Legal Aid used to fund franchise lawsuits

July 23, 2008

Now here are a couple of novel ideas from New Zealand.

Maria Slade at the ever-vigilant New Zealand Herald reports today that the 2,000 investors who have lost over $84-million in the Blue Chip franchise collapse are being encouraged to apply for legal aid to finance their attempts at getting thier money back.

Commerce Minister Lianne Dalziel says she is:

interested in helping Blue Chip investors find ways and means to access legal advice, particularly in this case where lack of funding is a barrier to legal recourse.

This is a first: I have never seen a publicly funded legal aid program used to fund a franchise legal action.

Not that surprising that the New Zealand government doesn’t want to touch the Blue Chip mess with a 10 foot pole. It’d raise too many questions about lax commercial regulation, I’d imagine.

  • Something about creating a very friendly feeding ground for massive consumer fraud, targeting Kiwi senior citizens.
  • International financial market laughingstock? Or some other alarmist conclusions.

The second is that the the lawyers and valuation firms are being scrutinized for their professional competence.

Law firm Ellis Law, together with barristers Paul Dale and Daniel Grove, are acting on behalf of several hundred of them. Activity includes taking legal action against solicitors over allegedly negligent advice they gave on the investments.

Valuers who provided allegedly inflated valuations on properties sold through the Blue Chip scheme are also in the lawyers’ sights.

But we’re missing a key ingredient to the Blue Chip fraud sausage: The lenders. Where are they in this fiasco? The last time I checked, there should be some type of regulation or lapdog self-regulation to cover these lenders.

  • Could it be the government is handing over the heads of the small fries [no-name lawyers and valuators] to avoid looking responsible for not regulating lenders sufficiently?
  • The Kiwi government knew or would have been reasonably been expected to know that lax or no lending regulations causes loss.
  • When the chickens come home to roost, the government blames everyone except themselves.

This fraud would have been impossible without a source of funds. I suspect the government was asleep at the switch as $ millions fed this humongous scam.

  1. Remember: Sue the SOBs with insurance, when you don’t have the cojones to sue the government and Her Majesty’s ministers.

Sue the enablers: lawyers, appraisers

July 9, 2008

Good news for the thousands of Kiwi real estate investors who have lost +$80 million from a tanked franchise system.

I like it. I like it a lot.

Sue the practicing attorneys with the greatest legal duty and insurance rather than the smarter, former one who is in Oz now.

  • Want to pretend fulfilling your fiduciary duty to a client?

Okay.

  • Let’s e-publish a list of the defending solictors and their law firms.

Auckland law firm Ellis Law is trying to take legal action against the lawyers and appraisers who helped convince senior citizens to sign up for some very high risk, fuzzy logic investments.

Ellis Law principal Brian Ellis said there were a number of concerns surrounding the solicitors’ actions, including:

  • The size of the deposits investors were required to make.
  • The immediate release of investors’ deposits.
  • The lack of explanation in the documentation about who actually owned the property and who was developing it.

But some things stay the Same: And what is the government doing when asked by Ellis and Paul Dale to help centralize and co-ordinate claims?

Other than acknowledging the lawyers’ request the Government has not yet responded.

There is still lots of work to do.

Ellis said many affected Blue Chip investors could not afford the $2000 retainer the lawyers were charging. “We think there’s a large number who have done nothing.”

He knew of people in their 70s and 80s who had no idea what to do, and who were struggling to even write a straightforward narrative of their situation.

Anyone that waits for any western government to help out when the inevitable and predictable fraud sausage blows up, is a damn fool.


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