The Expert Podcast

• Topic: Exploring Third-Party Liability as a Recovery Strategy for Fraud Victims
• Overview:
  • Discussing the role of third-party liability in recovering losses from fraud, scams, Ponzi schemes, or lawsuits.
  • Highlighting how principal fraudsters often hide or squander assets, making direct recovery difficult.
  • Introducing third-party liability as an effective strategy, recently reinforced by case law in Pennsylvania.
• Key Points:
  • Third-Party Liability Defined:
    • Legal theory allowing victims to pursue damages from businesses or individuals that indirectly enabled or extended fraudulent activities.
    • Now established as case law, confirming civil liability for aiding and abetting fraud.
  • Examples of Third-Party Involvement:
    • Banks opening accounts negligently for fraudsters.
    • Accountants, sales companies, or other entities enabling fraud through negligence.
    • Newspapers or media outlets promoting fraudulent schemes.
  • Legal Implications:
    • Willful blindness or negligence can result in punitive damages.
    • Third parties with errors and omissions insurance or professional liability insurance often settle claims through policy payouts.
  • Investigative Process:
    • Identifying third parties requires proactive investigation.
    • Holding principals accountable when they divert funds for personal use (e.g., cars, houses, planes).
  • Real-Life Cases:
    • From Bernie Madoff to FTX crypto fraud cases, third-party liability has helped recover funds.
    • Recent Pennsylvania case highlights the significance of holding banks accountable.
  • Practical Application:
    • Leverage third-party liability to recover funds when principals are judgment-proof or hiding assets.
    • Third parties may also help locate hidden assets.
• Takeaway:
  • If you've experienced fraud, embezzlement, or scams, consider pursuing third-party liability.
  • Explore opportunities to connect liable third parties to recover your judgment or losses.
  • Always consult an attorney for specific legal advice.