Tragedy of Fraud – part 4 – possible civil litigation

Previous post discussed the sentencing in a fraud case I have been following.  Jail for 270 days, $25,000 restitution, and $3,915 of fines and fees.  The ripple effects of the fraud have not ended.  The next chapter might be in the civil law area.

Future litigation — When you read the newspaper article discussing the sentencing, the defense attorney has several odd comments, including saying “(t)here’s no admission of any wrongdoing in this case” (I’m quoting the newspaper as they have quoted the attorney).  He also suggested there is not enough oversight of the church’s finances and there should be an investigation of their financial status.  He also said the amount of restitution ($25,000) is just the amount that is missing.  Note the word ‘missing’ – not what was stolen, or what the accused admits.  It is just missing.

Those are peculiar comments on their face.  Why claim the person did nothing wrong and suggest the money has just been misplaced?  If that’s the case, then why is there even a case?

Those comments make sense when you combine three pieces of information:  the allegations that he took over $700,000; restitution will be $25,000, and he pled nolo contendere. 

To put this together, think civil suit.  The church must be thinking they will be short around $700k or $900k after restitution.  I know nothing about the defendant’s financial situation.  I know nothing about what the church is thinking in terms of their plans, but it would be quite reasonable for someone outside the situation to think the church may pursue civil action to recover the balance. 

(The theological discussion of whether Matthew 18 says you forego civil action when massive amounts have been taken by a believer is for another day.  Besides, that is way beyond the scope of my blog!)

The defense attorney obviously thinks the church may take action.  Thus, he is getting his client through the criminal phase of the case and at the same time leaving him positioned so he can at least try to defend himself if there is a civil case. 

How?  This is where the nolo contendere plea becomes important.  That plea is different from a guilty plea.  It is my understanding that in the criminal area, a nolo plea is the same as a guilty plea. Thus in this case, even though he pled nolo contendere, the man will be reporting to jail on January 14, 2011 for 268 days.  That case is closed.

If civil litigation were to follow, it is my understanding a guilty plea would be admissible in that civil case as proof of wrongdoing and the case would be easily lost by the person giving the guilty plea.  A nolo plea in a criminal case is not an admission of wrongdoing in a follow-on civil case.  At least that is my general understanding, although I did find one web site which stated that in California, that only applies in a misdemeanor case, not a felony case.  So, I don’t know how the nolo plea would work in this situation. (That’s why you need a good attorney if you get into a serious problem!  Also—remember the preceding legal commentary is from a CPA and is worth exactly what you paid for it – nothing!)

So when I look at all of this as a businessman, I can only guess there is a really good chance of civil litigation to follow.

Why have I gone into all this detail?  Why outline the jail time, severity of probation, and high likelihood of civil litigation?  It is one more round of the horrible ripple effects of fraud.  The devastation of a fraud incident is frightening.  Please reread The Tragedy of Fraud.  Other posts accumulated at Tragedy of Fraud tab at top of page.

Update – next post here.

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