Question for attorneys/police

[K. Roman]

I was scammed by a friend of mine about 4 months ago. He told me he needed 7500 dollars to print up cd's he had distribution, here is the break-down

[ $7,500. investment to finance the manufacture of 8,000 units(CDs) of
"Sade Blends".
The profits of which are then split 50/50 with half going to
Look Records; half going to Paul Nice.
The CDs manufacture at a cost of just under $1. per unit (accounting
for artwork, casing, etc. - set up costs have already been accounted
for on the initial run).
The wholesale price for "Sade Blends" is $6. per unit., leaving around
$5. profit per unit.
8,000 units sold comes out to $40,000. total profit.
Half of that / your share comes out to $20,000 profit on $7,500 invested.

The distributor terms are as follows:
TRC: 60 Days (payment: 15th of the month)
Fat Beats: 45 Days (payment: 15th of the month)
Revolver: 60 Days (payment: 15th of the month)

Your first payment would commence on the day according to each
distributor's terms.
For example, if TRC receives their shippment on August 5th, your first
check from TRC would be cut on October 15th.
All checks would be included with an itemized statement accounting for
all sales during that period. ]

I never heard from him again. I called TRC, a distributor, and they told me that he asked them to fake some P.O.s for him that made it look like he sold thousands to them. They told him no.

I am in SF, he is in Poughkeepsie, NY.

He changed his phone number, but he still checks his myspace page daily.
I contacted him there but he never replies.

Anyone know what I can do? It's so insulting. He's a music producer, very talented, I've worked with him before, and so have friends/colleagues of mine.
I can't believe he scammed someone who trusted him. To add insult to injury, I found out that he still is DJ'ing around in NY. How brazen.

Any cops out here in Poughkeepsie? This is a big financial loss for me.

[Porsche-O-Phile]

Why haven't you called the D.A.'s office yet? Or a NY-bar attorney?

[Dueller]

I trust this deal was in writing? If not the statute of frauds is gonna be a problem...

[Mo_Gearhead]

So...ya want I should send a couple of goons up to see dis guy? Maybe crack a few heads or what?

PM me.

Tony S.

[cantdrv55]

With friends like those...

[DavidI]

From the limited information, this appears to be a civil case. You may want to speak to an attorney, but that may cost you about the same as your loss.

The guy is a scumbag, David

[the]

Originally Posted by Dueller

I trust this deal was in writing? If not the statute of frauds is gonna be a problem...

Why?

As to the police, I agree with David. They are going to view this as a civil/business dispute and won't get involved.

[Dueller]

Originally Posted by the

Why?

As to the police, I agree with David. They are going to view this as a civil/business dispute and won't get involved.

The statute of frauds is law that governs certain transactions. For example, any contract for the sale of land is required to be in writing to be enforceable. Similarly, in my state any contract involving more than $500 is required to be in writing. The idea is that substantial transactions are required to be in writing to prevent one party from committing a fraud on another.

In other words, oral contracts aren't worth the paper they're NOT written on.

[the]

Originally Posted by Dueller

The statute of frauds is law that governs certain transactions. For example, any contract for the sale of land is required to be in writing to be enforceable. Similarly, in my state any contract involving more than $500 is required to be in writing. The idea is that substantial transactions are required to be in writing to prevent one party from committing a fraud on another.

In other words, oral contracts aren't worth the paper they're NOT written on.

Why would such a statute govern this guy getting ripped off for $7500?

There is no other, non-contract cause of action that he could assert to recover his money? Fraud? Common counts? Money had and received? Nothing like that?

People can just defraud others out of $7500 like in this case, keep the money, and as long as they made sure there was no written contract, they can just say:



Hard to believe that under the facts given by K. Roman, he would have no legal theory upon which to recover his $7500. But you're the fancy lawyer.

[Dueller]

Colorado law (there are several SOF's...I just randomly copied this)

TITLE 38 PROPERTY - REAL AND PERSONAL
ARTICLE 10 Frauds - Statute of Frauds
38-10-108 Contracts for interests in land - must be written.

--------------------------------------------------------------------------------
38-10-108. Contracts for interests in land - must be written.
Every contract for the leasing for a longer period than one year or for the sale of any lands or any interest in lands is void unless the contract or some note or memorandum thereof expressing the consideration is in writing and subscribed by the party by whom the lease or sale is to be made.

[Dueller]

Originally Posted by the

Why would such a statute govern this guy getting ripped off for $7500?

There is no other, non-contract cause of action that he could assert to recover his money? Fraud? Common counts? Money had and received? Nothing like that?


Hard to believe that under the facts given by K. Roman, he would have no legal theory upon which to recover his $7500. But you're the fancy lawyer.

Oh there are other civil theories...conversion comes to mind. SOF is generally a defense to contract disputes.

The idea behind SOF's is to memorialize substantial transactions. So what if the guy comes into court and says "This was a gift because we were old friends and I was on hard times. If it was a business deal why didn't he insist on something in writing?"

I'd need a lot more facts before I could comment further. Was it a loan? A speculative investment? Where was the contract entered into? Which state has jurisdiction (choice of law problem)?



And just WHO are you calling fancy?

[Gogar]

I think if it's a civil matter, perhaps you should spend $300 or use up some miles and pay him an unannounced visit.

If you didn't draw up any papers or anything, well . . . . call me. I've got a great business idea!

[K. Roman]

Paul, the guy in question, had told me that he sold these CDs to distributors. But he needed the funds to manufacture. I trusted him, because we've done biz before, and also he's done biz with a friend of mine. He is somewhat known as a good producer of music in our community.

The thing is, I want to pay him a "visit" but I'm not willing to pay for a ticket to Poughkeepsie, and I don't want to go to jail for the pleasure of smacking him around. And I keep thinking about what happened when OJ tried to kidnap someone to get his stuff back!

The transaction was done through email. That supposedly can hold up as a contract, although I don't know how to go about doing this across state lines.

[the]

Originally Posted by Dueller

Colorado law (there are several SOF's...I just randomly copied this)

TITLE 38 PROPERTY - REAL AND PERSONAL
ARTICLE 10 Frauds - Statute of Frauds
38-10-108 Contracts for interests in land - must be written.

--------------------------------------------------------------------------------
38-10-108. Contracts for interests in land - must be written.
Every contract for the leasing for a longer period than one year or for the sale of any lands or any interest in lands is void unless the contract or some note or memorandum thereof expressing the consideration is in writing and subscribed by the party by whom the lease or sale is to be made.

So if the Statute of Frauds operates to make the agreement between K. Roman and his ex-friend "void," the ex-friend gets to simply keep the $7500?

[Gogar]

I'm not saying you should smack him around. But, if in his physical presence, you feel that you would "smack him around", then I guess my suggestion isn't the best one.

[Dueller]

Originally Posted by the

So if the Statute of Frauds operates to make the agreement between K. Roman and his ex-friend "void," the ex-friend gets to simply keep the $7500?

Not necessarily. The SOF in simple terms is a defense against the enforcement of a contract. The emails he refers to may be enough to defeat the SOF defense. Depends on state law and where exactly the contract was to be performed or whether he can invoke long arm statutes to drag him to California. He may be able to recover under a tort theory of conversion, unjust enrichment, fraud in the inducement, etc.

On the other hand, what was their relationship? Partners? Venture capitalist/entrepreneur? Lender/borrower? Was there a contingency if 8,000 CD's weren't sold? In the event there was a suit against them for copyright infringement, who was liable? Lots of things control how their relationship is defined....

[Dueller]

Originally Posted by K. Roman

The transaction was done through email. That supposedly can hold up as a contract, although I don't know how to go about doing this across state lines.

Given the (relatively) small amount involved, I'd sue his ass in California, serve him by certified mail, get a court date and a default judgment if he didn't show up. If he does show let him argue jurisdiction is improper. Once you have your judgment in place, enroll it in NY. Find out where he banks or has property and get a writ of garnishment. Likely he's judgment proof but ya never know.

[the]

OK, enough of the mumbo jumbo. There is not going to be any defense based on statutes of fraud, because he can't defend against the suit by voiding the contract, but then still claim a right to keep the $7500. If a judge allows him to void the contract with a defense of statute of frauds, the judge will also order him to give you back the $7500 (to void the contract would be to put the parties in the same position they would have been in had the contract not been entered).

But in the real world, that's neither here nor there, because there is never going to be a judicial determination on the defense of statute of frauds on a $7500 claim.

Sorry to hear about your loss, and that the $7500 is a significant financial loss to you. The reality is, you are very likely going to have a very uphill battle ever collecting a penny from this guy.

So you don't want to dig your hole deeper, i.e., throw good money after bad.

Putting myself in your shoes, this is what I would do:

1. First, is the guy collectible, or is just a total fly-by night flake? I.e., does he own a house, have any roots anywhere, still under the control of his parents, etc.? I'm going to assume the worst: He owns nothing, is an adult, is fairly transient, and is a total flake.

2. The lack of a written contract is most relevant b/c without a written contract, with an attorney's fee provision, in most states, you can't recover your attorneys' fees, even if you prevail. Therefore, given the amount and the likely inability to recover attorneys fees (both to get an award, and to be able to enforce it if you could), hiring an attorney is not going to be worth it. You won't find any attorney to take it on a contingency fee (amt is too small, but if you find one, even one that will take 50% of the recovery, jump on it!), and on an hourly arrangement, your $7500 loss will quickly escalate to a $10,000+++ loss.

I usually have an attorney or two kicking around, and if someone stiffed me for $7500, I'd have them write a demand letter, threatening to sue. But that will cost you at least $500 in SF (2 hours x $250 if you got out cheap).

You know your friend, and are in the best position to guess if such an attorney demand letter will have any affect on him. I've had mixed results, sometimes people come to the table, sometimes they ignore it. You have to decide if you think the $500 will be well spent, or a waste of money.

3. If you decide not to have an atty send a demand letter, or if he ignores the letter, I'd agree that you should sue him in small claims court. The thing you will have to be careful with is the jurisdiction issue. The forms will have specific questions relating to jurisdiction - where he lives, where the contract was made or to be performed, etc. It sounds to me like you can say the contract was entered into in San Francisco, was to be performed in SF, etc. If you have a California address for him, you might want to use that, too. If on the face of the form, there is no basis for jurisdiction shown, the court may summarily toss your case, even if he doesn't show.

I don't know how you can serve him, but make sure you find out. I doubt you can serve by mail. Certified mail, maybe, but probably only if he signs some kind of receipt. He likely won't sign for it. The small claims paperwork should explain the various ways you can get it done. Be sure to follow it and serve in an authorized way.

This is worth doing, because it is very low cost. Probably can get it filed, and served, for under $100.

If you serve him, hopefully that brings him to the table and you can work out a settlement where you get at least some of your money back. If he ignores it, and you can get a default and a default judgment, then you have to consider what you want to do after that point.

Sorry to hear your "friend" did this to you, but I think that from a "psychological" standpoint, you need to start accepting that you made a mistake in trusting him, too a big risk, and the money was likely "gone" the second you handed it to him. People have paid a lot more to learn lessons, it could have been a lot worse, and in the grand scheme of things, you'll be ok. Do the steps you can do without throwing significant amounts of money at it, but mentally start preparing to accept the loss and move on, as hard as that may be.

[the]

Originally Posted by K. Roman

This is a big financial loss for me.

Sheesh, I thought I was helping out some poor starving student, then I read your list of cars that you own.

If you are driving a 2001 twin turbo, and $7500 is a "big financial loss" to you, something that I can't understand is going on. I know people to whom $7500 would be a big financial loss, and I know people driving late model Porsche twin turbos, but they are never the same person!

Good luck, anyways.

[HardDrive]

Post his name and address.