Page 2 of 3 FirstFirst 1 2 3 LastLast
Results 11 to 20 of 26
  1. #11
    Join Date
    Oct 2014
    Posts
    7,454

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Quote Quoting budwad
    View Post
    I also agree with jk.

    The attorney forms the LLC and registers it as a Co-op but doesn't follow through and create all the other agreements and governing documents but accepts investor money and diverts it to a bank account that is registered to his address on behalf of his client.

    Would you do that and say you were just following your client's instructions? I think not.
    We don't have all the details, and those details matter. All I can say is that if the attorney knowingly participated in the alleged fraud then there is a good claim. But there is a lot more to this story than we know, and until I know the whole story it's impossible to say what liability the lawyer has, if any. Indeed, we have just the OP's characterization of a fraud here. What this might have turned out to be was simply a very poor choice of investment or purchase; i.e. a deal gone bad that he now regrets and wants someone to pay for.

  2. #12
    Join Date
    Dec 2014
    Location
    NY
    Posts
    14

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Wow, you guys are great. Thanks so much! I'll post a much more detailed story of events below.

    To Answer some Questions:

    • I haven't contacted the SEC, I just realized the possible SEC issue on Friday.
    • I also haven't reached out to any government organizations, because I have been hoping to find a lawyer to take on the case, and also help me navigate the system.
    • In regards to me not being his client, didn't the Lawyer represent I was his client, by saying I'd become a member of the Co-Op, and as the lawyer of the Co-Op, I'd be one of his member clients? (the bill of sale, that had his information on it and wire information to his client trust, stated I'd become a member for my purchase) But also, as the lawyer of the Co-Op, he represented my investment in it?


    Without knowing that this "product" was I cannot say if the sale of it might be subject to regulation by the federal securities acts. But the problem here is that the lawyer was not the seller or promoter of the alleged security. And I'm going to guess that the lawyer did not furnish to you any written opinion that the sale would be exempt from the securities laws.
    The documentation given to me by the individual did state the product would be considered a security. This could be considered "marketing" material.

    However, you sparked a memory, not only did the Lawyer say the Co-Op was formed to avoid securities laws, I believe he also said he had us sending the money to his client trust to also avoid security laws. This would have happened on a phone conversation that another attorney was present for, if I recall correctly. This was after I had sent the money.

    And Below, more the Full Story:

    Lawyer = Lawyer and individual = Dick

    TDRL: Lawyer allegedly knew Dick had handled money very poorly (leaving two groups of people high and dry – possibly committed fraud), that the FBI had a case open on Dick for fraudulent behavior, but still created a Co-Op for Dick’s new project. The Co-Op had no board, fiscal oversight, or bylaws, but Lawyer began telling people Dick’s project was a good investment. Had the money sent to his client trust first, then to the Co-Op (but some of the money to another of Dick's companies, which disappeared). Dick ended up running it like a sole member LLC (including with personal expenses). After fraud was discovered, and Lawyer was made aware by another lawyer, he wrote a letter on his company letter head supporting Dick, telling us it will work out, to have patience. Then later he spoke to another law firm to help work with Dick, who he said (in email) was willing to work with Dick. He also kept saying the Co-Op was set up properly (when it wasn’t). Then finally just retired and didn’t inform anyone and isn’t replying to emails. So Lawyer, after knowing fraud happened, kept supporting his client and preaching patience, possibly allowing his client to find more people to defraud.

    History I later learned about Dick and Lawyer:

    • Dick had been a client of Lawyer’s for 5 years (allegedly).

    • Lawyer knows that there were two groups of people that had already invested money with Dick, which produced no results, and Dick left them high and dry (allegedly).

    • The FBI contacted Lawyer about Dick, Dick claimed the FBI Agent hung up on Lawyer. I suspect there was more said then that, and someone else claims a conversation was had. The FBI has an open file on Dick for a pattern of fraudulent behavior.

    • Dick has several large judgements against him from being sued and losing.

    • Maybe it could be argued that Dick was just horrible at managing money, instead of being fraudulent. The point though, is Lawyer knew Dick was not one to be trusted with money (allegedly).

    Here are the actions Lawyer took that helped aid Dick’s fraud:

    • Lawyer created a Co-Op for Dick. The Co-Op was to be used as a safe harbor from the SEC, because the certain item Dick was selling were going to be considered a security by the SEC.

    • I was hesitant to send money after I talked to Dick, so I later had a phone call with Lawyer. I remember him telling me he thought this was going to work, and the conversation left me feeling good about sending money. I was also sending it to his client trust account, which made it feel safer.

    • Before I sent money, I wanted my Certain Item Bill of Sale signed. I made this known to Dick and Lawyer, Dick (in an email CC’ed to Lawyer) sent me a signed issuance that I later learned was done with a pseudo name Dick went by, not his legal name.

    • The Certain Item issuance, which Lawyer was listed on, stated that those buying Certain Item automatically become Co-Op members. This was actually wrong and Co-Ops don’t work that way, I later learned, Certain Item purchasers would need to join the Co-Op.

    • Later in the month, Lawyer informed me the structure for the Co-Op hadn’t been finalized, and I asked when it would be, and he told me (in email) he would work with the Board and members to complete this as soon as they can.

    • What Lawyer forgot to say above, was that there was no board, no members, no corporate governance set up, and no financial oversight. And despite all that, knowing Dick couldn’t be trusted with money, he was sending money to the Co-Op’s bank account (that only Dick had access too).

    • Dick was running the Co-Op like a sole member LLC, wasn’t spending any money on creating Certain Items, and was including personal spending on the account.

    • The address on the Co-Op’s bank account was Lawyer and his office. I am fairly certain paperless billing wasn’t set up (it asked me to set it up, when I finally got access to the account), so he should have been receiving bank statements and been able to see his client was defrauding everyone who invested.

    • Not all of the money sent to Lawyer's trust account was released to the Co-Op's bank account. Some went to one of Dick's other companies (and disappeared), some to an escrow account (and disappeared), and $6,000 to pay for a website / web hosting.

    • About a month and a half after I sent my money, and Dick unbeknownst to me was not providing what he promised, Lawyer flew here for a dinner and gave more legitimacy to Dick (I’d later lend more money to the project, since I couldn’t fathom it was a scam with the length’s Lawyer was supporting it at).

    • Lawyer was informed by the Attorney here (working on the project as well) that Dick was mispresenting things Lawyer said, that according to the Attorney had Lawyer upset.

    • Dick ended up filing company tax filing for Deleware with wrong information and signed my name, without permission. Lawyer knows he did this and was included in emails where Dick denied doing it.

    • The lawyer eventually told us, that Dick couldn’t be in control or have access of the money. This was recorded in meeting notes by the Attorney.

    • Despite all this (and a lot of drama not mentioned and all the money having been spent) Lawyer continued to tell people to put money in, Attorney refused to support more money being invested until the corporate governance and fiscal oversight was finalized.

    • As we continued to try and make this work, Dick signed a MoA that made Lawyer and me Fiscal custodians of the money and Co-Op. Dick was given a deadline to turn over full accounting to me, but missed it. Lawyer knew about this.

    • When I was finally given access to the Co-Op’s bank account, I discovered none of the money that was given to Lawyer and Dick was used to create Certain Item. Finally had proof fraud happened.

    • Dick had also during this time attempting to add himself to a Company bank account, a clear violation of the MoA he signed. Lawyer also knew about this.

    • When we discovered fraud, the Attorney working with us resigned and let Lawyer know that fraud had been happening.

    • Instead of resigning himself, knowing Dick had committed fraud (allegedly again), Lawyer doubled down in support of Dick, possibly allowing more people to get defrauded.

    • Dick sent out a C&D to those of us who resigned. The language was so harsh, it claimed I couldn’t even speak to anyone who had been involved in the project.

    • I let people know that I had resigned at the recommendation of the Attorney by email, and went and spoke directly to some people I knew Dick wanted to help him get money via a non-profit. I told them about what happened.

    • Lawyer then followed up, copy and pasting the C&D as a friendly reminder. He also said:
    • 1) The Co-Op continues to be properly formed (yet has no board or bylaw and is being run like a sole member LLC by Dick).
    • 2) Said that LLC (Dick’s company) was moving forward as planned and to be patient, because the bills were going to get paid.

    • Lawyer had also written a letter, on his law firms letter head, expressing the same things, which Dick attached to an email he sent out.

    • I asked Lawyer where his information is coming from because Dick has established a track record of mis-presentation. Lawyer replied Dick does overstate things from time to time and that he was his source of information.

    • About a month later, Dick sends out an email that includes he is working with a new law firm for his Company and another to be named.

    • I called the law firm and asked, they had never heard of him.

    • I replied to Dick, CC’ing Lawyer, informing them of that.

    • Lawyer replies, stating that he continues to represent the Co-Op, and had met with the new law firm concerning their representation of the entities that are not Co-Ops and can attest to their willingness to serve. (This despite knowing Dick had committed fraud, owed a lot of money, including the Attorney who never got paid her $60k invoice).

    • The following month, I sent an email with an update on what I am owed (been doing that every so often) and got an automated message that Lawyer had retired.

    • I emailed the new email, to try and reach him, and never heard back. So Lawyer, preached us to be patient, telling us he thought the bills would be paid, despite knowing his client committed fraud, and then retires without letting any of us know that he was retiring and / or no longer representing Dick. He kept stringing us along for 2 months, when really, he should have stepped away and not kept telling us it was going to work out while trying to get others involved (new law firm).

    EDIT: I did start working for Dick (never got paid), as many of us did, to try and make the project work. We had all been under the impression that he and the lawyer had been acting in good faith.

  3. #13
    Join Date
    Nov 2013
    Posts
    6,504

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Before I sent money, I wanted my Certain Item Bill of Sale signed.
    What is the content of this agreement? Would you care to post the text (redacting any identifying information)? Are there any other contracts that were signed?

    From the information you posted I take the position that the money you and others invested was converted to personal use by Dick. The funds sent to the lawyer's trust account should have been placed in an escrow account for the purpose of forming the Co-OP and vesting you (and others) as members with whatever security products you agreed to buy. And not placed into an account that Dick had unlimited access to. So I think that the lawyer was complicit in converting the funds.

    Was the lawyer paid his fees from this money by Dick?

    Read this case. It is not exactly on point but close and it explains much of the case law that I think would apply to conversion and civil theft. The attorney in this case settled before the appeal but it sheds some light on your case.

  4. #14
    Join Date
    Dec 2014
    Location
    NY
    Posts
    14

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Quote Quoting budwad
    View Post
    What is the content of this agreement? Would you care to post the text (redacting any identifying information)? Are there any other contracts that were signed?

    From the information you posted I take the position that the money you and others invested was converted to personal use by Dick. The funds sent to the lawyer's trust account should have been placed in an escrow account for the purpose of forming the Co-OP and vesting you (and others) as members with whatever security products you agreed to buy. And not placed into an account that Dick had unlimited access to. So I think that the lawyer was complicit in converting the funds.

    Was the lawyer paid his fees from this money by Dick?

    Read this case. It is not exactly on point but close and it explains much of the case law that I think would apply to conversion and civil theft. The attorney in this case settled before the appeal but it sheds some light on your case.
    I am under an NDA, so I want to be careful in sharing it. But I think these three sections below won't violate that and are the most important. The rest is talking about the product, the projected passive income, and other fluff.

    For context, INC in the below quotes from an Inc. that was going to be contracted out by the Co-Op, to build, store, and manage the Product being sold. Inc. was also Dick's company.
    This issuance will also include a Legal Title to this (Product) issued to you as well as a legally prepared (INC) Management Agreement, provided within 90 days by the Lawfirm, the offices of Lawyer or his assigned counsel.
    ISSUANCE OF (Product):
    (Person) or an entity of your direction, (Product Owner) is hereby issued (# Products), that will be created / built in total, by May 2019, stored, managed and preserved at INC locations in The State of (BLANK).
    (Co-OP) authorizes its member owned (Products) to be built, stored and managed at (INC) through a mangement contract. A copy of this (Co-Op - INC) management agreement will be provided to (Product) OWNER(S), with the (Product) ownership Title / Cooperative Membership Package, which will be provided with 90 days of the date of this (Product) Issuance.
    Edit: All of these agreements mentioned, between Co-Op and INC, didn't actually exist.

    Was the lawyer paid his fees from this money by Dick?
    Yes and No. In the Client Trust, $35k was wired in last year, and $30k of that went to the Lawyer's legal bills. That's the only payment I know of, I think at the end, I heard his firm wasn't happy that there was a growing unpaid bill.

    And if you saw it in the details, the Lawyer released some of the money from his trust to one of Dick's other companies (and disappeared), some to an escrow account (and disappeared). When given the "full" accounting, those amounts were never found. Which actually looks even worse for the Lawyer then, right?

    I really appreciated the case! I'll read through it, and definitely happy to see any other case or laws, that could help me out. I've talked to quite a few law firms already, that have turned down the case (why I'm posting here). So I'm wondering if I'm not explaining it well, because I have a mountain of evidence and I feel a really strong case. Just seems to be complex since it involves suing a lawyer.

    Edit: Correction, I've had some willing to take it on, but they wanted to be paid hourly. I'm currently in debt and may need to sell my house... so need a contingency basis unfortunately.

  5. #15
    Join Date
    Sep 2010
    Posts
    19,280

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    If you're under an NDA (and even not) the best bet is to contact an attorney. That's the sort of thing they do.

  6. #16
    Join Date
    Dec 2014
    Location
    NY
    Posts
    14

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Quote Quoting flyingron
    View Post
    If you're under an NDA (and even not) the best bet is to contact an attorney. That's the sort of thing they do.
    As mentioned, I've done that... with no luck. So my hope here is to get a better understanding of how to present this to a lawyer, to have him/her willing to take on the case for those of us damaged.

  7. #17
    Join Date
    Jan 2006
    Posts
    38,783

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Quote Quoting Mr B
    View Post

    Edit: Correction, I've had some willing to take it on, but they wanted to be paid hourly. I'm currently in debt and may need to sell my house... so need a contingency basis unfortunately.
    you’ve already said dick owes multiple judgments. Unless an attorney can expect to actually be paid if you prevail in court (which doesn’t sound real likely dick will or even can pay a judgment), they aren’t going to take this on on a contingency basis. It would appear none of the attorneys you’ve contacted so far are holding out much hope to be able to collect on any judgment, even if you prevail. That should give you a big clue as to how far you should chase this issue.

  8. #18
    Join Date
    Dec 2014
    Location
    NY
    Posts
    14

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Quote Quoting jk
    View Post
    you’ve already said dick owes multiple judgments. Unless an attorney can expect to actually be paid if you prevail in court (which doesn’t sound real likely dick will or even can pay a judgment), they aren’t going to take this on on a contingency basis. It would appear none of the attorneys you’ve contacted so far are holding out much hope to be able to collect on any judgment, even if you prevail. That should give you a big clue as to how far you should chase this issue.
    I hear that, but what I hadn't mentioned to those firms was the possible SEC violation by the Lawyer and I may not have explained how well the lawyer was complicit.

    I know Dick is judgment proof, but the Lawyer I believe isn't. Any new thoughts on that? Sound like a strong case?

  9. #19
    Join Date
    Jan 2006
    Posts
    38,783

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Obviously the issue is too complex to give much of a recommendation from my perspective. To prevail against the attorney you have to be able to prove this was all a scam and the lawyer was knowingly complicit in the fraud. Then, for it to be worthwhile, you would have to be able to collect from the lawyer. I have no way of knowing if the lawyer has the where with all to pay whatever judgments the suit may produce.

    Of course, you also have to consider the possibility the judgment debtor may file bankruptcy to attempt to avoid having to pay the judgment. Debts incurred through illegal means are often not dischargeable. That still doesn’t mean you can collect on the judgment.

  10. #20
    Join Date
    Dec 2014
    Location
    NY
    Posts
    14

    Default Re: Co-Op, Capper Volstead Act, and Possible Sec Violations

    Hello all,

    I really appreciated the feedback that has been given.

    The more I tried to research, the more I do think I have a malpractice claim could be made, which would make recovering everyone's money much easier (due to insurance).

    Here is why I think a client - attorney relationship was established:

    * It was represented to me, that upon sending money to the Lawyer's client trust account, I would become a member of the Co-Op. And as he is the Co-Op's lawyer, he needs to look out for the best interest of it's members.
    * On the phone, he advised me that this was a good investment.
    * As the lawyer of the Co-Op and only one with agency over the Co-Op, he was the attorney representing the money and investments in the Co-Op.
    * After I sent the money, he was giving me advice / guidance on the Co-Op.

    So, I think it can be argued, that a client - attorney relationship had been established (the representations of one, sending the money, and advising me). Or at the least, any reasonable person would have believed there was a client - attorney relationship, which could still make it legal malpractice? Or no?

    1. Sponsored Links
       

Page 2 of 3 FirstFirst 1 2 3 LastLast

Similar Threads

  1. Other Violations: Are Off-Highway Vehicles Violations Traffic Violations
    By Nick481 in forum Moving Violations, Parking and Traffic Tickets
    Replies: 2
    Last Post: 08-06-2013, 07:18 PM
  2. Speeding Tickets: Serious CDL Violations
    By robione in forum Moving Violations, Parking and Traffic Tickets
    Replies: 1
    Last Post: 07-11-2012, 11:35 PM
  3. Probation and Parole: New Law Violations
    By chaos5 in forum Probation, Parole and Incarceration
    Replies: 1
    Last Post: 04-28-2010, 09:08 AM
  4. Consumer Law Issues: Privacy Violations. Are They Law Violations
    By Michale32086 in forum Consumer Law
    Replies: 4
    Last Post: 09-08-2009, 07:54 AM
 
 
Sponsored Links

Legal Help, Information and Resources