Getting at the Truth: Using the Attorney-Client Privilege Waiver to Gain Access to “Inside” Information
by Steven R. Neuner
Neuner & Ventura LLP; Marlton, N. J.
In any investigation, finding the sources that have the information you need is key to success. Attorneys who represented the target of your investigation would be a valuable resource, except for the attorney-client privilege. For that reason, investigators do not often think of subpoenaing the files and records of attorneys. However, when the attorney represented a corporation or other “inanimate” legal entity now under the control of a liquidator, bankruptcy trustee or even new management, that privilege can be waived by new persons in control. This valuable resource may be easily overlooked. As a trustee in bankruptcy or attorney for such trustees, I have used this tool several times in conducting my investigations, with excellent results. This article will discuss the basis for such a waiver and the circumstances where it can be used.
Those Pesky Schedules: Be Careful, Creditors and Others Are Reading Them!
by Patricia Brown Fugée
Roetzel & Andress; Toledo, Ohio
Numerous recent decisions highlight the need for accuracy and attention to detail in preparing and filing the schedules and statement of financial affairs (SOFA). While some of the cases involve fraudulent or criminal conduct, they should remind us that accuracy and completeness are critical. Even errors in the schedules, or SOFA, with no actual intent to defraud creditors can cause litigation expense and delay the entry of discharge.
Semper Fidelis, Faithful or Foolish: The Legal, Professional and Ethical Dilemma of Debtor Counsel after Appointment of a Chapter 11 or 7 Trustee
by H. Kent Aguillard
Hoychick & Aguillard, LLP; Eunice, La.
“Most good lawyers live well, work hard and die poor.” As punitive as public opinion and perception of the legal profession is, the fact is nearly everyone likes his or her lawyer. The majority of us, with notorious exceptions, are ethical and do a credible job at policing ourselves. And sometimes we pay a price for doing what is right.
The Doctrine of Derivative Standing – Alive and Well?
by Colin W. Wied
C.W. Wied, PC; San Diego
What can a creditor do when it has information indicating that the debtor, prior to going into bankruptcy, transferred or concealed assets? The first thing is to ask the trustee to act to recover the assets under the trustee's avoiding powers (e.g., 11 U.S.C. §§508, 544(b) and 550). What if the trustee refuses to do so? The answer is to seek a court order granting derivative standing to the creditor to act in the trustee's stead.
Ponzi Schemes in Bankruptcy
by Patrick M. O’Keefe
O’Keefe & Associates; Bloomfield Hills, Mich.
Russell D. Long
O’Keefe & Associates; Bloomfield Hills, Mich.
Michael S. McElwee
Varnum, Riddering, Schmidt & Howlett, LLP; Grand Rapids, Mich.
Ponzi schemes are named after confidence man Charles Ponzi, who invented a scheme to profit from foreign exchange arbitrage through the purchase and redemption of postal coupons after World War I. Ponzi attracted financial backing for his scheme by offering investors enormous returns. As he paid early investors the high returns they were promised, word spread and Ponzi began collecting cash from investors at a frenzied pace. However the postal coupon scheme did not generate enough profit to pay the returns Ponzi promised, and in fact he went deeper into debt with each transaction. He was only able to sustain the scheme by paying returns to earlier investors with cash received from later investors. When authorities began to investigate Ponzi’s business, investors became spooked, new investment funds dried up and the scheme quickly collapsed, leaving Ponzi unable to repay any of the remaining investors.
New Contributing Editor
Please welcome the newest contributing editor to the Commercial Fraud Task Force eNewsletter:
- Eric Terry, Haynes and Boone, LLP; San Antonio