Archive for the ‘Civil Litigation’ Category
Bernie Madoff may be the poster child for investment scams because of the size and scope of the fraud he perpetrated. But while his victims included many wealthy patrons, investment fraud can destroy the lives of middle class and working class people just the
same.
Consider the case of Thomas Mitchell, a financial advisor alleged to have defrauded a group of train and bus operators in the Los Angeles area. The Ponzi scheme he allegedly ran went on for fifteen years, impacting 150 retirees who worked for the Los Angeles County Metropolitan Transportation Authority. Many lost their life savings, nest eggs substantially less than the amounts lost by Madoff’s clients, but devastating nonetheless because it was all they had.
It’s often difficult to believe in retrospect that these kinds of schemes can go on undetected for years. But that, sadly, is often the nature of investment fraud. The scammer keeps investors happy for as long as possible, sending positive account statements and paying good if not spectacular returns, using early money to satisfy clients and attract later investors. The victims remain in the dark, oblivious to what’s really happening until it’s too late.
Thomas Mitchell is charged with collecting $15 million from the bus and train retirees, losing at least $7 million. Perhaps most disturbing, his own cousin was one of the victims. Having lost access to her $150,000 retirement fund, and with Mitchell
not returning her calls, she took to the Internet, posting a birthday message on Mitchell’s Facebook account.
Her message did not include good wishes.
Schein & Cai handles investment fraud litigation. Contact us for a free consultation.
Find us on the web at www.sacattorneys.com.
Statute of Frauds is a type of state law, modeled after an old 1677 English law, that requires certain types of contracts to be in writing. The law’s purpose is to prevent the possibility of a nonexistent contract between two parties being “proved” by perjury or fraud. This objective is accomplished by prescribing that particular contracts not be enforced unless a written note or memorandum of agreement exists that is signed by the persons or their authorized representatives to be bound by the contract’s terms.
The statute of frauds is invoked by a defendant in a breach of contract action. If the defendant can establish that the contract he has failed to perform is legally unenforceable because it has not satisfied the requirement of the statute, then the defendant cannot be liable for its breach. For example, if a plaintiff claims that a defendant agreed to pay her a commission for selling his building. If the defendant can demonstrate that no commission contract was signed, the statute of frauds will prevent the plaintiff from recovering the commission.
A strict application of the statute of frauds can produce an unjust result. A party, who in good faith believes a contract exists and therefore spends time and money to perform the contract, would be unable to force the other party to perform because the agreement was not in writing. Therefore, courts often employ the term part performance to determine whether a plaintiff’s conduct based on her belief that a contract exists justifies enforcement of the contract even though it has failed to comply with the statute of frauds. Part performance refers to acts performed by the plaintiff in reliance on the performance of the duties imposed on the defendant by the terms of the contract. The plaintiff’s actions must be substantial in order to demonstrate that he actually has relied on the terms of the contract.
Where services have been performed based upon a contract that is unenforceable because of the statute of frauds, the value of those services can nevertheless be recovered on the basis of quantum meruit, or the reasonable value of those services.
If one party has performed in reliance on an oral contract and will be irreparably harmed if the contract is not enforced, some courts apply the theory of equitable estoppel to prevent the statute of frauds from being employed as a defense. Equitable estoppel holds that if a person has so altered his position that justice demands the enforcement of the contract, the court will enforce the contract even though it fails to comply with the statute.