U.S. Corporate Fraud Victim Compensation
Whether committed by a giant U.S. corporation or an international corporation doing business in America, victims of corporate fraud and racketeering sustain devastating economic losses but hesitate to seek a legal remedy. Many investors, small companies and other victims are afraid to challenge the formidable corporate opponent having vast financial, political and legal resources. Most of the victims do not have the funds to withstand a protracted and expensive litigation. Others do not believe in the American judicial system, which may render unpredictable results.
Any domestic or foreign company may bring a corporate or consumer fraud action in the United States against an American or international corporation doing business in America to pursue justice under the U.S. legal system. American federal courts may adjudicate civil liability claims of foreign nationals for intentional torts and crimes under the Alien Tort Claims Act of 1789 (ATCA) giving jurisdiction over "civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." 28 U.S.C. Sec. 1350. Foreign entities may have a claim arising under the ATCA against private parties if a violation of international law constitutes a violation of the domestic law of the United States, or the party's conduct was undertaken under the color of state authority or in violation of international law that is recognized as extending to the conduct of private parties. The wrongdoer, such as an international corporation, must be served within the borders of the United States.
The Racketeering Influenced and Corrupt Organization ("RICO") Act's civil provisions (only the government may prosecute under the Act's criminal provisions) allow private parties to recover triple damages, attorney's fees, and costs against any person or company participating in the criminal enterprise affecting interstate or foreign commerce through a pattern of racketeering activity. This anti-mafia statute has been used in many corporate fraud cases.
Corporate fraud cases include securities (alleged in Enron, WorldCom, Tyco, Quest, Adelphia or ImClone schemes), pension fund, fiduciary (violation of a fiduciary duty established by the total financial control over the investor's funds) and consumer fraud matters. Corporations violating their own published policies and contractual terms, setting up phony charges for consumers, hiding their actual intentions, data and schemes, fixing prices with competitors and misstating the facts to lure the parties into transactions are committing corporate fraud. Examples:
The U.S. laws facilitate significantly larger awards than most countries in the world. The brave souls who decided to seek justice in the U.S. courts have received substantial awards sometimes exceeding threefold and even 27 times their compensatory damages. In fraud cases the awards may include punitive damages (amount which punishes defendant) in addition to compensatory damages. Statutory pre-judgment and post-judgment interests may be added to the judgment amounts.
Illustrations of victims' legal victories, a few of which had been won by our firm:
The above-mentioned 27-times multipliers of the fraud victim's assets loss (cash, financial paper, products or services) reflect the power of American laws. Awards may reach billions of dollars, e.g. in 1999 the insureds were awarded after trial $1.186 billion for fraud by the State Farm Insurance Company contending that the inferior generic parts used for repairs were as good or better than the original manufacturer's parts.
One of the prevalent categories of corporate fraud is fraud on the corporation's clients or consumers. In consumer fraud cases, the victims of the same corporation's wrongful conduct join together for class action suits, which are used when a suit by one victim is financially unprofitable in view of the litigation costs exceeding that victim's potential recovery. Just one victim may represent (be named as a party in a suit and go through a discovery process) the whole class (of at least 20 members). Examples of consumer fraud cases:
A majority of law firms charge their clients for services rendered on an hourly basis. Some firms, including our firm, charge their clients on a contingency (a percentage of recovery) fee basis, and mainly in class action and bodily injury suits. Such firms are result-oriented and try to finish the litigation as soon as possible. Clients sometimes pay the costs of litigation as well. There are finance firms providing financial assistance to litigants in exchange for a percentage of the recovery. Contingency fee arrangements equalize the legal forces, remove the clients' fear of attorney fee billing and give opportunity to poor people to fight the Goliaths of the corporate world.
The U.S. courts and laws cover domestic and international corporate disputes, permit recoveries in excess of suffered damages, allow litigation to be conducted relatively inexpensively (on a contingency fee basis or through the litigation finance firms), and in general yield fair results.