FRAUD- It Never Ends-

Posted on June 7, 2022 in Arizona Law Regarding Business and Real Estate

There are many types of fraud. Virtually each type, involves money. Arizona has very good laws if you have been defrauded. Call Bill Miller at 602.319.6899. He has been prosecuting fraud cases for over 34 years.

 Taking From The Boss

Partner, employee or subcontractor fraud costs billions per year. It’s the bookkeeper who keeps separate charge cards, the cashier who short changes the customer. Some companies estimate fraud and error losses to average about 4% of organization’s expenses.

Signs of an embezzler engaging in employee theft are clear. Too many visits to the casino. Too many hang overs from the guilt. Too much sucking up to the accountant. It may be someone cheating on their spouse.  Just ask simple questions. How does a 75K a year sales man have a brand new 100K Raptor?

Other warning signs of a fraudster in an office may not be particularly intuitive. For example, one of the warning signs could be the office manager who never takes a vacation and who never delegates tasks to subordinates. An employer may view that as a dedicated employee. However, these qualities may be pretext for a nefarious reason, to possibly cover something up and ensure no one finds out. The author’s experience in handling employee theft cases is that the embezzler usually steals to gain wants not needs.

As mentioned before, one does not want to promote distrust within an organization. But, a healthy dose of skepticism is appropriate, and thorough internal controls are critical. Internal controls may be as simple as making certain that the person who prepares checks is different than the person signing the check. Finally, every business should have an indemnity bond or employee defalcation insurance to cover losses attributable to dishonest employees.

Investment Nightmares or Ponzi Schemes

Ponzi schemes may be named after Charles Ponzi, but the first known schemer was William “520 Percent” Miller who in or around 1899 defrauded thousands through the Frankin Syndicate in Brooklyn, New York. A Conman is always nice and friendly. They get you to trust them, them they pounce.

A Ponzi scheme is a scheme and artifice which pays monies to investors from such investor’s own principal investments or from new investors. It is a house of cards which ultimately must fail because a Ponzi scheme is not based on any legitimate business enterprise. It sustains itself solely though new investor money and does not do a thing.

The Madoff case is also a classic example of affinity fraud. Given Madoff’s celebrity and apparent success in the SEC world and Jewish Community, investors from his synagogue, the charities with which he was involved and the socialites in Manhattan were drawn to Madoff’s apparent golden touch on investments. There is more than one church who has had reckless members prey on the vulnerable, all using “church terms” to keep the victim off guard.

We prosecuted the NCFE bond case and that was a billon dollar fraud.

Contract Law in Arizona

Posted on December 7, 2020 in Arizona Law Regarding Business Disputes

Arizona Supreme Court recently ruled that contractual time limits on lawsuits do not apply to a third party just because the third party is “closely related” to the contracting party. A link to the opinion is found below.

By way of background, a corporation hired an accounting firm.  The fee agreement contained a limitations provision, requiring that any claim against the accounting firm for its work be filed within two years after the audit. This is despite a six-year Statute of Limitations (SOL) in Arizona. In Arizona, you can contract away your SOL rights.

Three years after the audit, the corporation (closely held) sued the accounting firm for its work.  The accounting firm defended that the suit was barred by the limitations provision in the fee agreement.  The president and sole shareholder was not a party to the fee agreement, nor was he a signatory since the corporation’s CFO had signed for the corporation.

The trial Judge applied the fee agreement limitations because the president and sole shareholder was “closely related” to the corporation.  The court of appeals affirmed.

The Arizona Supreme Court reversed.  Stating that some courts in other States have applied contract provisions to third parties who are “closely related” to contracting parties, the Court rejected the doctrine in this case, for several reasons:

1)  Arizona law distinguishes between corporations and individuals who act on their behalf.  Applying contract provisions to “closely related” third parties would tend to void this distinction.

2)  Applying the contract provision to a third party would have a particularly harsh result: barring a lawsuit entirely.

3)  Arizona law already recognizes other ways to apply contract provisions to third parties, such as incorporation by reference, assumption, agency, piercing the corporate veil, equitable estoppel, and third-party beneficiary theories.

Over the last 33 years, we have filed scores of claims for common law fraud, RICO, AZRAC, and fraudulent schemes. We have defended and prosecuted cases involving contract breaches too.

In a case like JTF Holdings, there was no fraud alleged. It was just two folks fighting over money. Common law fraud involves a dispute between two people or business entities. It almost always comes from a contractual relationship that went bad or an investment scheme. Unlike criminal fraud cases in which the defendant can go to prison if convicted, in a civil fraud case, the judgment will only be for money. There is strict liability for many types of investment frauds. Lawyers often threaten jail in a civil fraud case, but it never happens. These types of threats border on extortion. The AG, Police or FBI will seldom get involved in a civil dispute where individuals are alleging fraud.

There are thousands of small closely held limited liability companies in Arizona. If you need help sorting out your rights and what the current law is, feel free to give Bill Miller, a call at 602-319-6899.

We also handle, Breach of contract, Non-compete agreements, Non-disclosure agreements, Employee theft and embezzlement, Insurance purchases and enforcement of policy coverage, Negotiation and/or enforcement of commercial leases, Negligence and gross negligence resulting in losses, Intentional acts causing a company to suffer damages, Tortious interference with contractual relationships, Unjust enrichment, Real Estate fraud, Consumer fraud, Conversion/Theft, Intentional and/or negligent misrepresentation, Business torts and Real estate title and escrow.

 

JTF Aviation Holdings Inc. v. CliftonLarsonAllen LLP

 

Litigation in Arizona is About to Explode

Posted on March 23, 2020 in Arizona Law Regarding Business and Real Estate

On this website, a few years ago, we wrote… for over 33 years the Law Firm of William A. Miller has ‘seen it all’. Well, that was until last week. Litigation in Arizona for Fraud, Contract Breach and various business torts will explode, not unlike the days of the RTC. As most of you know,…

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Arizona Rules of Civil Procedure = Truth Finding

Posted on June 7, 2016 in Arizona Law Regarding Business and Real Estate

Prosecutors are in trouble after lawyers representing a doctor accused of fraud alleged the U.S. attorney’s office has been stealing documents. In court papers filed May 26, lawyers wrote prosecutors had gained access to discovery of the defense. According to the defense, an informant said an FBI agent had received CDs containing duplicates of discovery…

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Arbitration is Changing the Game

Posted on November 2, 2015 in Arizona Law Regarding Business and Real Estate

Arbitration is changing the legal game. Be on your guard if you are faced with this. When Dr. Pierce accused her medical group of permitting sexual harassment she was forced to arbitrate in place of the filing a lawsuit. Presiding over the case was not a judge but a corporate lawyer, Mr. Kalogredis. When Dr….

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