Article Archives >> Lead Stories >> October 1-31, 2007
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Bankruptcy Trustee Denied Claim
Against Lawyers in Nonprofit Fraud
Court says “in pari delicto” rule prevents recovery
when nonprofit’s directors were more at fault
When attorneys for a nonprofit corporation that went bankrupt after participating in a type of Ponzi scheme filed a claim for unpaid fees for their services, the Trustee appointed to represent the nonprofit not only opposed the claim, but brought his own claim against the lawyers for professional negligence and other malfeasance.
A federal District Court in Utah has granted summary judgment in favor of the lawyers. The Court held that, as a matter of law, the wrongdoing of the officers and directors of the nonprofit was “far greater” than any wrongdoing by the lawyers, and that the Trustee’s claim was barred by the doctrine of in pari delicto.
Article Archives >> Lead Stories >> October 1-31, 2007
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