The Little Loan That Could
When our client came to us, he had spent nearly a year chasing repayment on a $20K loan to his accountant/CPA. After we were engaged, we discovered the accountant had been falsely advertising CPA credentials he never held—for nearly a decade.
Our investigation also uncovered a $3.6M real estate portfolio and significant legal exposure from ongoing lawsuits by employees and former counsel for unpaid legal fees.
To recover our client’s funds, we had to navigate competing creditors, multiple suits, and convince the defendant it was in his best interest to prioritize whatever diminishing funds he had left to paying our client first and ahead of anyone else.
Because the Defendant applied the loan proceeds to cover the commercial mortgage payments, the payment provided a direct route to the portfolio. Our complaint highlighted the defendant’s financial troubles and growing indebtedness—which we discovered was prohibited by the lending documents underpinning the 3.6 million portfolio.
This material covenant holds the loan agreements together; a single violation would trigger cross-defaults across multiple mortgages, accelerate all debt maturities, and turn the capital stack into a financial time bomb.
This provided a credible reason for engaging with us ahead of other creditors.
We filed a verified complaint, legally requiring the defendant to answer each allegation under penalty of perjury. This trapped the defendant into four unsustainable options:
Answer & Admit: Publicly confess to unauthorized CPA licensure and fraud.
Answer & Deny: Lie under oath and risk criminal perjury charges.
Default: Concede the case and face immediate asset seizure.
Settle: Pay our client immediately to keep the complaint quiet.
After ignoring our client for 18 months, the defendant called to settle immediately. We negotiated airtight settlement terms designed to completely protect our client while maximizing the recovery premium:
125% Premium: Settled for 125% above the original loan principal.
Bulletproof Enforcement: Fortified the agreement with an executed Confession of Judgment at 250% of the principal, allowing for instant asset liquidation if he defaulted on payments.
Conditional Release: Crafted a narrow release limited strictly to the Plaintiff LLC's claims, explicitly preserving all personal claims. Crucially, the release was only effective upon full satisfaction of the settlement terms.
While the payment terms allowed for a three-month schedule, the defendant panicked and paid the full settlement in under a month. The other plaintiffs are still litigating.
