by John J. Tollefsen | Apr 17, 2018 | Fraud, Fraud, Fraud WA, SEC, Securities US
Regulating ICOs The regulators of money and securities are facing a new challenge with the emergence of crypto-currencies like Bitcoin. Not only do crypto-currencies live in cyberland computers usually outside the jurisdiction of the regulators, their mere existence is a challenge to the modern notion that only nation-states have the right to issue fiat currencies. Recently the Securities and Exchange Commission has entered the fray. It used to be said the securities regulators could be divided between the philosophy of the states and the philosophy of feds. The states were adherents to the central government control view (called “merit review”) believing that the staff of the Department of Financial Institutions (DFI) in Olympia knew what was good for investors and would be the appropriate gate-keepers for the investing public. For example, when Apple Computer went public, DFI would not approve its IPO stock for sale in Washington (it was too risky) so Washington investors had to purchase post-IPO stock at a substantial premium on the national public markets. The SEC was said to hold to a view that anything could be sold if there was full disclosure. Over time, the positions modified. The SEC is now known to make it difficult or impossible to register an offering its employees do not like. Recently the SEC insisted on applying traditional stock trading and Investment Company Act of 1940 rules to registration of crypto-currency ETF-like funds which were designed to allow investor speculation in a basket of crypto-currencies1Staff Letter: Engaging on Fund Innovation and Cryptocurrency-related Holdings, January 18, 2018. In a typical government “catch-22”, now that the SEC had held...
by John J. Tollefsen | Nov 3, 2016 | Blog, Civil Litigation WA, Fraud WA, Insurance, Whistleblowing WA
ONE-YEAR STATUE OF LIMITATIONS – EMBEZZLEMENT Copy of case: (Travelers Casualty & Surety Co., v. Washington Trust Bank, No 92483-0) 1611-travelers-casualty-surety-co-v-washington-trust-bank Often the only hope of financial recovery from an embezzlement, other than from insurance policies, is from a bank which paid on forged endorsements (also spelled “indorsements”). A recent case (November 3, 2016) held that the statute of limitations in such cases is only one year in Washington State.1Travelers Casualty & Surety Co., v. Washington Trust Bank, No 92483-0 An employee of a nonprofit serving disabled adult client~ used her position to embezzle more than half a million dollars held by the nonprofit for its clients. She did this by drawing checks from the nonprofit’s account payable to its clients, signing the back of those checks with her own signature, and cashing them at the nonprofit’s local bank. The embezzlement was discovered in an admission in the employee’s suicide note. The Bank sent monthly bank statements during the embezzlement period. These statements included copies of the fronts of the checks that had been cashed at the Bank. The statements did not include copies of the backs of the checks, which would have readily revealed the embezzler’s signature. During the relevant period of time, the victim could access its checking account online at any time to view both the front and backs of checks that cleared its account. The online process required clicking an account to view, clicking a link for the front of the check, clicking a link for the back of the check, closing the check, and repeating as necessary. RCW 62A.4-406(f) provides: “Without regard to care or lack...
by John J. Tollefsen | Dec 12, 2015 | Blog, Civil Litigation WA, Consumer Protection WA, Contracts WA, Employment Law WA, Fraud WA, Securities Law WA
SANDRA C. THORNELL, on behalf of herself and an others similarly situated, Plaintiff, v SEATTLE SERVICE BUREAU, INC. d/b/a) NATIONAL SERVICE BUREAU, INC., and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,) Defendants. copy of decision: 151210 Thornell v Seattle Service Bureau “This case involves two certified questions from the United States District Court for the Western District of Washington. First, we are asked to determine whether the Washington Consumer Protection Act (CPA), chapter 19.86 RCW allows a cause of action for a plaintiff residing outside Washington to sue a Washington corporate defendant for allegedly deceptive acts. Second, we are asked to determine whether the CPA supports a cause of action for an out-of-state plaintiff to sue an out-of-state defendant for the allegedly deceptive acts of its instate agent. The United States District Court noted an absence of Washington case law providing guidance on these issues. We answer both certified questions in the affirmative.” “We first focus on the definition of “commerce” – “any commerce directly or indirectly affecting the people of the state of Washington.” RCW 19.86.010(2) (emphasis added). The definition of “commerce” does not describe who may sue under the CPA but rather the scope of the acts and practices the CPA is designed to prevent. Defendants argue that the definition of “commerce” should not be understood to allow a claim for an unfair or deceptive practice on behalf of people not “of the state of Washington.” Such a reading, however, would require us to give no effect to the words “indirectly affecting.” In order to give effect to the phrase “indirectly affecting,” claims are not limited to those only having...
by John J. Tollefsen | Jun 27, 2012 | Bankruptcy, Blog, Business Torts WA, Federal Law, Fraud, Fraud WA, Washingon State
Fraudulent Transfers in Washington State Transfers without adequate consideration or gifts can be overturned as fraudulent in certain circumstances. This article discusses breaking asset protection trusts and other devices to avoid creditors Briefly transferring house to wife to obtain loan is fraudulent transfer Most Asset Protection Schemes Do Not Work The Internet is replete with websites touting asset protection schemes. What they do not reveal is that they are unlikely to work. Most states have statutes that protect creditors from asset protection schemes through a variety of tools. Unless the trust does not benefit the debtor, it is unlikely to serve its purpose. This article discusses the various applicable statutes in Washington State. Understanding trusts An asset protection trust is an entity created by and recognized by court-made law (common law). “Asset protection” is a label applied to a common law trust specifying its purpose but not describing a unique entity. Some trusts, like Massachusetts Business Trusts, are entities chartered by Washington’s Secretary of State in a process similar to the creation of a corporation or limited liability company. Asset protection trusts generally rely on the non-chartered and therefore more secret trusts created under common law. Modern trust law is primarily the product of centuries of decisions starting from the 13th century in the courts of equity (Court of the Chancery) of England. Trusts are now internationally recognized by the Hague Convention on the Law Applicable to Trusts and on their Recognition effective January 1, 1992. An intentionally established trust (“express” trust) involves at least three persons: 1) the settlor(s) or trustor(s) who transfers property in trust to the...
by John J. Tollefsen | Jan 26, 2009 | Blog, Fraud, Fraud WA
Negligent Misrepresentation in Washington State Law Also see Four Theories of Negligence Plaintiffs who are unable to allege fraud may resort to an alternative theory.1This section quotes from 16 WAPRAC § 18.10. The tort of negligent misrepresentation occurs when the defendant, in the course of business, profession, employment, or a transaction in which the defendant has a pecuniary interest, negligently supplies false information for the guidance of others in their business transactions, and the plaintiff justifiably relies to his detriment.2Peterson v. Big Bend Ins. Agency, Inc., 150 Wash. App. 504, 202 P.3d 372 (Div. 3 2009), as amended on reconsideration, (July 14, 2009) (trial court erroneously dismissed negligent misrepresentation claim against insurance agent who misrepresented cost of replacement coverage); Ross v. Kirner, 162 Wash. 2d 493, 172 P.3d 701 (2007) (Court of Appeals erroneously determined conduct to constitute negligent misrepresentation as a matter of law); Baddeley v. Seek, 138 Wash. App. 333, 156 P.3d 959 (Div. 3 2007) (negligent misrepresentation claim properly dismissed where no representations were made); Ross v. Ticor Title Ins. Co., 135 Wash. App. 182, 143 P.3d 885 (Div. 2 2006) (trial court properly dismissed negligent misrepresentation claim where defendant had no duty to disclose); Van Dinter v. Orr, 157 Wash. 2d 329, 138 P.3d 608 (2006) (trial court properly dismissed claim against vendor and title insurer, where defendants had no duty to disclose capital facilities rate); Shah v. Allstate Ins. Co., 130 Wash. App. 74, 121 P.3d 1204 (2005) (trial court erroneously dismissed claim for negligent misrepresentation); Lawyers Title Ins. Corp. v. Baik, 147 Wash. 2d 536, 55 P.3d 619 (2002); Restatement (Second) of Torts...
