I badgered a couple of friends for their perspectives on the civil suit in which Taylor is currently embroiled. I have known both of these gentlemen for decades, and I value their knowledge, expertise and experience. One of them is a retired FBI Agent with degrees in law and accounting. His career involved fraud, money laundering and organized crime, including an undercover assignment within the Gambino family. My other friend, also retired, spent twenty five years as a partner in a law firm, specializing in corporate law.
Both of them were kind and patient (and good-humored) enough to listen to my Armstrong theories and hypotheticals, and I filled a good part of a legal pad with notes. I also will offer a disclaimer before I go any further. Civil suits and trials are fluid things. They involve actions between opposing counsel that mimic chess moves, with one side trying to out think the other. So given that, I know that I won’t be placing any bets on an outcome.
Civil Suit Versus Criminal Prosecution
The fraud that has been alleged against the Armstrongs by MMR and other investors is considered small potatoes. It, in no way, comes close to the kind of Ponzi scheme run by Bernie Madoff. The FBI simply does not have the manpower or resources to track every scammer looking to take our money. Madoff’s tentacles reached tens of thousands of people and billions of dollars. Russell and Taylor probably managed to reap somewhere in the tens of millions – chump change as far as the Feds are concerned. The relatively small number of people defrauded also failed to meet the threshold usually required for a federal investigation.
Bernie Madoff stole money from important charitable organizations, and nearly ruined state and local pension plans. His scheme had international implications. He also managed to fool some very influential people, a fact, although while not fair, does carry more weight when the FBI chooses, or is told, to open an investigation.
Given the very same reasons, even an investigation by the State of California is not likely. A fraud division of a State Attorney General’s office simply could not keep up with every scam that comes along, every day. This is a State that is letting people who have committed far more onerous deeds out of prison.
A Duress Defense
Before Russell died, a settlement agreement was in the works between MMR and the Armstrongs. It was actually very close to reaching an end, until the Armstrongs failed to fulfill their part of the bargain. After Russell’s passing, the original complaint was amended, naming Taylor and their company as the sole defendants. Her attorneys responded, claiming a defense of duress. From a defense perspective, this was a smart move. On the other hand, they really didn’t have anything else.
Her claims have been discussed over and over, on social networks, by bloggers, by her castmates and by the media. Her statements have been increasingly more guarded and open-ended, leaving much to interpretation. While Taylor proclaims that she has found her voice, she apparently has also hired voice coaches.
Every word and move is being very carefully calculated by attorneys, agents, advisers and assistants. She has hired a top-tier law firm. The only thing she needs to focus on now is staying on script. She has already been deposed, so whatever she says from now on will depend on what she said then. Taylor needs to convince the Court that Russell forced her to participate in these fraudulent activities. She needs to maintain that she feared for her life and the life of her child. Russell needs to be made out to be the mastermind and, well, who is there to offer evidence otherwise?
A Settlement Agreement
Taylor needs to hang on to the single, working mom story. She will have to, again, make out Russell to be the one who controlled everything. That would include how the money was handled, by whom and where it ended up.
There could be some type of settlement agreement wherein the plaintiffs would receive small amounts over time, if and when Taylor is actually earning any money, also from her Bravo salary and other business venture(s). In legalese, it is “an assignment of future earnings to satisfy a bona fide debt”. MMR’s legal team has filed a motion for a Right to Attach order, which would reserve any of her assets in the eventuality of a judgment in their favor. It is small comfort for the victims of the Armstrongs, but it is better than nothing.
Right now, there is nothing to be gained by Taylor entering into settlement talks. But what if she convinces the Court that her participation in the fraud was coerced, and that she did what she did out of fear, threat and intimidation? What if she actually wins? If her claim of duress succeeds, she will no longer be a party to the suit. Only the Nuway Digital Systems, Inc. and the Armstrong Family Trust would remain. Any money Taylor has made or will make in the future, through legitimate means, would be hers – just another victim of Russell Armstrong.
The Offshore Account(s)
Last week, I posted some things about offshore accounts from my own research. Asking the two men I spoke with about it, I was actually left a little more disheartened and somewhat more confused. There is nothing simple about these accounts. There are as many ways to hide money as there are people looking for ways to do so. It is a Herculean task for even Federal investigators, much less plaintiffs in a breach of contract dispute.
The team from MMR seem convinced that there is a treasure chest in the Cook Islands labelled “Armstrong Family Trust”. Their insistence upon that fact raises the idea that they probably have some evidence which pointed them there, and that was probably discovered through what is known as a “debtor’s examination”. I hope, for their sake, they are right.
However, it is a possibility that they may be putting all of their eggs in one basket. That is only one account in one bank on one island. MMR may be discounting the fact that there are many businesses, many banks, many countries and many players. Investment money could be scattered to the four corners of the Earth by now. Russell, Taylor and some kindred spirits had been at this long before MMR discovered the fraud. There is no telling where all of the money may be. As I mentioned in my earlier post, the only bright spot may lie in Taylor’s inability to access these funds, either due to the corruption of the bankers, the politicians or any number of silent and untrustworthy partners.
The Madoff investigation was huge in terms of scope, dollars, victims and time. The wrath and resources of every type of investigative agency descended on him and his family. To this day they are still looking for accounts. The remaining members of his family maintain that they know nothing about the fraud or the whereabouts of investors’ funds. To the ire of many, Ruth Madoff was given a settlement by the government appointed trustees – a sort of prison widow’s pension. If she spends no more than $125,000 per year, it will last until she is 100 years old. It may not seem fair, but in the eyes of the law and the absence of any evidence to the contrary, she is an innocent woman – just another victim of Bernie Madoff.
In the end, I am left with more more information but no concrete answers. It is like going down the rabbit hole. The case will play itself out and we will follow it. The trial, if it should come to that, doesn’t even begin until July – barring a motion for continuance.