716 West Ave Austin, TX USA

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1 RECOVERING THE PROCEEDS OF FRAUD GLOBAL HEADQUARTERS the gregor building 716 West Ave Austin, TX USA

2 TABLE OF CONTENTS PART ONE: THE LAW IN A FRAUD RECOVERY CASE I. LEGAL CAUSES OF ACTION IN GENERAL Bringing Multiple Claims in a Single Legal Action... 1 State Versus Federal Offenses... 2 Civil Wrongs Versus Crimes... 3 Essential Elements of a Cause of Action... 4 Vicarious Liability... 5 Criminal Conspiracy... 6 Review Questions... 8 II. STATE COMMON LAW AND STATUTORY OFFENSES APPLICABLE TO FRAUD Misrepresentation Fraud... 9 Essential Elements... 9 Facts, Not Opinions Concealment of Material Facts Negligent Misrepresentation False and Fraudulent Statements Breach of Fiduciary Duty (Constructive Fraud) Duty of Loyalty Duty of Care Bribery and Corruption Schemes Corruption Bribery Illegal Gratuity Conflict of Interest Federal Corruption Statutes Economic Extortion Theft of Money and Property Conversion Larceny Larceny by Trick and False Pretenses Embezzlement Misappropriation of Trade Secrets Forgery Forgery Uttering a Forged Instrument Uniform Commercial Code Articles Relating to Forged and Altered Checks Civil Negligence i

3 II. STATE COMMON LAW AND STATUTORY OFFENSES APPLICABLE TO FRAUD (CONT.) Defenses to Negligence Remedies in Negligence Cases Breach of Contract General Remedies for Breach of Contract Quasi-Contract (Assumpsit) Other State Statutory Actions Review Questions III. FEDERAL OFFENSES APPLICABLE IN A FRAUD RECOVERY CASE Mail Fraud and Wire Fraud Mail Fraud (18 U.S.C. 1341) Wire Fraud (18 U.S.C. 1343) Honest Services Fraud (18 U.S.C. 1346) Interstate Transportation of Stolen Property (18 U.S.C. 2314) Racketeer Influenced and Corrupt Organizations Act (18 U.S.C et seq.) RICO Violations Under Section 1962(c) Civil RICO Actions Federal Securities Laws Private Right of Action Jurisdiction Liability The Intent Requirement Federal Securities Law Provisions with a Private Right of Action False Claims and Statements Federal Statutes Relating to False Claims and Statements No Private Right of Action Common Actions That Violate Federal False Claim Statutes Other Federal Statutes The Clayton Antitrust Act (15 U.S.C , 52 53) The Lanham Act (15 U.S.C. 1125(a)) Fraudulent Use of Credit Cards (15 U.S.C. 1644) Electronic Funds Transfer Act (15 U.S.C. 1693n) Theft, Embezzlement, and Misapplication of Bank Funds (18 U.S.C. 656, 657) Theft or Embezzlement in Connection with Health Care (18 U.S.C. 669) Computer Fraud (18 U.S.C. 1030(a)(4)) Defend Trade Secrets Act (18 U.S.C et seq.) Review Questions ii

4 PART TWO: REMEDIES IN A FRAUD RECOVERY CASE IV. REMEDIES TO PREVENT UNJUST ENRICHMENT Introduction to Remedies Legal Versus Equitable Remedies Availability of Litigation-Related Remedies Types of Civil Remedies Chapter Overview Rescission Fraudulent Inducement Mutual Mistake Duress Undue Influence Failure of Consideration Unlawful Contract Other Grounds for Rescission Restitution Restitution in Civil Law Restitution in Criminal Law Constructive Trusts Equitable Liens Replevin Preliminary Injunctions and Temporary Restraining Orders Review Questions V. REMEDIES IN CIVIL LITIGATION FOR THE RECOVERY OF COMPENSATORY DAMAGES Introduction Two Kinds of Damages The Law Varies Among Jurisdictions Fair Market Value Used to Measure Compensatory Damages General Compensatory Damages for Conversion and Fraud Benefit of the Bargain Damages Out-of-Pocket Damages Damages for Emotional Distress Special (Consequential Damages) for Conversion or Fraud General Compensatory Damages for Breach of Contract Special or Consequential Damages for Breach of Contract Standard Measure of Damages for Breach of Quasi-Contractual Duty Standard Measure of Damages for Negligence Duty to Mitigate Damages Under Statutorily Created Causes of Action iii

5 V. REMEDIES IN CIVIL LITIGATION FOR THE RECOVERY OF COMPENSATORY DAMAGES (CONT.) Racketeer Influenced and Corrupt Organizations Act (18 U.S.C et seq.) Securities Statutes Deceptive Advertising and Unfair Competition Statutes Clayton Antitrust Act (15 U.S.C and 29 U.S.C ) Qui Tam Action Under the Civil False Claims Act (31 U.S.C ) Defend Trade Secrets Act (18 U.S.C et seq.) Whistleblower Statutes Uniform Commercial Code Articles Relating to Forged and Altered Checks Review Questions VI. REMEDIES IN CIVIL LITIGATION FOR THE RECOVERY OF PUNITIVE DAMAGES Introduction Punitive Damages in Tort Cases Proving the Defendant s Mental State Standard of Proof Vicarious Liability for Punitive Damages Punitive Liability Insurance Additional Statutory Punitive Damages Provisions Racketeer Influenced and Corrupt Organizations Act Deceptive Advertising and Unfair Competition Statutes Clayton Antitrust Act (15 U.S.C. 13(c), (d)) Defend Trade Secrets Act (18 U.S.C et seq.) Securities Statutes Review Questions VII. REMEDIES TO RESTRAIN OR MANDATE CONDUCT: EQUITABLE REMEDIES Equitable Remedies Injunctions Provisional Remedies Injunctions and Temporary Restraining Orders Under Statutorily Created Causes of Action Racketeer Influenced and Corrupt Organizations Act Securities Statutes Deceptive Advertising and Unfair Competition Statutes Trade Secret Legislation Review Questions VIII. REMEDIES ARISING FROM CRIMINAL PROSECUTIONS Introduction Criminal Restitution Orders iv

6 VII. REMEDIES ARISING FROM CRIMINAL PROSECUTIONS (CONT.) Criminal Restitution as a Condition of Probation Direct Restitution Orders in Criminal Cases Sentencing Guidelines Recovery from Victim s Compensation Funds Recovery Under Forfeiture Statutes Criminal Forfeiture Civil Forfeiture Seven Questions to Answer Before Initiating a Forfeiture Action Review Questions IX. RECOVERING DAMAGES WITHOUT LITIGATION Insurance Policies Fidelity Insurance Liability Insurance The Federal Trade Commission Negotiated Agreements or Settlements Consent Judgments Default Judgments Foreclosures on Security Interests Real Property Personal Property Review Questions PART THREE: PLANNING AND PROCEDURES IN A FRAUD RECOVERY CASE X. STRATEGIC CONSIDERATIONS FOR PLANNING A FRAUD RECOVERY CASE How Has the Victim Been Injured? What Is the Recovery Goal? What Conduct Can You Prove and Against Whom? What Damages Can Be Proven? What Damages Can Be Recovered? Can the Target Defendants Satisfy a Judgment? Can You Recover Costs of Litigation? Is the Action Barred by the Statute of Limitations? Where Should the Case Be Pursued? Choosing Between Criminal and Civil Court Choosing Between Federal or State Court Choosing Between Courts of Different States Choosing Between Courts of the Same State Review Questions v

7 XI. ENFORCING THE JUDGMENT: THE SEARCH FOR PROPERTY OR PROCEEDS Start Enforcement Efforts Early Look for Hidden and Unhidden Assets and Property Trace and Locate Property and Assets Suspect s Privacy Rights and Legal Limits of the Investigation Common Law Rights Constitutional Rights Federal Statutes Use Court Powers to Compel Production of Information Time for Making Use of Court Processes Limitations on the Scope of Discovery Jurisdictional Limitations Review Questions XII. ENFORCING THE JUDGMENT: ENSURING THAT PROCEEDS, PROPERTY, AND ASSETS WILL BE THERE TO TO SATISFY A JUDGMENT Securing Property Through Prejudgment Attachment Legal Actions in Which Prejudgment Attachment Is Available Property Subject to Prejudgment Attachment Procedures for Obtaining a Prejudgment Attachment Seeking Prejudgment Attachment Against Out-of-State Defendants or Property Procedures for Levying on Property Pursuant to a Writ of Attachment Termination of the Attachment Lien Protecting the Interests of Third Parties Disposition of Attached Property After Judgment Securing Possession of Property with a Prejudgment Writ of Possession (Replevin) Securing Property with a Creditor s Suit Against Third Parties Preventing Transfers of Property with Temporary Restraining Orders and Preliminary Injunctions Protecting Claims to Real Property with a Notice of Lis Pendens Voiding Fraudulent Transfers Made to Protect Assets from Creditors Common Law Remedies for Fraudulent Transfers Uniform Fraudulent Conveyance Act Uniform Fraudulent Transfer Act The Bankruptcy Code Avoiding the Wrongdoer s Discharge in Bankruptcy Reaching a Defendant s Property Behind the Corporate Veil Corporations Limited Partnerships Limited Liability Companies vi

8 XII. ENFORCING THE JUDGMENT: ENSURING THAT PROCEEDS, PROPERTY, AND ASSETS WILL BE THERE TO SATISFY A JUDGMENT (CONT.) Piercing the Veil Review Questions XIII. ENFORCING THE JUDGMENT: EXECUTING AND LEVYING AGAINST PROPERTY IN SATISFACTION OF THE JUDGMENT Enforcement of Money Judgments by Writ of Execution Determining What Is Leviable Property Property That Is Subject to Enforcement of Judgment Property of a Spouse Who Is Not a Judgment Debtor Property That Is Exempt from Enforcement by Law Methods of Levying on Property with a Writ of Execution Enforcement of Money Judgments by Judgment Liens Enforcement of Money Judgments Using Miscellaneous Remedies Enforcement of Non-Money Judgments Writs for the Possession or Sale of Real Property Writs of Possession or Sale of Personal Property Enforcement of Judgments Involving Out-of-State Property Renewing Judgments Supersedeas (Appeal) Bonds Review Questions XIV. CONCLUSION XV. PRACTICAL EXERCISE XVI. SOLUTIONS TO REVIEW QUESTIONS I. Legal Causes of Action in General II. State Common Law and Statutory Offenses Applicable to Fraud III. Federal Offenses Applicable in a Fraud Recovery Case IV. Remedies to Prevent Unjust Enrichment V. Remedies in Civil Litigation for the Recovery of Compensatory Damages VI. Remedies in Civil Litigation for the Recovery of Punitive Damages VII. Remedies to Restrain or Mandate Conduct: Equitable Remedies VIII. Remedies Arising from Criminal Prosecutions IX. Recovering Damages Without Litigation X. Strategic Considerations for Planning a Fraud Recovery Case XI. Enforcing the Judgment: The Search for Property or Proceeds vii

9 XVI. SOLUTIONS TO REVIEW QUESTIONS (CONT.) XII. Enforcing the Judgment: Ensuring That Proceeds, Property, and Assets Will Be There to Satisfy a Judgment XIII. Enforcing the Judgment: Executing and Levying Against Property in Satisfaction of the Judgment XVII. SOLUTIONS TO PRACTICAL EXERCISE XVIII. RECOVERING THE PROCEEDS OF FRAUD FINAL EXAMINATION... E-1 XIX. INDEX... I-1 viii