Articles Tagged with fraud

This case involves a company, Henry S. Miller Commercial Company (“HSM”), who set up commercial property transactions by a buyer who claimed to be the beneficiary of a large trust fund. The buyer was in fact a truck driver who had no trust fund. When the deals failed to close, the prospective sellers were forced to liquidate their properties at a loss. They then sued HSM for fraud, and obtained a judgment in the amount of $8.9 million. HSM then sued its insurance carrier when it refused to pay the judgment. HSM eventually settled that action for close to $6 million.

 

HSM also sued its lawyers in the underlying case for legal malpractice and also for gross negligence. HSM asserted that the lawyers were grossly negligence for failing to name the truck driver in the underlying action. The trial judge in the legal malpractice action granted a direct verdict for the lawyers on the gross negligence claim, but permitted the legal malpractice claim to go forward. At trial, a jury found in favor of HSM in the amount of $4.6 million. The judge issued a final judgment with no monetary award, after applying the $6 million paid by the insurer. Both parties appealed.

 

The Fifth Circuit Court of Appeals reversed the directed verdict for the lawyers on gross negligence, and remanded the case for a new trial rejecting all other appellate issues. The Appeals Court found that the truck driver was a person the jury could have considered to be responsible for the unsuccessful real estate transactions, and that the lawyers’ failure to name him may have shifted additional liability on HSM. The court found that it was a factual question whether the lawyers were grossly negligence in failing to bring the truck driver into the case.

ISSUE:

I was an investor in a ponzi scheme. I lost six figure numbers when the head of the scheme was arrested and jailed and has stated that he spent all his investor’s money playing in high stakes commodities trading. I was referred to this man by my accountant. Do I have any potential claims against this accountant?

INSIGHT:

The Texas Board of Disciplinary Appeals (“Board”) has disbarred an attorney after he was convicted of conspiracy to commit wire fraud in connection with his operation of an investment scam.  In the Matter of Roger Lee Shoss, an attorney created fraudulent business entities using the names of corporation’s companies, which were still listed on the NASDAQ stock exchange, but had lost their corporate status, due to their failure to pay taxes.

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The North Carolina State Bar Disciplinary Commission recently disbarred an attorney who had been licensed to practice law in the state since 1997. In the Matter of David Shawn Clark, an attorney became romantically involved with a client in proceedings related to a domestic violence incident. The client’s estranged husband discovered the affair and threatened to sue the lawyer in tort for ‘alienation of affection’, which is a common law claim that a spouse may bring against a third party, whom they hold responsible for the failure of their marriage.

In response to the threat of this lawsuit, the attorney attempted to silence those who had specific knowledge of the affair, fearing that its exposure would ruin his family relationships and his law practice. He threatened to report damaging information about the client, which he had learned as a result of the attorney-client relationship, to the Department of Social Services in order to interfere with her custody over her children. Next, he berated his legal secretary and threatened her with physical harm if she did not protect his secret.

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