Lawyer’s Involvement in Ponzi Schemes

/ 02.Oct, 2013

We have written before on our observation that nearly every Ponzi scheme seems to involve an attorney at one level or another.  Following a three week trial, a California federal jury recently found the Silicon Valley Law Group was not liable for legal malpractice due to its involvement in negotiating the sale of a real estate investment firm to Ponzi Schemer Edward Okun.  Okun, who is currently serving 100 years in jail as the result of his $126 million Ponzi scheme, purchased 1031 Advance, the real estate investment firm, and the Silicon Valley Law Group represented 1031 Advance in the purchase.   Okun gutted the company, and after it entered bankruptcy, the trustee sued the Silicon Valley Law Group.  The law suit asserted if due diligence was properly performed, then Silicon Valley Law Group would have discovered Okun was a thief.

As always, after a Ponzi scheme, those who suffered losses will seek to recover their losses.  With justification or not, attorneys are frequently the target of these recovery attempts.  Legal malpractice avoidance requires attorneys keep a careful eye out for the specter of Charles Ponzi.  This, of course, is difficult as swindlers do not become successful unless they have the ability to convince people they are not swindlers.

Josh J.T. Byrne, Esquire