USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken
Conversion Where a fraudster has intentionally and without authority taken personal property belonging to someone else, the owner may allege a claim for conversion to have the property returned. The plaintiff must allege that: • the property taken is a specific, identifiable thing; • the plaintiff owned, possessed or had control over the property before it was taken; and • the defendant now has unauthorised control over the property. Although exceptions exist, generally an action for conversion can only proceed where the prop - erty taken is tangible – for example, a bond, promissory note, check, deed or manuscript. In some instances, an action for conversion of money may be brought where it relates to spe - cifically identified funds. 1.6 Rules of Pre-Action Conduct No specific rules of pre-action conduct apply in relation to fraud claims. Certain related claims, such as conversion, require the plaintiff to make a demand on the defendant for the return of the property. In general, however, there are no set requirements of pre-action conduct prior to the filing of a claim for fraud. 1.7 Prevention of Defendants Dissipating or Secreting Assets A victim of fraud has several options to prevent a defendant from dissipating or secreting assets prior to a judgment. Depending on the underly - ing cause of action, a fraud victim may be able to obtain a preliminary injunction or restraining order preventing the pre-judgment dissipation of assets. A plaintiff may also be able to obtain a pre-judgment attachment order under state law.
tors seeking to recover from the fraudulent actor. For example, under federal bankruptcy law, a trustee may avoid a transfer of a debtor made with the intention to defraud a creditor so long as the transfer occurred within the two years prior to the debtor’s bankruptcy filing. Either the trustee or an individual creditor may bring an action seeking to avoid the fraudulent transfer. If a fraudulent conveyance is shown, the credi - tor will be able to claw back the portion of the fraudulent transaction that satisfies its individual claim. The preference or priority of a fraud victim may depend on whether the property it seeks to claw back is traceable or identifiable. In many instances, the victim of fraud does not take pri - ority over other creditors. A victim of fraud may also bring other claims arising out of the fraud to recoup lost property or damages. Those claims include unjust enrich - ment or conversion, for example. Unjust Enrichment An action for unjust enrichment allows a plaintiff to try to recoup a benefit that was wrongfully retained by a fraudulent party. Although the ele - ments differ slightly from jurisdiction to jurisdic - tion, in general a plaintiff must prove that: • there was a benefit conferred on the defend - ant; • the defendant was aware of the benefit; and • acceptance or retention by the defendant of the benefit would be inequitable under the circumstances. A claim for unjust enrichment sounds in equity. An essential question is whether it is against equity to allow the defendant to retain what is sought to be recovered.
432 CHAMBERS.COM
Powered by FlippingBook