Possible Fraud?

[blake22]

What is the name of your state (only U.S. law)? GA

On January 15,2014 my father passed away from cancer. My mother asked me if i would help with the cost of his funeral, which I agreed to help.

I took a loan out on my 401k of $75,000. I gave that money to my mother to cover internment, plot, casket, all funeral expenses and to help her pay her bills during the rough times. In return my mother wrote a promissary note that I could have her stock (IBM 100 shares, Yahoo 100 shares, Walmart 200 share, Coca Cola 300 shares, and my fathers old bank stocks 100 shares).

My sister was incarcerated and did not come to the funeral. Once released (April 2014), my sister moved from Texas to Georgia and into our mother's house.

Earlier this week, (July 2014) My mother & sister went away for a week, my wife and I paid for my mother to go on a cruise. My sister was to pay her own way. I stopped by my mother's house to get her mail, and take her trash to the curb. I noticed my sister had gotten mail from a stock trader. Curious, I checked my mother's stock and lo-and-behold Im not listed on it, but my sister is. I also noticed that some of the stock, the bank stocks in particular have been listed as Paid to my XXXXX my sister.

My questions are, is a promissary note valid in court? Can my mother or sister be arrested for fraud? (Not that I want that, just worried). What are my options?

 

[latigo]

What is the name of your state (only U.S. law)? GA

On January 15,2014 my father passed away from cancer. My mother asked me if i would help with the cost of his funeral, which I agreed to help.

I took a loan out on my 401k of $75,000. I gave that money to my mother to cover internment, plot, casket, all funeral expenses and to help her pay her bills during the rough times. In return my mother wrote a promissary [sic] note that I could have her stock (IBM 100 shares, Yahoo 100 shares, Walmart 200 share, Coca Cola 300 shares, and my fathers old bank stocks 100 shares).

My sister was incarcerated and did not come to the funeral. Once released (April 2014), my sister moved from Texas to Georgia and into our mother's house.

Earlier this week, (July 2014) My mother & sister went away for a week, my wife and I paid for my mother to go on a cruise. My sister was to pay her own way. I stopped by my mother's house to get her mail, and take her trash to the curb. I noticed my sister had gotten mail from a stock trader. Curious, I checked my mother's stock and lo-and-behold Im not listed on it, but my sister is. I also noticed that some of the stock, the bank stocks in particular have been listed as Paid to my XXXXX my sister.

My questions are, is a promissary [sic] note valid in court? Can my mother or sister be arrested for fraud? (Not that I want that, just worried). What are my options?

No, your sister has definitely not defrauded you. As between you and your sibling none of the elements of fraud are evidenced.

As far as your mother is concerned . . . possibly.

That is, if she purposely induced you to give her the $75K on the false representation that she owned and was thus capable of pledging the mentioned securities as collateral for the repayment of the $75K . . .

And you had no reason to doubt that she owned the securities. And that you relied on her representations. And you had the right to rely on them. And you would not have forked over the money except for those representation.

HOWEVER, there is an overriding question here. Which is, was in fact an enforceable loan and security agreement created? And that appears very much in doubt.

To learn whether or not you need to take your self-created paper work, i. e., what you refer to as a "promissary note", to your attorney.

 

[tranquility]

I completely agree with latigo. Sister has not committed fraud. (At least towards the OP.) Mom may have; if, the note is considered a security agreement. I think it unlikely as well. The OP did not mention anything about a UCC-1 filing and it seems doubtful any security on the stock was had. If not, mom cannot be accused of fraud either as she could get the stock if the repayment terms of the note are breached. (At least in theory.)

I suspect that if the OP was careful enough to get a copy of a valid note over the internet or some source, the promissory note may be valid against the mother. What the terms are there would be instructive on what the OP could sue for.

 

[GaAtty]

GaAtty

What is the name of your state (only U.S. law)? GA

On January 15,2014 my father passed away from cancer. My mother asked me if i would help with the cost of his funeral, which I agreed to help.

I took a loan out on my 401k of $75,000. I gave that money to my mother to cover internment, plot, casket, all funeral expenses and to help her pay her bills during the rough times. In return my mother wrote a promissary note that I could have her stock (IBM 100 shares, Yahoo 100 shares, Walmart 200 share, Coca Cola 300 shares, and my fathers old bank stocks 100 shares).

My sister was incarcerated and did not come to the funeral. Once released (April 2014), my sister moved from Texas to Georgia and into our mother's house.

Earlier this week, (July 2014) My mother & sister went away for a week, my wife and I paid for my mother to go on a cruise. My sister was to pay her own way. I stopped by my mother's house to get her mail, and take her trash to the curb. I noticed my sister had gotten mail from a stock trader. Curious, I checked my mother's stock and lo-and-behold Im not listed on it, but my sister is. I also noticed that some of the stock, the bank stocks in particular have been listed as Paid to my XXXXX my sister.

My questions are, is a promissary note valid in court? Can my mother or sister be arrested for fraud? (Not that I want that, just worried). What are my options?

Maybe criminal fraud if you could show that at the time she wrote the promissory note that she had no intention of repaying you. That might be difficult. On the other hand, there are some things that you skip over. If your father's estate had any assets, the funeral and associated expenses were supposed to be paid out of the estate assets. In Georgia law, funeral expenses are second in priority on the list of expenses which must be paid by the estate if there are any assets in the estate. If the bank stocks were really owned 100% by him on the date of his death, then those stocks were a part of his estate. Therefore, the estate had at least those stocks as an asset. If you paid a bill on behalf of the estate and the estate had assets, you should be reimbursed for the funeral expenses from the estate, not from your mom. Those stocks did not become the property of your mother to dispose of, they should have gone into the estate. If they were jointly owned, then that is a different matter. So a good question is who is appointed by the court to run the estate? It doesn't sound like anyone is at this time. For the remainder that you lent your mom, promissory notes are enforceable in Georgia, and you may have to file a lawsuit to enforce it if an attorney could not get your mom to pay any other way. Whether your promissory note is enforceable depends somewhat on how it was written, but there are other ways to collect by civil action assuming that you have good evidence.

 

[latigo]

Maybe criminal fraud if you could show that at the time she wrote the promissory note that she had no intention of repaying you. (?)

Excuse me, but can you offer up any case law out of Georgia or any other state wherein the maker of promissory note has been found guilty of "criminal fraud" on the mere evidence that the maker had "no intention of repayment"? Or in any other debtor/creditor relationship?

I suspect you will have difficulty in doing so. And an equal problem providing legal support for your "theory" that the OP would have a claim against his father's estate were his mother to have used any of the proceeds of the $75K loan in the payment of administrative expenses. A "theory" which you have expressed as follows:

"If you paid a bill on behalf of the estate and the estate had assets, you should be reimbursed for the funeral expenses from the estate, not from your mom."

Then you mysteriously add:

"For the 'remainder' that you lent your mom . . . . . you may have to file a lawsuit to enforce it . . . . "

____________

What you are saying here is that a lender can be limited to collecting repayment from the borrower to the extent that the proceeds of the loan are used for some specific purpose in which the recipient must make restitution. For example: The borrower in turn becomes a lender by loaning a portion of the original loan proceeds to another borrower.

In that example the extension of your "legal theory" would require the original lender to collect repayment from two sources. One, from the second borrower and secondly, the "remainder" from the original borrower.

And please pardon me for saying so, but that ain't the law in Georgia or anywhere else in the business world!

 

[cbg]

I have a question.

Did you take a loan against your 401(k) or a hardship withdrawal? They are not the same thing.

 

[latigo]

I have a question.

Did you take a loan against your 401(k) or a hardship withdrawal? They are not the same thing.

But what would it have to do with the transaction between OP and mom?

On the other hand if one subscribes to "GaAtty's" theory, the lender couldn't collect the $75K 401(k) loan from the OP because he in turn loaned it to his mother!

Also, according to "GaAtty", if either the OP or his mom had "no intention" of repaying the money, they could be arrested, handcuffed, tried and convicted of "criminal fraud" and trucked off to prison.

Apparently things are as "peachy" down there in Georgia as we're led to believe.