My question involves malpractice in the state of: Co-Op was formed in CO, Lawyer is based in UT. Victims are in several other states.
I met an individual who was selling a product, that was going to be considered a security by the SEC. His lawyer formed a Co-Op, because they said, "Under Capper Volstead Act of 1922, Co-Ops can raise money through the sales of their products directly to their members and be exempt from the Securities Act of 1933." The purchase agreement said those of us purchasing the product would automatically become member's of the Co-Op. After speaking with his lawyer, who told me the individual's plan would work out, I wired the money to the lawyer's client trust, who sent it to the Co-Ops' bank account. The lawyer had also told me in an email, that the Co-Op had a board and members.
Turned out the Co-Op; had no board, had no members, had no corporate governance, no bylaws, no fiscal oversight, it had nothing. Was only formed in name. Those of us who made purchases, also couldn't be automatically added. We needed to apply. Biggest issue, the individual ran it like an LLC and wasted all of the money (I'd say fraud, but's he is judgement proof because he already has some large jugdements against him).
Why Legal Malpractice?
I'm looking for expert advice here, on whether I have a legal malpractice case against the Lawyer (so his liability insurance can cover all of our losses). Hopefully I said enough above?
Some key points / questions:
- When I made the purchase, I was not a member of the Co-Op, and have never been a member of the Co-Op. So, I believe, them selling me a security while I am not a member of the Co-Op (and many other people) is an SEC violation.
- The product however never actually got made, so I don't know if that would nullify the SEC Violation? Or just the act of selling something that would become a security, is enough?
- The money was first sent to the lawyer's client trust, and as the lawyer of the Co-Op, he was the attorney representing my investment in the Co-Op.
- I believe it can be proven, he knew the individual was not going to spend the money on the product and use it for other purposes (another attorney is witness to that, but has a conflict of interest).
- He released the money to the Co-Op with that knowledge and knowing only the individual had access to the bank account.
- The individual then wasted the money (could be argued defrauded the Co-Op). The individual claimed or thought he was running the Co-Op.
- The mailing address on the Co-Op's bank account, was the lawyer's office, and paperless statements hadn't been set up.
- With the Co-Op having no board or anything what so ever, wouldn't the lawyer be the only one with agency to spend the Co-Ops money?
So, any input would be greatly appreciated. I had been trying to find a lawyer for a fraud case, but wasn't getting anywhere. So I'm hopeful, focusing on the Lawyer, the SEC violations he committed, and not protecting the investment could, be a strong enough case for a law firm to take on and hopefully win? Or any other thoughts / inputs, that would be helpful in how to present this to a lawfirm. (And there is a ton more to this lol)