Co-Op, Capper Volstead Act, and Possible Sec Violations

[Taxing Matters]

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?

No. You are making the argument that because you were investing in the co-op that the attorney for the co-op then becomes your attorney. That's not a good argument. If you buy stock of Google, Apple, GM or whatever other company you can think of that does not make their lawyers now your lawyers too. You never retained this lawyer to give you legal advise and representation. You weren't looking to him to provide you legal advise. Indeed, you knew he was representing the seller (Dick) in this transaction and thus was not representing you. You were not his client and he was not giving you legal advise or representation. He may well be liable as a party to the fraud (assuming there was fraud) but you won't succeed in a legal malpractice claim against him.

[Mr B]

No. You are making the argument that because you were investing in the co-op that the attorney for the co-op then becomes your attorney. That's not a good argument. If you buy stock of Google, Apple, GM or whatever other company you can think of that does not make their lawyers now your lawyers too. You never retained this lawyer to give you legal advise and representation. You weren't looking to him to provide you legal advise. Indeed, you knew he was representing the seller (Dick) in this transaction and thus was not representing you. You were not his client and he was not giving you legal advise or representation. He may well be liable as a party to the fraud (assuming there was fraud) but you won't succeed in a legal malpractice claim against him.

Actually, the argument I am making is that I was told I would become a member of the Co-Op (only way to avoid SEC violation to invest), and the client-attorney relationship is in that he was the attorney representing the Co-Op I was a member of. Or at least, according to the documentation they gave me, that's how it was supposed to work.

And after that, I have an email string with him, giving me legal advise on how the Co-Op works.

So, the argument is.. any reasonable person would have believed there was a client-attorney relationship and he would be acting in my best interests (and everyone else who believed them).

Or is it Fraud (not Malpractice) when a lawyer makes a representation like that, when it isn't actually true?

[Taxing Matters]

Actually, the argument I am making is that I was told I would become a member of the Co-Op (only way to avoid SEC violation to invest), and the client-attorney relationship is in that he was the attorney representing the Co-Op I was a member of. Or at least, according to the documentation they gave me, that's how it was supposed to work.

That is the same argument. You are arguing that becoming a member of the co-op means that the co-ops lawyer is your lawyer. And that is simply not the case. That argument is no different from arguing that being a shareholder of Apple makes Apple's lawyers your lawyers. And both are loser arguments. The fact that an attorney is the lawyer for a business entity of which you are part owner does not make that lawyer your lawyer.

And after that, I have an email string with him, giving me legal advise on how the Co-Op works.

No, what you have is a string of e-mails explaining how Dick was supposedly setting up the co-op to work. The lawyer was not your lawyer. He was not giving you legal advise.

So, the argument is.. any reasonable person would have believed there was a client-attorney relationship and he would be acting in my best interests (and everyone else who believed them).

First of all, what some people might believe isn't the standard. What matters is whether you had in fact retained the lawyer to give you legal advise and representation, and clearly you did not do that. Second, I disagree with you that any reasonable person would have believed there was an attorney-client relationship. You were going into business with Dick, making Dick the adverse party to you in terms of negotiating the deal into the co-op. You knew the attorney represented Dick and the co-op. You must also have had the common sense to know that the attorney of the guy opposite you in the transaction is not looking out for your best interests — he's looking out for Dick's best interests, and Dick's best interests are not your best interests. Thus, you could not reasonably have believed that the guy was your lawyer.

Or is it Fraud (not Malpractice) when a lawyer makes a representation like that, when it isn't actually true?

Nothing you've said indicates the lawyer in any way indicated he was representing you. What you have said is that the lawyer helped Dick in selling the deal to you. That's a very different thing. And it may be that the lawyer is complicit in any fraud that Dick perpetrated, though more facts are needed for that. But this is not a malpractice problem. I get that you'd very much like it to be a malpractice problem so that you might get paid from his malpractice insurance. However, the guy was not your lawyer, so this is not a malpractice problem. The lawyer might be liable to you under a theory of fraud or perhaps SEC violations. Those aren't easy to prove, though.

[Mr B]

Thank you again for taking the time to respond. I really appreciate it.

That argument is no different from arguing that being a shareholder of Apple makes Apple's lawyers your lawyers. And both are loser arguments. The fact that an attorney is the lawyer for a business entity of which you are part owner does not make that lawyer your lawyer.

Here seems to be where I am off then. It had been my understanding no one owns a Co-Op (unlike a corporation like Apple). And that the Lawyer of a Co-Op, represents the best interests of the Co-Op and it's members. Hence why I thought he would have the best interests of me as a member and of the investments he took in for the Co-Op.

This thread has been good, because it has had me re-looking over things and getting ideas.

I definitely now think there is a case, against the Lawyer for being complicit or grossly negligent in the Fraud Dick perpetrated.

I went back and looked at the Co-Op's back account, and it was formed in July. The "bigger" money starting coming in at the end of October. In those three months, Dick had acclimated 18 overdraft fees on the Co-Ops bank account with some personal spending and/or sending it to his personal account (and no agency to be spending money to begin with). Dick's name isn't even on any of the Co-Op's documentation, just the Lawyer and his office's address. Usually banks send a letter when there is overdrafts (or mine does). I may call that bank to confirm, and if they do, that pretty much proves Lawyer should have known Dick was recklessly spending the Co-Op's money with no agency to do so. So him accepting our money (and saying it was a good investment!), then depositing it in the Co-Op without getting the board set up, corporate governance, fiscal oversight, I think makes the case much stronger. Plus as I mentioned previously, he also sent money to another one of Dick's company's, instead of the Co-Op, and the money disappeared.

[PayrolGuy]

This site may help you fully understand a co-op. https://www.co-oplaw.org/statebystate/colorado/

[Mr B]

This site may help you fully understand a co-op. https://www.co-oplaw.org/statebystate/colorado/

Thank you!