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    Re: Abandoned in Dubai

    Porsche-Jeck:

    Imagine how many of these towers you'd need in the US to lock all those away who aren't able to pay off their mortgages Smiley

    schuldturm.jpg

     

    Imagine how many of these towers you would need to lock away all the bankers, loan officers, and financial engineers who whipped up these financial schemes, made liar loans to unscrupulous people, and hyper inflated the mortgage and real estate markets.

    Oh wait, none of those parties went to jail.


    Re: Abandoned in Dubai

    I prepared a rather long post (of which I lost a big part when trying to post), so for those not interested reading, please feel free to skip it.

    Hi Easy_rider911,

    It happens to be that I am a lawyer too Smiley (small world) and I agree with your analysis (the first one, and the second one). Also, I do not take offense in stating I do not know how the legal system works Smiley I typed my post in a rush and I do think my point did not well came across due to this...

    I just tried to make an argument that it is possible to look at it from another side. Being very well aware of the difference between civil and criminal aspects of law, you might agree that, at the end of the day, such difference can be a thin line (like Porsche_Jeck indicated that Germany along time ago apparently had a similar system).

    It is a bunch of politicians (and broader society) that decide what is a criminal offense. Going back to a Belgian example: adultery used to be a criminal offense (I suppose it was considered so morally wrong and caused "damage" to society as a whole) whilst now it is simple something between the people involved (albeit with an impact on the civil level for divorce). Other example (thinking back of sociology in law school): apparently, there once was a day and age where suicide was a criminal offense, so that the bodies of dead people were thrown out of the window and dragged through the village Smiley

    I was rather referring to the concept (where it could be considered that debt is criminal offense) than the actual law we have in the Western world. In other words, before going into an analysis of the consequences and the differences between civil and criminal liabilities, one might consider as a first step the determination of what is criminal and/or civil... I was just trying to make a point that, given adultery or suicide were once considered criminal offenses, it should not necessarily come as a shock that not paying back debt is (or was) considered a criminal offense.

    I am thinking now of other things where you could wonder what the criminal relevance is Smiley 

    I hope the above makes clear my point and gets me back some credit as a lawyer ? If not, I will stick to car related posts (such as me going to Frankfurt already next week Friday and doing a road trip in the following weekend for 1200 km).

    Last side note: during my law studies, I tagged along with a bailiff. You would be surprised to see how many people in Belgium end up in poverty because they cannot pay back their debt (last cell phone, big LCD TV, leased BMW, ...). I am not necessarily in favor of punishing this (which also turns out to be illegal apparently), but current situation is not wonderful either.

    Take care!

    Porsche_lover


    Re: Abandoned in Dubai

     OK, ... two questions for all the lawyers:

    1)  Please explain debtors' prison

    2)  Please explain Bernie Madoff


    --

    Mike

    2005 Carrera GT + 2008 Tesla Roadster +2010 Panamera Turbo + 2001 BMW Z8 + 1972 BMW 3.0 CSi +2009 Bentley Arnage T


    Re: Abandoned in Dubai

    W8MM:

     OK, ... two questions for all the lawyers:

    1)  Please explain debtors' prison

    2)  Please explain Bernie Madoff


    --

    Mike

    2005 Carrera GT + 2008 Tesla Roadster +2010 Panamera Turbo + 2001 BMW Z8 + 1972 BMW 3.0 CSi +2009 Bentley Arnage T

     

    Let's have a quick try Smiley
     

    1) Debtor's prison

    The government as lawmaker decides what is a criminal offense. In certain legal systems (such as the one applicable to Dubai or like it used to be apparently a long time ago), not paying back debt is considered a criminal offense.

    As a consequence, you do not only have the civil liability of paying back the debt but you also get punished (and most likely not by a fine as you cannot pay it, but you go to jail). In comparison with e.g. murder, you do not only incur civil liability (like paying damanges to the family that is left behind), but also you get prosecuted and go to jail.

    Like I said above, it is a thin line to what is sometimes considered as only being between people (thus incurring civil liability) or what also impacts society as a whole (which then should be protected even more, by actively prosecuting it and putting criminal penalties on it).

     

    2) Bernie Madoff

    Bernie set up a so-called ponzi scheme. Basically, he "promised" everyone a big gain by making marvellous investments (on which he obviously takes a cut). Instead of making such investments (and goods one what would delivered his return are very hard to find), he took on capital from everyone and paid out gains on the basis of that to those who wanted.

    Basically, I take money from a good friend of you (100) and promise him a return of 20% per year (if he wants to cash out). After some time, your friend brags about his return and you want in. After some pushing and calls around, I decide to let you in for 100. If your friend wants to take the money back: not a problem: I give him his 100 and 20 from yours. If I paid him back, I only have 80 left (whilst I promised you 20 return), so I should be able to come with 120 too, should you want out. Not a problem, because by the time you want out, someone stepped in and pay back from his money.

    This system only works as long as you have enough money flowing in to cover for what is asked back.

    Bernie never contractually engaged to these high gains I think, but he committed fraude in many ways. E.g. bank statements would need to show how much money you have on your account. The problem is that Bernie was also acting as prime broker (if I am not mistaking). Basically, he was his own bank and produced his own statements. You can see that then things get easy...

    Still 3 points:

    - SEC (US regulator)? They did not understand his system and did not properly investigate

    - Auditor? Small firm of which no one heard (didn't the guy commit suicide?), probably well paid.

    - Investors? Money makes blind (and on paper everything looked good) and Bernie was always beating the market (bear or bull)

    -> Important factor on this is that Mr Madoff did not let everyone into his fund. You always needed to know a guy that knows a guy... He was I suppose charismatic and intelligent to keep it rolling for so long. He was ESTABLISED. So, noone (not SEC, not the investors) could believe Mr Madoff was frauding. No one would dared to question him, and certainly not investors, because they would be kicked out... (being paid back from other people who were lining up to step in) and they would have lost a change for these good returns.

    Finally, it exploded (more request to get money out than money coming in in combination with SEC and others who started to question the system) and even those who got their money back (just before it exploded) apparenlty can be requested to give all or part of their money back (as it is not necessarily theirs entirely as it partly paid out from with other victims' monies ). Such a "claw back" is limited in time, so those who got in, rode it for a few years, and stepped out a few years before it exploded can have made massive "gains" (basically received money from new joiners).

    To go back to a legal analysis; Bernie is liable for civil liability purposes (he caused damage to people) and therefore his belongings were auctioned in a futile attempt to pay somethin back and is liable from a criminal point of view because he committed fraude and violated many criminal provisions (not being a US lawyer, I am not best placed to comment on without doubt the long list...)

    It just a try, so feel free to correct where you do not agree Smiley


     


     
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