If you get a “Statement” from UST Development, Inc.—an invoice like this one:
(from here)—do not pay it. It’s a scam. You probably don’t owe UST Development any money because they haven’t provided you with any “preventative maintenance.”
Ken at Popehat got the same statement; he didn’t pay it, but he’s calling UST Development (and likely its principles, David Bell and Branden Tomeric Bell) to the attention of federal authorities who prosecute fraud cases.
This looks like a solid federal mail-fraud case: UST Development is using the mail to try to obtain money by false pretenses. Nail down who was involved in the conspiracy, count the number of letters sent, and calculate a guidelines number under 2B1.1.
Ken discusses briefly why the scammers’ apparent defense (that the statement says that it is not a statement for services rendered “but for preventative maintenance”) doesn’t work.
When Ken got the fraudulent invoice, he emailed the registered agent for service of process of UST Development. Ken didn’t reveal the registered agent’s name, but it’s a public record and not hard to find: the registered agent is Dennis R. Baranowski of Rancho Cucamonga, California.
Ken wrote to the registered agent, in part:
I Googled today, Mr. —, and I observed multiple reports on sites like ripoffreport.com and scaminformer.com and scamchasers.com suggesting that other businesses had gotten invoices from [Scammer], Inc. for services not actually rendered.
What is Dennis Baranowski’s duty now that Ken has called it to his attention that UST Development is sending out fraudulent invoices?
If Baranowski is just the registered agent for UST Development, and does not represent them, he has no duty that I can see under the disciplinary rules to do anything about UST Development’s fraud. Registered agents are not liable in their capacity as registered agents for the acts of corporations.
If Baranowski is just the registered agent for UST Development and does not represent the corporation or either David Bell or Branden Bell, he may consider that he has a moral duty to stop enabling UST Development’s scam, or even to try to stop the corporation, which has taken advantage of his services as registered agent, from defrauding people further. He might decide—as a matter of conscience—to assist Ken in shutting down the scam. In that circumstance, there is no privilege protecting his communications with UST Development.
If Baranowski represents UST Development or the Bells, California has a strong rule of privilege protecting their confidential information. A California lawyer must “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” There is, however, as at common law, a “crime-fraud exception” to the privilege: “There is no privilege under this article if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit a crime or a fraud.” So Baranowski may find himself in a privilege battle over his communications with UST (the crime-fraud exception in California applies to privileged communications but not to work product).
It is almost unfathomable that any lawyer vetted UST Development’s scam letter. But not inconceivable: what you or I might immediately recognize as a scam, a lawyer in other circumstances might think is okay. What circumstances? Desperation and addiction come immediately to mind. In the unlikely event that Baranowski counseled the company to send these “statements,” or even approved their sending, he’s going to have some explaining to do. A lawyer may not, of course, counsel a client to break the law. Not only is it a violation of the rules, but it also subjects the lawyer to possible criminal liability—for example liability for a mail-fraud conspiracy. A bar card is not carte blanche to conspire.
A conspirator’s liability for a criminal conspiracy continues until the conspiracy ends, or until the conspirator withdraws from the conspiracy. “Withdrawal” is not just walking away, but requires some affirmative action to defeat or disavow the conspiracy’s purpose. One may withdraw by doing acts which are inconsistent with the purpose of the conspiracy and by making reasonable efforts to tell the co-conspirators about those acts. When a person becomes involved in a conspiracy, he’s all in—responsible for the bad acts of the conspiracy that were foreseeable when he joined—or he’s all out.