On Wednesday, in Sun Nat'l Bank v. Visci, 2011 Google Scholar 7027591867709304438 (N.J. App.Div. 2011), the Appellate Division of the New Jersey Superior Court reinstated claims by Sun National Bank against a law firm and its sole owner involving fraudulent transfers and civil conspiracy. In the case, an attorney accepted a wire of funds into his trust account from his client which, as instructed by his client, he used to settle a lawsuit. He did not inquire of his client the source of the funds. As it turns out, the funds were loaned by Sun National Bank to a business entity related to the client, and were loaned on the condition that they be used to purchase business equipment. According to the bank, the funds never would have been loaned if it were known that they were to be used to pay a lawsuit settlement.
This is scary stuff for obvious reasons. Unfortunately, at least in New Jersey, this seems to mean that attorneys, title companies, and other agents which hold funds on behalf of clients will need to start getting documentation regarding the source of those funds if they want to play it safe. Give us a call at 609-568-0109 if you would like to discuss further.
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