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85 Def. Counsel J. 1 (2018)

handle is hein.journals/defcon85 and id is 1 raw text is: 










Law Firm Nightmare: Clients Using

Lawyer Services for Ponzi Schemes


'[The mastermind] was so charismatic and his Ponzi scheme so sophisticated
that he duped everyone, including [the lawyers].'
              -Norton v. Graham and Dunn, P.C,
                            2016 WL  1562541 at*11  (Wn. App. Apr. 18,
                            2016) (unpublished)


By:   Mark   J. Fucile



                   /ADC  member,  Mark Fucile of Fucile & Reising LLP in
                   Portland,  advises  lawyers, law   firms and  legal
                   departments  throughout the Northwest on ethics and
                   attorney-client privilege matters. Before co-founding
                   his current firm in 2005, Mark served as an in-house
                   ethics counsel for a large Northwest regional law firm.
                   Mark  also teaches legal ethics as an adjunct at the
University of Oregon School of Law's Portland campus.


     HERE are few risk management
     problems   that  law   firms
     confront that are potentially
more    catastrophic   than   the
discovery that a seemingly good
client has used the firm's services
for a Ponzi scheme or similar fraud.'
Although  circumstances  vary,  a

'A Ponzi scheme is classically defined as
[a] fraudulent investment scheme in which
money  contributed by later investors
generates artificially high dividends or
returns for original investors, whose
example attracts even larger investments.
BLACK's LAw DICTIONARY (10th ed. 2014). In
practice, however, the term has been used


classic scenario is the one illustrated
by  the  opening  quotation:   an
outwardly successful and celebrated
business   person    has   duped
hundreds of investors-and the law
firm. Once unmasked,  the master-
mind   and  any  compatriots  are
almost inevitably on their way to

broadly to describe a variety of frauds. See
generally In re Rose, 425 B.R. 145, 152-153
(Bankr. M.D. Pa. 2010) (noting the breadth
of the term in practice); United States v.
Harder, 144 F. Supp.3d 1233, 1238 n.4 (D.
Or. 2015) (same). This article uses the term
in its broad practical sense.

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