If you’ve been defrauded and are seeking avenues for recovery, there are legal and risk management options that might be worth exploring. In this blog post, we’ll delve into the possibilities of recovering losses through third-party liability and judgment preservation insurance.
Third-Party Liability: Holding Banks Accountable
A recent article from The Wall Street Journal highlights the challenges banks face in policing customer crimes, particularly in cases involving alleged Ponzi schemes. When scammers funnel ill-gotten gains through banks, the institutions can be held accountable if they fail to detect fraudulent activities. Banks are expected to perform due diligence when opening accounts and actively monitor transactions to identify potential fraud.
Detecting Ponzi Schemes
Analyzing patterns of money flow, corporate activities, and conducting audits on bank accounts can reveal signs of a Ponzi scheme. While individuals may not have the tools to scrutinize an entire bank account, banks can easily identify suspicious activities through data analytics. Failure to do so may result in the bank being identified as a third-party enabler, opening the door to vicarious liability.
Third-Party Recovery
In instances where the scammer disappears without leaving sufficient funds to compensate victims, looking at third parties becomes crucial. Banks, as primary third-party entities, can be held accountable for their role in facilitating fraudulent activities. A notable case is the Scott Rothstein Ponzi scheme, where TD Bank was compelled to pay back victims due to its involvement in the fraudulent scheme.
Judgment Preservation Insurance: Managing Legal Risks
Another avenue for recovery involves judgment preservation insurance, a risk management option that can be valuable in scenarios where obtaining the awarded judgment may prove challenging.
Understanding Judgment Preservation Insurance
After securing a judgment or default judgment in a lawsuit, the road to obtaining the awarded sum can be fraught with obstacles. Judgment preservation insurance acts as a safety net, providing financial protection for plaintiffs. If, for instance, a defendant appeals the judgment or negotiations become protracted, having this insurance in place can offer leverage.
How It Works
Judgment preservation insurance allows plaintiffs to proceed with confidence, knowing that even if the court reduces the judgment amount on appeal, the insurance company will make up the difference. This ensures that plaintiffs receive the full amount they were initially awarded, providing financial security and mitigating the risks associated with legal proceedings.
Exploring Comprehensive Recovery Strategies
When dealing with the aftermath of fraud, it’s crucial to explore comprehensive recovery strategies. Third-party liability can be a powerful tool in holding facilitators accountable, while judgment preservation insurance adds an extra layer of protection in navigating the complexities of legal processes. Whether it’s scrutinizing bank activities or safeguarding against legal uncertainties, understanding these options can empower victims to pursue justice and restitution.