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.
Empress
realhousewifeofaiken 
I suppose many people get away with fraud. One of the keys to Taylor surviving is sticking with her story. The damage may already be done in that regard, as she has told many obvious lies that have been debunked by people searching on the internet. It may come down to whether or not any of those lies were told in her deposition. In any event, Bravo should distance themselves from her.
I found your blog through a mention at Q’s & have been reading daily ever since. Really enjoy your writing style & appreciate your studied approach versus the emotional component that too many bloggers inject into their work.
Like many others I’m fascinated by how adept Taylor has been in presenting herself so am curious to see where this all goes. That you incorporated the opinions of experts in the field(s) of law/finance helps to form a more cohesive picture from the bits & pieces of so much speculation circulating in the blogosphere.
Despite the rants from some about Taylor’s inconsistencies being her undoing, I see someone who has been underestimated & your post today further confirms that the legal system is not always the panacea we’d like it to be.
Thanks for providing another enjoyable place to get a clue.
And that is how world class scammers do it! Thank you for your work which gives us a lot of information. I enjoy the studied approach AND the emotional approach to HW blogging. they complement each other nicely.
Empress thank you for speaking to your outstanding contacts. My family was the victim of grifters, not exactly the Armstrong style of stealing but nontheless they were out and out thieves who didn’t pay their business or personal bills, confused things to obscure collection then sued people for millions to wring cash settlements out of them. Like the landlord that Russell sued.
The reason I mention this is because our attorneys said there isn’t much you can do to protect yourself when someone is willing to lie in the civil legal system. It is outrageous but there is no remedy for those who are abused. The money is all “disappeared”. Malicious prosecution is a nice theory but completely impractical.
I meant that Russell sued a landlord. The Armtrongs moved into mansion after claiming they would buy it. They tore it up to remodel. The owner/landlord tried to get rid of the Armstrongs. Russell sued the guy who wound up settling – he gave the Armstrongs $75,000 to move out.
The Armtrongs also stiffed the decorator who thought he was a personal friend of the Armstrongs.
http://www.realitytea.com/tag/russell-armstrong-bankruptcy/
According to Beverly Hills real-estate entrepreneur, Philip Elghanian, Russell and Taylor attempted to purchase a home from him through a lease to own type deal and the keys were turned over to them with the promise of payment. After months of waiting for a signed contract that was never returned he attempted to evict them and was immediately served with papers from the couple demanding he pay them $75,000 for renovations they made to the home, despite never being given permission to make said reservations.
Elghanian reports: “Taylor said, ‘My best friend is the decorator on this house. We’ve already paid him $50,000. We’ve already bought the wallpaper.’” According to Elghanian’s account, “My lawyer finally said to pay them because they’ll tie you up in court forever at a huge cost.”
The supposed decorator and best friend, John Wiltgen; well the Armstrongs defrauded him too – with Taylor at the helm! “They were telling people I was their designer but they never signed the contract I sent them. They picked out furniture and fabrics … but they never paid for any of it. They never paid me a dime [but] they did offer me some more MMR stock. And Taylor can’t say she didn’t know because she was standing right there smiling.” Oops, busted again, Tay-Tay.
Hi Adgirl,
Sorry for your family’s trouble. Nothing like trusting people who magically use the system to screw you over even more. America! F*ck yeah!!*
xo
V5
*intended as a reflection of our legal system.
Empress thank you for asking your friends what they think will be the outcome of Taylor’s legal problems. It just sickens me that she will get off scott free, and perhaps even carry on as a “star” of the RHOBH. She really had everything planned out, didn’t she? Russell’s suicide fit right in with her schemes. Will we ever know the full extent of her participation in Russell’s scams & even if she goaded him into suicide or was it murder….? How strange that Russell’s business partner committed suicide soon after Russell…it’s just all so convenient for Taylor.
I don’t think MMR will ever get any money out of her. Her “I was a victim too” schtick will more than likely work for her. The bank accounts, if there ever were any on the Cook Islands, were likely moved months ago to some other well hidden place.
Taylor is a pariah so I do believe her days are numbered as a Beverly Hills socialite. Her infamy will keep her out of the cherished spotlight that she so yearns for. Eerie to remember what Lisa said in season 1, that Taylor’s longing for belonging to the social elite of Beverly Hills was more dear to her than anything else.
Poor Kennedy!
Empress,
I am really hoping (perhaps you can ask your learned friends) re: Taylor’s specific claims of abuse (supporting her claim of duress) can be entered into the case? Like… can MMR ask for medical records showing fractured eye socket, etc.? Can they order an MRI of her head? I ask because unless I’m mistaken, an MRI will show trauma/surgery and that little electrode-to-the-brain-hookup shows past trauma. I *think* – not sure, that, say, if you fell off one of your babies, the “injury” would be “recorded,” even without a concussion. Etc. (As Taylor is now claiming that Russell slammed her head against the interior car window; most probably in an effort to explain why there were never any bruises on her.
Thanks,
V5
Duress falls into a category of what is known as affirmative defenses. Affirmative defenses are things like alibi, entrapment, insanity and self defense. They are different from a simple claim of “I didn’t do it” and, instead, they say “I did it, but…”.
When a defendant makes that claim, the burden of proof changes a little, and the defendant has to produce some sort of supporting and compelling evidence.
Given that Taylor has begun to tone down her rhetoric somewhat, I think that her attorney may already realize that the medical records just aren’t going to do the job for the physical abuse rants she has made in the past. I think they will try to make it into some sort of exaggeration on her part, to get others’ undivided attention.
As for the MRI question – only in very specific cases can someone be compelled to undergo any medical procedure – such as in a Worker’s Compensation claim.
Interestingly, Taylor showed “her” MRI films/Xrays? on ET – or some such show. My films are dated with my name/etc. on them. I really do think that Taylor’s big mistake was claiming specific abuse, and showing photographs and films (to get a quick payout from ET or whomever.)
It seems to me, that if those films/surgery, etc. – that she’s already made publicly available and received payment for – can’t be verified as “hers” – then she’s screwed. It would seem to support MMR’s case that she is conniving, etc. Whatnot. I hope so. 😦
V5,
Happy Birthday again. Hope you have some fun today.
FYI…Taylor can’t have a MRI now as she (according to her) has a medal plate
holding her eye socket together. MRI is a big magnet so she’s disqualified. Same thing
with a patient that has a total knee replacement. I have a pacemaker so I can’t either.
Taylors face would literally explode in a MRI machine.
I have to qualify my last sentence – “only in very specific cases can someone be compelled to undergo any medical procedure” – it should have included, “or any medical examination”. Sorry if I caused any confusion.
Aw Jeez, Guys –
Xray? Can she get an Xray? IT’S NOT FAIR!!!
No confusion, Emp. I guess the only recourse is if people decide to band together and sue Random House – or whoever is publishing her book. Drat!
V5 – LOL! and I was just getting over the visual Nancy gave me of Taylor’s head exploding during an MRI.
Empress – loving your logical explanation and sources cited for the legal aspects of the “Armstrong Famiy Business”. In my heart, I feel that Russell was driving that bus and Taylor did what she had to do to stay on that bus, for reasons only known to herself. The only outcome I am interested in is one that removes Taylor from our televisions. And I am hoping that she can adequately support her daughter – financially and emotionally.