Leonardo Angiulo: Keeping The Powerful From Abusing Our Money
Monday, October 21, 2013
One of the reasons that stories like President Dobelle's attract us is because when a person of authority and importance gets accused of mishandling funds we get a funny feeling. I think people, generally, become drawn into the intrigue of broken promises in a special way. For example, if I told you that someone broke into a Westfield State administration building and stole money from a safe it wouldn't affect you the same way. It's the act of deception, the disregard of a promise, the abuse of trust that holds your attention like nothing else. Not surprisingly, the law recognizes relationships that include a promise to handle money honestly as very special things. And there are some specific legal rules and laws dealing with the subject.
The title given to a person who holds a special position of trust and control over the assets or resources of another is called a fiduciary. When a fiduciary relationship exists, it requires the trusted person to faithfully serve the person or entity trusting them. This requirement is called a fiduciary duty and includes the idea that all actions of the fiduciary will be for the benefit of the person doing the trusting. When a fiduciary abuses the trust placed in them by misusing assets or resources it is called a breach of fiduciary duty.
A common example from criminal law is when a public employee abuses her position of trust by stealing money from say, hypothetically speaking, a town. Lets say Ms. Stealsalot is the lead administrator in the town water department. They allow her access to a credit card to be used for expenses related to the operation of the office and cash drawer for miscellaneous expenditures. What if she goes ahead and uses the town credit card to buy plane tickets to Florida? Or even takes petty cash to go and buy new clothes at the local mall? She has breached her fiduciary duty by using those monies that she was trusted with for an improper purpose. The act of converting those public monies to her own use, improperly, is known as embezzlement and we have a special law just for that very crime.
Civil law also has special legal principles addressing breaches of fiduciary duty. For example, this concept plays an important role when corporations are owned by a small number of people. Say two people own equal parts of a corporation. Those two people owe a fiduciary duty to each other and they are required to provide “utmost good faith and loyalty” to each other's interests. If Owner A is found to have acted out of “avarice, expediency or self-interest” and financially injured the other as a result, then Owner B will be repaid for whatever loss he has suffered. This is because the law will enforce that fundamental promise included as part of a fiduciary relationship: that you will keep your word to those people that trust you.
Whether you risk jail time for a criminal charge or a hefty jury award as part of a civil lawsuit, there are serious consequences for failing to keep your promise when someone trusts you with their money. The ability to trust a promise is such a fundamental prerequisite of our economy and society that the law must be applied in such a way as to encourage this behavior. Simply because breaches of trust catch our attention, the punishment for such behavior must be equally captivating. Otherwise, we would watch people get away with financially rewarding crimes with impunity.
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