by francine Hardaway on January 26, 2004

NEITHER A BORROWER NOR A LENDER BE � especially not a lender

Another friend of mine is caught in the American legal system. This isn�t the first guy to experience the latest swing of the pendulum away from civil liberties and toward undue punishment for actions that are not completely understood by or, worse yet, are misrepresented to the judge and the jury. Some federal prosecutors are more concerned with their won-loss records than in how they play the game.

Our system is based on the notion that the truth will emerge through competent advocacy. The system, however, relies on the integrity of its participants. Long ago prosecutors discovered it was very hard to gather the evidence needed to meet the �beyond a reasonable doubt� standard. Some of these prosecutors, who maybe didn�t fully understand the complexities of a situation, or maybe who just decided that they knew someone was guilty, have compromised their integrity to elevate their own reputations and secure convictions.

As a lender, Larry (I have changed all the names, for obvious reasons) is being blamed for something his former client did. At the end of January, if he isn�t granted a re-trial, he will likely go to prison, leaving a wife and three children destitute. All because he lent someone money and trusted the wrong people.

Larry Jacobs, the owner of Nameless Financial Services, had lent money to Ben Rogers. Nameless had a large number of borrowers at the time, and Rogers was one of them. Rogers was selling a benefits package, including a supposed credit card, through telemarketing.

At the time of the activities mentioned in Larry�s first trial, Nameless wasn�t lending Rogers new money. However, to get its money back, Nameless had an agreement to get paid a small amount of money from each sale made by Rogers.

Rogers probably was cheating consumers. Part of the package he offered often included a credit card or debit card that he probably couldn�t deliver.

To make certain it was paid back its loan, Nameless opened bank accounts to receive sales proceeds generated by Rogers. Nameless kept a small piece of the proceeds and sent the rest to Rogers.

This system didn�t work because irate consumers requested refunds. The account in which money was received was later debited in large amounts because of chargebacks. The result was that while Nameless should have had its position paid down considerably, it ended up around $400k more in the hole to Rogers.

By mid March 2000, it became clear that Rogers was cheating Nameless in many ways and was also probably cheating customers. At the advice of Nameless�s attorney, Nameless basically took over the business operation of Rogers, including his employees.

This new operation was called Newco. (Isn�t it always?) The credit card offer was eliminated in the short term. A new credit card offer was put in place a few months later. Larry struggled to right the company, while losing $1 million.

When Nameless took over the company, it found an operational and financial disaster. Necessary contractual relationships with third party vendors supplying benefits weren�t documented correctly. The sales effort wasn�t monitored well, allowing sloppy and even fraudulent sales. Many (not all) consumers probably didn�t get what they bargained for; fulfillment was slow, and the entire business stank.

Although Larry tried to straighten things out, Rogers was indicted, and so was Larry. The theme at the trial was that the Nameless� Newco was simply a continuation of what Rogers did — an operation established to cheat people.

Although the government knew it was not telling the whole truth, in its eagerness to get a conviction in the Rogers case, it also convicted Larry, saying he was the mastermind and, in fact, ran all aspects of this scheme.

Employees who were questioned by the government were not called as witnesses if their stories didn�t fit into the prosecution�s picture that Nameless Financial Services was the real culprit. If a potential witness stated that Larry did not commit a crime, then the government would scream and and threaten that witness. On one occasion, when a witness refused to implicate Larry, the Asst US Atty, threw a book on the meeting room table and walked out of the room.

In exchange for deals or immunity, witnesses perjured themselves. The judge and the jury were misled concerning the complexities of the situation. And Larry was convicted, to be sentenced January 30.

If this were the first time I had heard a story like this, I wouldn�t even involve myself, thinking the storyteller was biased. But this is the fourth time in a single year that a person I call a friend has been caught up like this in a legal nightmare that costs him (her) time, money, reputation, friends, and even health.

Something�s wrong in our legal system. I suspect it�s because we have come to measure a persons worth by their successes or victories; concepts like integrity and ethics played well in old Jimmie Stewart movies, but that was long ago. Today, they just don�t pay the bills.

It�s extremely difficult in an age of elaborate business structures, complex relationships, and high technology to guarantee that the prosecution, judge or jury will be competent to decide a man�s fate. When a prosecutor manipulates the system by distorting the truth in the name of justice, there is little hope that a judge and jury will reach a correct result. .

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