The Expert Podcast

We've talked many times about third party liability as a means to recover losses from a fraud or from a judgment. And what that means is that. If you have a fraud or somebody scammed you out of money or there was a Ponzi scheme or even if you have a lawsuit judgment. Many times the collection of that recovery or that debt. Is may difficult by the fact that the principal the fraudster the scammer or the defendant.

May have squandered Some of those assets may have spent some of the money or they may be hiding some of the money. And sometimes the easier pathway. Is to use what's called third party liability In this case from Pennsylvania is a very good establishment of that It's always been a legal theory and the legal strategy that people have used and victims have used to recover money everything from the Bernie Madoff case to the more recent FTX crypto fraud case looks at third parties to recover. Debts owed by the principal.

And in this case it confirms that doesn't make it a legal theory or legal strategy It makes it actually case law. There's now official civil liability for aiding and abetting fraud. This means businesses that are willfully blind. Could pay damages to victims including punitive damages So look what it says here, willfully blind That doesn't mean they took action They took part in the fraud many times a third party weren't actively into. but they either did something accidental or negligent to let the fraud happen For example, if you are a bank, let's say Wells Fargo bank chase bank any large.

Banking institution. And you allow a fraudster to open up a bank account for them to deposit money from they're stealing from,

victims. If you do something in opening that account that is negligent like you forget the kid get a copy of their ID, forget to get certain forms signed or you neglect to file SAR reports or neglect to monitor withdrawals that bank can now be held liable for the activities of the Froster Even if the bank wasn't part of that fraud, they may be able to be held live Now remember we're not attorneys we're not giving you legal advice, but this is a legal theory that many. of our client's attorneys have used in the past to recover frauds for victims The first thing you have to do though is you have to identify those third parties. It's not going to magically appear You have to get that as part of the investigation. And.

Even if you are a third party that really didn't know anything about the fraud but you should have if you ask the right questions a lot of times these third parties are accountants or sales companies that do things that enable or extend the fraud Those are the key words enable the fraud or extend the fraud. And if the fraud or even the loss was preventable if the third party had. done just their proper due diligence, that third party could be dragged In many times the third parties have very good insurance errors and emissions insurance, professional liability insurance. And once their insurance company finds out that there's this possible claim, what they do is they just do a policy limit.

payout right To get that party off of the, the the claim of loss And in this particular case that's exactly what it was It was actually a bank. And in this case the court concluded that allowing a separate tort meaning that it's a separate claim. Could support finding of an actual knowledge In other words turning a blind eye to fraudulent activity, may support finding that a party aided and abetted the fraud and some states call it aiding and abetting. Some states call it enabling some states call it extending. in one case we saw aware there was a, a newspaper that was taking advertisements.

From a Ponzi scheme that was advertising Look send us your money We'll pay you a high return. And it was obvious it was a fraud. And that newspaper was held liable for allowing that fraud to extend or to reach more people. So third parties can really be anybody could be a an employee It could be a principal. It's important also to use this if you're trying to bring in.

The principles of the company because if you Sue the company and you get a judgment against the company. And then that company goes out of business or dissolves and they have no money. Where are you going to get your money from But if the principals involved were actively part of this or knew about it, now they the liability extends to them And that may be where all the money went. Right I mean, Principals don't leave money in the company They use it to buy cars and houses and boats and planes and everything else. So this third party liability has always been something we've recommended You've seen it on our videos before, but now it's very specifically.

established in case law This is one is in Pennsylvania and other states are doing the same thing So if the takeaway from this if you have a loss or a fraud or scam embezzlement, even if you have a judgment against the person, look for opportunities to connect and collect up. Other third parties that may have liability. That you can use to recover all are part of your judgment If the principle is shady or sketchy or they're hiding money or they're they don't have anything They're judgment proof. Look to see what third parties may enable that even if worst case scenario the third parties help you find the asset for the principal. At least now you have another…resource and other opportunity.

To get…made whole and get your money back from your loss your judgment your fraud, or your, lawsuit garnishment that you're looking to.