Are you looking to recoup lost funds from an online scam or Ponzi scheme? You may wonder what third-party liability is and how it can benefit you. Essentially, third-party liability refers to holding businesses or individuals accountable for enabling or extending fraudulent activity, even if they weren’t actively involved in the fraud.

Collecting money owed from fraudsters, scammers, or defendants can be difficult because they may have already spent or hidden the money. This is where third-party liability comes in handy. In Pennsylvania, there is a good establishment of this legal theory, which has been used in cases like Bernie Madoff and the FTX crypto fraud case.

Aiding and abetting fraud is now an official civil liability, meaning that businesses that are willfully blind can be held responsible for damages to victims, including punitive damages. This means that if a bank or any large banking institution allows a fraudster to open an account to deposit stolen money from victims and they do something negligent in the process, such as neglecting to file SAR reports or failing to monitor withdrawals, the bank can be held liable for the fraudster’s activities, even if they weren’t actively involved in the fraud.

It’s important to note that third-party liability is a legal theory and strategy many attorneys have used to recover fraud losses for victims. The first step in using this strategy is identifying those third parties, which requires a thorough investigation. Even if a third party wasn’t actively involved in the fraud, they could be held accountable if they enabled or extended it in any way.

Third parties can be anyone, including employees or principals of a company. It’s important to use third-party liability when trying to recover losses because if you only sue the company and they go out of business or dissolves with no money, you won’t be able to collect your judgment. However, if the principals were actively involved or knew about the fraud, liability can extend to them, and that’s where the money may be.

Using third-party liability has always been recommended and is now specifically established in case law. If you have a loss or fraud, even if you have a judgment against the person, look for opportunities to collect from third parties who may have liability. This can help you recover all or part of your judgment.

In conclusion, third-party liability can be valuable in recovering losses from fraud or judgments. Look for opportunities to hold third parties accountable for enabling or extending fraudulent activity, and don’t hesitate to seek legal advice if you need it. 

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