the Court found credible,132 Do-ran expressly described the intent on the two sides that title remain with Fine Diamonds.133 And, importantly, each of Mitch and Mehran admitted the alleged consignment, confirming the parties’ intent, which ultimately is controlling.134

Additionally, while the objective indicia of the two sides’ intent are not as critical as the statements by Doran and the express admissions by Mitch and Mehran, nearly all of those objective indicia support a factual finding of a consignment as well. The dealings relevant here began when, in 2006, Mehran said he did not want the responsibility of taking on credit,135 Thereafter, as Mitch testified, the Debtor “would provide us with stone[s],” and that after receiving the stones, “we have to sell and give him back the money.”136

Notably, Mitch phrased it that way (with sale and then payment), rather than speak*179ing in terms of Peykar International having bought the diamonds, for which payment would then be due — immediately, within 10 or 30 days, or at any other fixed time before diamonds were sold to third parties. And Mitch’s testimony that “whatever diamonds he [Doran] brought in a box you would accept”137 further supports Doran’s testimony that delivery was merely on consignment. If the delivery of the diamonds were on consignment, there would be no risk associated with accepting, them so indiscriminately; if the diamonds couldn’t be sold, they could simply be returned. But if the diamonds had actually been purchased by Peykar International when it took them, Peykar International would be liable to the Debtor for very sizable sums while being unable to sell the diamonds to anyone else.

There was, however, one statement by Doran that, based on one of two possible readings of it, could be read to cut the other way. Doran testified that “Mitch and Mehran would ... remit a previously agreed upon price to Fine Diamonds, keeping any profit above our negotiated price.”138 That statement is ambiguous, being capable of being read in two ways. By one reading, such an arrangement would still be an ordinary consignment, with the consignee liable merely to hand over to the consignor the consignment price, with the freedom to keep anything more than that received by the ultimate purchaser, as the commission or otherwise. By another, it could be deemed to be an ordinary sale. But the underlying fact then stated would in any event be insufficient to trump all of the other evidence of intent, as described in detail above.

B. Failure to File Financing Statement

The Court also agrees with the Trustee with respect to his contention that the failure to file a financing statement does not cause the Fine Diamonds estate to have forfeited its ownership in a dispute with Peykar International. The UCC does not prescribe rules for determining the legal relationship between the consignor and the consignee.139 In fact, comment 6 to N.Y. UCC § 9-109 expressly states that Article 9 does not apply to the relationship between consignor and consignee:

For purposes of determining the rights and interests of third-party creditors of, and purchasers of the goods from, the consignee, but not for other purposes, such as remedies of the consignor, the consignee is deemed to acquire under this Article whatever rights and title the consignor had or had power to transfer.... The relationship between the consignor and consignee is left to other law.140

The Court does not need to address how it would deal with failures to comply with required consignment formalities if they came at the expense of secured or unsecured creditors of consignee Peykar International, or purchasers from that entity. Here the dispute is between the consignor and consignee — consignor Fine Diamonds and consignee Peykar International. The *180principles defining that relationship are left to law other than the UCC.141

Thus, if the relationship otherwise was one of consignment — as the Court finds here — the UCC provisions that would require the filing of a financing statement and security agreement to protect consign- or rights as against third parties are not applicable here.142 The Defendants’ argument that “the Debtor as selling party must have a perfected security interest in the diamonds transferred to the Peykar Defendants in order to claim any continuing ownership interest in such diamonds” 143 is simply not supported by the law.

Rather, because no third-party rights of Peykar International creditors or purchasers are at stake here, the Court determines the claim of consignment (and resulting continuing ownership) using common law precepts,144 fully addressed above.

C. Consignment Conclusion

Accordingly, the Court finds, as a fact or mixed question of fact and law, that the diamonds given by Fine Diamonds to Peykar International beginning in 2007 were entrusted to Peykar International on consignment, and were not sold on credit. Thus, title did not pass to the Peykars during these consignment transactions, and the Transferred Diamonds remained property of the estate, subject to the turnover provision, section 542.

As previously determined, the value of the Transferred Diamonds held by Peykar International was $37,593,930.34. With no basis for a finding that Peykar International can return those diamonds in kind, judgment must be entered against Peykar International in that amount.

2. Fraudulent Transfers

In Counts 3 and 5 of the Amended Complaint, the Trustee seeks:

(a) to avoid the transfer of the missing diamonds under sections 548 and 544 of the Bankruptcy Code, respectively; and

(b) recovery of their value, pursuant to section 550 of the Code, from Peykar International, Mitch and Mehran, pursuant to Bankruptcy Code section 548(a)(1)(B) and New York Debtor and Creditor Law section 276, respectively.

Each is premised, in substance, on constructive fraudulent transfer doctrine, and on the claim that these Defendants caused the transfer of the consigned diamonds to themselves.

Based on its factual findings set forth above, the Court is satisfied that Peykar International caused the missing diamonds to be transferred to itself, and for no consideration. The Court further finds that the transfers were made when Fine Dia*181monds was insolvent, or rendered it so. On that showing, the Court can and does impose fraudulent transfer liability on Pey-kar International, but cannot impose transferee liability on Mitch and Mehran.

A. Section 548 Claims

The Trustee first asserts that the transfer of the Transferred Diamonds should be avoided under section 548(a)(1)(B) — alleging that the diamonds were transferred for less than reasonably equivalent value (ie., for no consideration whatever), and that the Debtor (i) was insolvent on the date such transfer was made or became insolvent as a result of such transfer; (ii) was engaged in a business or transaction, for which any property remaining was an unreasonably small capital; or (iii) intended to incur, or believed that the Debtor would incur, debts that would be beyond the Debtor’s ability to pay as such debts matured.

548(a)(1)(B) permits recovery only with respect to transfers made within the two years prior to the filing of the bankruptcy petition. But Batches 30 through 53 (Batch 53 being the final batch to be transferred to the Peykars) were all received by Peykar International, and (to the extent Fine Diamonds wasn’t paid for them) kept by Peykar International, well within the two year period.145

The first prong of the 548(a)(1)(B) test — that the transfer was made for less than reasonably equivalent value — requires no extensive analysis, and here is easily met. No value whatever was received for $37,593,930.34 of Transferred Diamonds. Over the course of the relationship, Fine Diamonds transferred over $125 million in diamonds to the Peykars and received only approximately $87 million in payments, leaving over $37 million owed by the Peykars to Fine Diamonds, after accounting for approximately $2 million in returned diamonds.146

Next, section 548(a)(1)(B) requires that the Debtor be insolvent at the time of the transfers or rendered insolvent by the transfers. Once a court determines that the property was transferred without fair consideration, the burden shifts under New York law to the defendants to establish that the debtor was solvent at the time of the transfers.147 The same presumption has been applied to constructive fraudulent transfer litigation under section 548.148

The Defendants argue that the Trustee failed to provide “require[d] proof ... of the Debtor’s ... insolvency at the time of Debtor’s diamond transfers to the Peykars.”149 But as the Trustee fairly observes,150 the burden shifted to the Defendants to demonstrate the Debtor’s sol*182vency at the time of the transfers of the Transferred Diamonds. As the Defendants submitted no evidence as to the Debtor’s solvency at the time of the transfers in question, Debtor Fine Diamonds is presumed to have been insolvent at the time Peykar International took the diamonds for itself, and the transfers of $37,598,930.34 in diamonds to Peykar International can and must be avoided under section 548(a)(1)(B) of the Code.

B. Section 5H Claims

The Trustee then asserts that the transfer of the Transferred Diamonds should also be avoided under section 544 of the Code. Section 544 authorizes the commencement of an action by a trustee on behalf of a debtor’s estate to bring causes of action for the ultimate benefit of the debtor’s creditors under applicable state law — as applicable here, N.Y. Debtor and Creditor Law § 273.

N.Y. Debtor and Creditor Law § 273 provides:

Every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration.

Here the Trustee asserts that the transfer of the missing diamonds must be avoided under that provision because the transfer of the Transferred Diamonds was made for no consideration — and while the Debt- or was insolvent or would be rendered thereby.

As noted above, the Transferred Diamonds were appropriated by Peykar International “without a fair consideration” — for no consideration at all- — and the burden of proving insolvency thus shifted to the Defendants. The Defendants failed to come forward with any evidence of solvency. The transfers must be avoided under § 273 as well.

C. Section 550 Liability

Then, Count 6 of the Amended Complaint seeks a money judgment, under section 550 of the Bankruptcy Code, for the value of the diamonds whose transfer was avoided under Bankruptcy Code sections 548 and 544 and N.Y. Debtor and Creditor Law § 273.

Section 550 provides that:

[T]he trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from — (1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or (2) any immediate or mediate transferee of such initial transferee.

Section 550 authorizes the recovery of the value of property transferred, as an alternative to recovery of the property itself, when “the court so orders.” Neither section 550, nor any other section of the Bankruptcy Code, lays out standards governing when a court should “so order[ ].” But the standards for doing so, derived from Collier and caselaw, are nevertheless clear. Section 550 is intended to restore the estate to the financial condition it would have enjoyed if the transfer had not occurred.151 Factors considered by *183courts in deciding whether to order recovery of the property or its value include whether the property is recoverable, whether there is conflicting evidence as to the value of the property, and whether the value of the property is readily determinable and a monetary award would result in a savings to the estate.152

Here restoring the estate to the financial condition it would have enjoyed if the transfer had not occurred requires issuance of a money judgment for the Transferred Diamonds’ value. And the caselaw factors compel relief of that character as well. Here the Court lacks the ability to achieve the return of the Transferred Diamonds themselves; efforts to secure the diamonds’ return have been fruitless. There was no conflicting evidence as to the Transferred Diamonds’ value, and their value was readily ascertainable. A judgment for the value of the Transferred Diamonds is plainly appropriate.

But while the Court can and will enter such a judgment with respect to Defendant Peykar International, it cannot do the same with respect to Mitch and Mehran. The Court lacks an evidentiary basis for doing so.

Section 550 lays out the entities from which the fraudulent transfers may be recovered, and requires that any such entity be either an initial transferee of such transfer; an entity for whom such transfer was made; or an immediate or mediate transferee of such initial transferee. But the Trustee seeks to impose section 550 liability on Mitch and Mehran not on those grounds, but rather under a substitute theory. He asks the Court to impose liability on Mitch and Mehran (as contrasted to Peykar International) because they “are the sole shareholders/members/officers and employees of the corporate defendant,” and because each had check writing abilities.153 But while such persons may, in some cases, turn out to be transferees and be liable as such, their status as shareholders, LLC members or officers, by itself, does not make them liable. More needs to be shown as an evidentiary matter, and here it was not.

3. Conversion

Count 7 of the Amended Complaint seeks to impose liability with respect to the Transferred Diamonds — on each of Peykar International, Mitch, and Meh-ran- — -for conversion. Here the Court finds the Trustee to have plainly made a sufficient showing, and with respect not just to Peykar International, but Mitch and Meh-ran as well.

Conversion is the “unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner’s rights.” 154 The two elements of conversion are “(i) plaintiffs possessory right or interest in the property; and (ii) defendant’s dominion over the property or interference with it, in derogation of plaintiffs rights.”155

As previously found, Fine Diamonds retained title to the Transferred Diamonds when the diamonds were trans*184ferred to the Peykars on consignment. And by failing to either return the Transferred Diamonds or the sale proceeds, Peykar International interfered with Fine Diamonds’ ownership of the Transferred Diamonds. Several courts have expressly held that if a consignee fails to return consigned goods or the value of such goods to the consignor upon request, the consignee is liable for conversion.156

Thus, Peykar International is plainly liable for conversion of the Transferred Diamonds.

And here, unlike with respect to the fraudulent transfer claims, Mitch and Mehran are liable as well. An officer or director of a corporate defendant may be liable for conversion if he or she personally fostered the conversion or was aware of the conversion and declined to set it right.157 And “an officer of a corporation who participates in the conversion of property of third persons on behalf of a corporation may still be personally liable.” 158 For example, officers and directors of a corporate auctioneer who misappropriated net proceeds of a consignment sale from the plaintiff were held to be individually liable to the plaintiff for conversion.159

In Kalfco, a seller of animal feed brought a conversion action against a defendant corporation that had warehoused the seller’s animal feed.160 The conversion claim arose out of the defendant-ware-houser’s failure to return about $162,000 worth of feed, which it instead transferred to itself on credit without the consent of the feed company.161 Significantly here, in a separate but related action, the feed company also sought to impose liability for conversion on the defendant-company’s manager, James Holman, and his wife, Caroline Holman, who acted as president, sole director, and sole shareholder of the defendant-corporation.162

The trial court entered judgments for conversion not just with respect to the corporate defendant, but also James Holman, who was in charge of the day-to-day operations of the defendant corporation (and who was primarily responsible for the conversion of the plaintiffs property) and his wife Caroline Holman, who had a lesser role.163 On appeal, the Third Department affirmed the judgment as to Caroline (ap*185parently the only one as to whom liability was debated), notwithstanding her lesser role.164

The Third Department noted that “officers or directors may not be held liable simply on the basis of their authority ...; there must be evidence that [the officer or director] knowingly fostered the conversion or was aware of the conversion and declined to exercise her ability to set it right.”165 And on the facts there, it found the latter basis sufficient to impose liability on Caroline Holman. Of relevance to the court was the fact that Caroline Holman was informed of the plaintiffs demand for the withheld feed, and may have seen a telegram (directed to the attention of James Holman) demanding that the feed be returned immediately.166 In addition, the court noted that “it is not without significance that as the sole shareholder ... she was the direct beneficiary of the conversion.”167 Based largely on this evidence, the court found that Caroline Holman was on notice that the defendant-corporation was in possession of the plaintiffs property without authority to do so, and failed, without excuse, to relinquish that wrongful possession. She was therefore hable for conversion.168

Similarly here, each of Mitch and Meh-ran was aware that Peykar International was wrongfully in possession of Fine Diamonds’ property. Doran made repeated requests for the return of the Transferred Diamonds to each of Mitch and Mehran, as did Lester to Mehran, and Jeffrey to Mitch. Requests were made by email, in person, and by phone. Mitch and Mehran each signaled his awareness of the need to return the Transferred Diamonds or their proceeds in calls, emails and even recorded conversations. And just as Caroline Holman was the direct beneficiary of the conversion as sole shareholder, Mitch and Mehran were the direct beneficiaries of the conversion as the sole owners of Pey-kar International.

Accordingly, Mitch and Mehran are personally liable for conversion as well.

5. Fraudulent Misrepresentation

Finally, Count 9 of the Amended Complaint seeks judgment, against Mitch and Mehran, in that same $37,593,930.34 amount, for fraudulent misrepresentation.169 The Trustee asserts that Mitch and Mehran became liable on this theory as well by fraudulently misrepresenting that they were engaged in a legitimate diamond consignment enterprise, when in fact they were engaged in a fraudulent scheme that would eventually bankrupt Fine Diamonds.170 While the Court finds Mitch’s and Mehran’s conduct disgraceful, it cannot impose liability on the additional ground of fraudulent misrepresentation.

Under New York law, a defendant will be liable for fraudulent misrepresentation if the defendant: (i) knowingly made a false statement; (ii) of a material fact; (iii) with the intent to deceive the plaintiff; and (iv) the plaintiff justifiably relied on that statement; (v) to his injury.171 Under New York law, “[a] corporate *186officer is individually liable for fraudulent acts or false representations of his own, or in which he participates, even though his actions in such respect may be in furtherance of the corporate business.” 172

The Trustee directs the Court’s attention to one case in particular. In Bor-gioni173 — -where, as here, a consignee accepted diamonds and then failed to return or pay for them — the plaintiff House of Diamonds consigned diamonds to one Joseph Zrelak (“Zrelak”) over the course of an approximately 10-month relationship.174 Zrelak (who had delivered diamonds to another diamond dealer, Chrissafis, who then sold them without paying Zrelak) failed to pay for or return about $157,000 worth of diamonds to House of Diamonds.175 The Court granted the plaintiff consignor’s summary judgment motion, which was unopposed, against consignee Zrelak on several of the consignor’s claims — including, as relevant here, a fraud claim.

Judge Ellis found as a fact that Zrelak received diamonds over a period of time, from July 2007 until May 2008, and that Zrelak’s failure to pay for, or return the diamonds, began in October 2007.176 In this factual context, Judge Ellis determined that Zrelak’s actions met the elements of fraud because Judge Ellis found (among other elements of a cause of action for fraud)177 that Zrelak “represented to House of Diamonds that he was holding the diamonds on consignment, which he knew was false since he had sold the diamonds to Chrissafis without approval.”178

Because the motion before him was unopposed, Judge Ellis had no occasion to issue a more detailed opinion. But it appears to this Court that what caused Judge Ellis to find fraud upon that factual showing (and not just to find conversion and the other bases for liability he there found), and to find the necessary reliance by the plaintiff, was that Zrelak secured more diamonds based on his false representation, in addition to the earlier diamonds that Zrelak had likewise converted.

It is quite possible that here too, Doran was induced to give Peykar International additional diamonds on consignment after false statements by Mitch or Mehran, but the evidentiary record as to this here was too thin. The Court cannot here make necessary findings as to timing, causation, and the value of any diamonds consigned to Peykar International after the fraudulent misrepresentations. The significant instances of outright fraud— e.g., those in October 2008 and thereafter, including Mehran’s statements as to the additional safe that never existed — appear to have taken place after all of the Transferred Diamonds were already in the Pey-kars’ hands. While the Trustee fully met his burden of proof with respect to his separate claims for turnover, fraudulent transfer and conversion, he failed to meet his burden of proof on the extent to which Mitch or Mehran made any false representations before Doran gave Peykar Interna*187tional more diamonds, and that either made false statements upon which Doran or anyone else at Fine Diamonds relied.

6. Prejudgment Interest

Finally, the Court considers the Trustee’s entitlement to prejudgment interest. The Trustee is entitled to prejudgment interest on the conversion claim,179 and because each of the various Defendants here is liable on that claim, the Court need not discuss entitlement to interest on the others.180

Conversion is a state law claim, and the Court thus looks to New York law concerning awards of prejudgment interest on claims of that character.181 New York’s CPLR provides for mandatory recovery of prejudgment interest with respect to “an act or omission depriving or otherwise interfering with title to, or possession or enjoyment of, property.”182 As the plain language of CPLR § 5001(a) requires, conversion is among those causes of action that qualify for recovery of prejudgment interest under this section.183

The interest rate to be applied is 9% per annum,184 computed from “the earliest ascertainable date the cause of action existed, except that interest upon damages incurred thereafter shall be computed from the date incurred.... or upon all of the damages from a single reasonable intermediate date.” 185

Here, until return of the consigned diamonds was demanded, Peykar International’s possession of those diamonds was authorized. Thus the Court fixes December 7, 2008 — the date on which Doran and Lester first demanded return of the Transferred Diamonds — as “the earliest ascertainable date,” or a “reasonable intermediate date.” The Trustee is entitled to prejudgment interest at 9% per annum from December 7, 2008 through the *188date of the entry of the judgment in this case, on $37,593,930.34.186

Conclusion

Judgment should be entered in favor of the Trustee and against Peykar International, Mitch, and Mehran, jointly and severally, in the amount of $37,593,930.34187 plus interest at 9% from December 7, 2008, on the conversion claim.188 Although the Trustee has shown an additional entitlement to judgments in his favor as against Peykar International for turnover and for the value of the avoided fraudulent transfers (and the Court believes that it constitutionally could enter them), the Court does not now do so, for the reasons set forth above, and because they are subsumed and effectively mooted by the conversion claims.189

This is a Decision only, and neither an order nor judgment. Under Fed. R.Bankr.P. 7058 and Fed.R.Civ.P. 58, the judgment will need to be embodied in a separate document. At this point, this Decision should be deemed to be this Court’s Proposed Findings of Fact and Conclusions of Law, subject to the procedures set forth in Fed.R.Bankr.P. 9033. An order (but once again, not a judgment) implementing Bankruptcy Rule 9033’s noticing requirements — addressing the fact that each of the Defendants’ two former counsel was permitted to withdraw, and that special measures should be taken to provide effective notice to the Defendants — is being entered in connection with this Decision.