To what extent is a lawyer guilty of malpractice for material misrepresentations to a client, and the client&#39;s counterparties? An investor agreed to invest an amount of money, 2X, in a startup through a convertible note. At the end of two years, the investor had the option of receiving back the monetary amount of his note with accrued interest, or converting his note into equity at a pre determined rate. The terms of the deal were that the investor would invest X up front, to allow the company to acquire a particular asset, and the remaining X upon the company's successful acquisition of this asset, which everyone involved agreed was key to the deal. The company failed to acquire the key asset, and in this contingency, the terms of the contract called for the company to return X to the investor. The company notified the investor's lawyer of this fact, but the lawyer falsely told the client that the asset had been acquired, and asked the client to forward the remaining X. The client failed to do so, which would have been a &quot;default&quot; had the asset, in fact, been acquired. The lawyer also represented to the company that he had reviewed the finances of the investor (he had not), and that the investor was an &quot;accredited investor&quot; as defined by the SEC, who could invest in unregistered securities, even though this was not the case. After two years, the client sued for the return of X, which the company had spent. The company counterclaimed for the remaining X by saying that it would have survived if the investor had invested the whole amount. Because of certain jurisdictional and procedural issues, this set of lawsuits will take years to resolve. Did the lawyer violate a fiduciary duty by telling the client that the asset had been acquired when, in fact it had not been, and if so, what are the consequences to the lawyer? What responsibilities did the lawyer have under &quot;know your customer&quot; or similar legislation to verify the client's ability to invest as an accredited investor? And to what extent is the lawyer liable for the relevant mispresentations? Normally, malpractice is not held against the lawyer unless the client wins the underlying case against the company. Is this true here, or are the lawyer's lapses so egregious and so material to the issues involved that the lawyer can be found liable regardless of the outcome of the investor-company litigation?
Did the lawyer violate a fiduciary duty by telling the client that the asset had been acquired when, in fact it had not been, and if so, what are the consequences to the lawyer? Yes. A lawyer has the obligation that his representations to his client be diligent and materially truthful. Lawyer's violation of that duty prevents his client from making informed decisions. At the outset, the lawyer's malpractice would warrant sanctions by the disciplinary board where he incurred legal malpractice. A possible suspension, public reprimand, and/or the amount of a monetary sanctions depend on several variables such as lawyer's intent, board's rules &amp; discretion, and lawyer's severity &amp; history of malpractice. Quantification of the lawyer's liability to his client depends on the losses the client incurred as a result of the lawyer's misrepresentations. This largely depends on the terms of the contract between the investor and the company. The intentionality (as opposed to negligence) of lawyer's misrepresentations are likely to support a claim of fraud, for which many jurisdictions entitle the injured party to treble damages. What responsibilities did the lawyer have under &quot;know your customer&quot; or similar legislation to verify the client's ability to invest as an accredited investor? Know Your Customer mostly relates to prevention and detection of money-laundering (and, to a lesser extent, of tax evasion), not to provider's awareness of his client's financial sophistication. KYC entails a duty the service provider has --if at all-- toward the authorities, not toward the client and typically not either toward the company in which the client intends to invest. Therefore KYC seems inapplicable in the scenario you describe. It is unclear from your post why the status of accredited investor would be any relevant in this scenario. A startup in need for a particular asset seems unlikely to have a duty to ensure that its investors are classified as accredited for SEC purposes. Normally, malpractice is not held against the lawyer unless the client wins the underlying case against the company. Is this true here That seems unlikely. Despite the several gaps in your description, it certainly reflects separate causes of action involving different parties, different types of relation between them, unrelated states of mind, simultaneous fictions devised by the lawyer, and so forth. Accordingly, the outcomes of investor's ensuing claims against his lawyer are independent of investor's suit against the company. For instance, the extent to which the contract between the investor and the company remained is inconclusive because crucial details of the investor-company contract are missing. Nor is it clear whether the company incurred what is known as invited error by not pressing the investor on the second installment of X the company was expecting. But, regardless of the legal position of the investor and the company with respect to each other, both entities [detrimentally] acted in reasonable reliance on the misrepresentations a third-party made to each of them.
united-states You may be confusing the right to an attorney if you cannot afford one that is applicable only in CRIMINAL cases, not civil cases like you are discussing. You may be able to get an attorney to take your case on a contingency basis but there are two things to keep in mind: The attorney has to have some expectation that the case is winnable. The amount to be recovered must be worth the risk of taking on this case. In other words, for the attorney it's more of a business question that a legal one. Many attorneys will give you a free 30 minute, more or less, consultation. Perhaps you might give that a try.
Does this amount to the employer potentially paying the employee to lie to them, to no ultimate legal effect? Or will the employee have a problem if they end up with an obligation to sign a statement that is not in agreement with reality? Neither. Contract law contemplates a party's subsequent inability to comply with the terms that were established at the formation of the contract. In the Restatement (Second) of Contracts, this is referred to as supervening impracticability. See, for instance, the Restatement at § 261. In the hypothetical scenario you outline, the loss of a company laptop renders the employee's promise (namely, "to return any company-issued computers or devices") impracticable. Instead, the circumstances may entitle the employer to restitution (by the employee) for what the employee now is literally unable to return. That would be cognizable as compliance in substance.
The Example of Colorado Law In Colorado, a private individual who is a victim of theft can bring a lawsuit for civil theft in which a prevailing theft victim can recover the actual economic amount of the theft (including pre-judgment interest at the statutory rate from lost use of the stolen property per a separate pre-judgment interest statute), treble damages (i.e. actual damages plus twice that amount as a civil penalty), and their attorneys' fees and the costs of the litigation. Colorado Revised Statutes § 18-4-405. Rights in stolen property All property obtained by theft, robbery, or burglary shall be restored to the owner, and no sale, whether in good faith on the part of the purchaser or not, shall divest the owner of his right to such property. The owner may maintain an action not only against the taker thereof but also against any person in whose possession he finds the property. In any such action, the owner may recover two hundred dollars or three times the amount of the actual damages sustained by him, whichever is greater, and may also recover costs of the action and reasonable attorney fees; but monetary damages and attorney fees shall not be recoverable from a good-faith purchaser or good-faith holder of the property. Returning the property stolen doesn't change the fact that civil theft was committed, it only reduces the amount of the damages by the amount repaid and prevents interest from continuing to accrue. In practice, it would be very uncommon for someone to bring a suit for civil theft after they are repaid. But, nothing in principle prevents this from happening until the statute of limitations runs (in Colorado that is probably three years from the date that the theft is discovered), although there might be an argument that accepting the funds returned by mutual agreement might constitute a waiver of their claim, or might give rise to equitable defenses of estoppel or laches. Criminal Charges Of course, in the U.S., even if the company doesn't press charges, a prosecutor does have the authority to press criminal charges without their consent. A theft victim does not have the legal authority to relieve you of criminal liability for theft. There are some countries other than the U.S. where a theft victim can relieve someone who committed theft of criminal liability (if I recall correctly, Germany is one of them), but that is a minority position internationally as a legal matter (although actual practice is often different). Civil Lawsuits For Theft In Other Jurisdictions While most states do not have a statutory civil theft statute, almost every state and country would allow a civil lawsuit for &quot;conversion&quot; or the equivalent for taking property that does not belong to you for your own benefit (which is a tort). Other U.S. states and other countries would vary over whether repayment of funds converted prior to commencement of a lawsuit limits actual damages and exemplary damages based upon actual damages to pre-judgment interest, or even constitutes a complete defense, or not. Most U.S. states allow for an award of punitive damages in connection with an intentional tort (statutes of limitations and pre-judgment interest award rules vary greatly). Most non-U.S. jurisdictions would not allow an award of punitive damages in a civil action involving an intentional tort. In the absence of a statutory authorization of the kind found in Colorado, attorneys' fees and costs would normally not be allowed for a U.S. plaintiff in an intentional tort case like this one, but most non-U.S. courts would allow an award of attorneys' fees and costs to a prevailing party in a case like this one. Practical Considerations The fact that you repaid the funds makes some defenses to future civil or criminal charges very challenging. You can't truthfully deny that you repaid the funds and that comes close to an admission of guilt. But, if you state under oath that you engaged in this conduct, you make yourself vulnerable to criminal prosecution based upon that testimony under oath. In practice, one reason that the business is actually unlikely to sue you in this situation (unless they discovered that more than $50,000 was taken) is that having lost your job and paid them $50,000 you may not be able to pay even a large judgment if it was awarded against you (although such a judgment, if entered, would probably not be dischargeable in bankruptcy under U.S. law). So, the cost-benefit analysis of such a suit for the company might not make much sense. Also, while having a suit like this filed against you would certainly damage your reputation seriously in a way that could be located with a public records search, it might also moderately harm the reputation of the company which revealed that its internal controls were lax enough to make it possible for the theft to happen. In the case of a large business the damage that this could do to the fair market value of the business and its creditworthiness might outweigh the benefit it would receive from bringing such a lawsuit.
No A lawyer is considered an &quot;officer of the court&quot; in the sense that certain duties to the court are imposed on the lawyer. That does not give the lawyer authority as if the lawyer was part of the court staff, nor a law enforcement officer. A statement can be prosecuted as perjury only if it is made under oath (or affirmation) in court, or if it is made &quot;under penalty of perjury&quot;. This is generally done by a statement in a document signed, something like &quot;I declare under penalty of perjury that all statements in the above document are true to the best of my knowledge and belief.&quot; It can also be done verbally, with the person making the statement agreeing that it is true and that this is subject to perjury prosecution if it is false. The exact wording will vary, but it must be clear and explicit. Aside from that, false statements to a lawyer are not generally subject to prosecution for perjury, nor otherwise illegal. In some cases a lie in a business transaction may be fraud, which is actionable, and possibly criminal. But that will not have anything to do with whether the person lied to is or is not a lawyer. This Wikipedia article says: Perjury is the intentional act of swearing a false oath or falsifying an affirmation to tell the truth, whether spoken or in writing, concerning matters material to an official proceeding. ... The rules for perjury also apply when a person has made a statement under penalty of perjury even if the person has not been sworn or affirmed as a witness before an appropriate official. An example is the US income tax return, which, by law, must be signed as true and correct under penalty of perjury The US Federal law on perjury, 18 U.S. Code § 1621 says: (1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true; or (2) in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States. Title 9 of the Maryland code, section 9-101 says: (a) Prohibited.- A person may not willfully and falsely make an oath or affirmation as to a material fact: (1) if the false swearing is perjury at common law; (2) in an affidavit required by any state, federal, or local law; (3) in an affidavit made to induce a court or officer to pass an account or claim; (4) in an affidavit required by any state, federal, or local government or governmental official with legal authority to require the issuance of an affidavit; or (5) in an affidavit or affirmation made under the Maryland Rules. (b) Penalty.- A person who violates this section is guilty of the misdemeanor of perjury and on conviction is subject to imprisonment not exceeding 10 years. Nothing about statements made to a lawyer not under oath or affirmation, or under penalty of perjury. Other US state laws are similar.
Fundamentally, to what extent is a Limited Partner subject to a potentially ruinous financial situation resulting from financial wrong-doing committed by the Managing Partner? Civil tax liability Under U.S. tax law, a limited partner in a limited partnership that is taxed under Subchapter K of the Internal Revenue Code (i.e. as a partner) is responsible for that limited partner's share of all taxable income of the partnership, for all interest owed on the unpaid taxes, and generally speaking (subject to very narrow exceptions), to penalties assessed on the unpaid tax. Moreover, frequently, the limited partner has no right to be involved in the tax litigation by the tax matters partner of the partnership on the issues that matter. The limited partner's tax liabilities to the federal government and any other taxing authorities with a pass through income tax system are not limited to the limited partner's investment in the limited partnership. Criminal liability exposure The limited partner will generally not have any criminal liability for tax crimes committed by a general partner or other partnership official engaged in tax work on behalf of the limited partnership without more affirmative involvement in and endorsement of the misconduct, although the partnership itself might See U.S. v. Arthur Anderson, LLP (which was reversed on appeal by the U.S. Supreme Court because proof of intent was inadequate, but demonstrated the principle.) A limited partner would bear the limited partner's pro rata share of a criminal fine but that would be limited to the limited partner's investment in the limited liability partnership. Mitigating the harm with a lawsuit The limited partner will usually have a right to bring a civil action (i.e. a lawsuit) against a general partner whose management of the taxes of the partnership cause the limited partner to incur tax penalties, on a breach of fiduciary duty theory, but the limited partner will generally not be able to recover back taxes owed, or interest on back taxes owed, in a lawsuit of this kind. The limited partner might also be able to bring a lawsuit on other theories that might involve an award of punitive damages against the general partner or other person handling the taxes of the partnership who was involved. The legal theories are complex and many would involve a "derivative action" rather than a direct suit against the general partner or manager. Other questions The "what to do about this situation" part of this question is beyond the scope of Law.SE as it calls for individualized legal advice. A good response to this situation would be challenging to formulate for even a specialist business law and litigation practitioner with far more factual detail available. Litigating of issues like this routinely costs each side hundreds of thousands of dollars and can take multiple years.
Generally speaking, a security agreement purporting to use a 401(k) account as collateral is void as a matter of law unless the loan is made by the institution that maintains the 401(k) account. This is also true of many annuity accounts which have special retirement account character (e.g. a TIAA-CREF annuity as part of a teacher's retirement plan). A non-retirement private annuity could normally be foreclosed upon in some manner as security, by forwarding the note, evidence of default and the security agreement to the private annuity holder, assuming that the security interest in the private annuity was properly perfected under the Uniform Commercial Code Article 9. If it was not properly perfected, it still might be possible to access this assets in a court action to enforce the promissory note and security agreement. Default would be sufficient to get a money judgment under the promissory note, and the mere fact that a 401(k) was pledged as collateral when it was not legal to do so would not show promissory fraud, without a showing that the borrower knew this and intended this effect. Otherwise, it could simply be a mutual mistake as to the legality of that security agreement. A court might very well find not fraud but negligence on the part of the creditor for not taking the proper steps to obtain collateral status for the collateral under the Uniform Commercial Code. Even if there was promissory fraud, this would only prevent discharge of the debt in bankruptcy if the creditor made the proper showing in a contested adversary action timely filed in a bankruptcy and would generally not permit access to the 401(k) funds. There are very few exceptions to the immunity of 401(k) funds from creditors claims and nothing in the OP suggests that the facts necessarily to benefit from any exception would be present in this case.
There is no prohibition on lying in general. Misrepresentation If you misrepresent a fact and that misrepresentation is a material inducement to someone entering into a contract with you then there are a number of problems that follow: The (mis)representation may become a term of the contract and if not complied with can allow the aggrieved party to either sue for damages or rescind the contract. If the misrepresentation led to the contract being entered into by mistake then the contract is void for mistake The misrepresentation may have become a collateral contract an innocent or negligent misstatement may give rise to the tort of negligent misstatement misrepresentation may put you in breach of trade practices statutes. Fraud If you knowingly tell a lie with the intention of receiving a benefit then this is both the tort and crime of fraud. You receiving employment or your company securing a contract probably qualifies as intending to receive a benefit.