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[mothandrust]

Why can't restitution be paid to lenders?

When a drunk totalled my parked car the court ordered him to pay restitution--his insurance didn't cover all my losses--and I was made whole in about 18 months after the accident.

I didn't have to file a lawsuit; the court just mailed me a form and I itemized my losses and I started getting checks from the court.  I never had any direct contact with the drunk.

It was a rare case of government acting the way I thought it should.

Imagine if they fined him $100K for his crime so he was broke, and then told me I don't get any of that, but I can hire a lawyer at personal expense or one that gets 1/3 if he wins.  But now the drunk is broke now and can't pay anything.  Where's the justice?

In Prosper's case, this was a settlement.  IANAL but I thought settlements could be written very creatively--like Prosper pays $999,950 in restitution to lenders and pay a $1 fine to the each state.

[Beerbud1]

In Prosper's case, this was a settlement.  IANAL but I thought settlements could be written very creatively--like Prosper pays $999,950 in restitution to lenders and pay a $1 fine to the each state.

This statement certainly makes sense to me but IANAL.

[ira01]

Why can't restitution be paid to lenders?

When a drunk totalled my parked car the court ordered him to pay restitution--his insurance didn't cover all my losses--and I was made whole in about 18 months after the accident.

Criminal cases often include restitution to the victim.  But this wasn't a criminal case.

In Prosper's case, this was a settlement.  IANAL but I thought settlements could be written very creatively--like Prosper pays $999,950 in restitution to lenders and pay a $1 fine to the each state.

Perhaps that could have been done (although it still might well have been illegal, if the state didn't have authority to retrieve money on behalf of individuals under these circumstances).  But that isn't generally how things work.  And it would have raised quite a number of significant complications, such as how would the money be divided among lenders -- pro rata by amount invested, pro rata by amount lost, pro rata by number of loans, evenly, etc.?  Good arguments could be made for each of those possibilities (and probably others too). 

[Beerbud1]

As a result of events culminating with today’s Final Order, a substantial amount of investors’ funds have been returned to investors who had purchased auction rate securities. 

This quote was taken from the press release page of Florida's financial regulation website:

http://www.flofr.com/PressReleases/ViewMediaRelease.asp?ID=3270

[zapp05]

As a result of events culminating with today’s Final Order, a substantial amount of investors’ funds have been returned to investors who had purchased auction rate securities.  

This quote was taken from the press release page of Florida's financial regulation website:

http://www.flofr.com/PressReleases/ViewMediaRelease.asp?ID=3270

so... are there any FL lenders here on ORG?  how much did you get?

<eta color/emphasis>

[Beerbud1]

MsAva, cash-is-king, and myself. We didn't recieve anything and won't. I've already checked. As ira has pointed out its a fine not restitution.

[zapp05]

As a result of events culminating with today’s Final Order, a substantial amount of investors’ funds have been returned to investors who had purchased auction rate securities. 

This quote was taken from the press release page of Florida's financial regulation website:

http://www.flofr.com/PressReleases/ViewMediaRelease.asp?ID=3270

so... are there any FL lenders here on ORG?  how much did you get?

<eta color/emphasis>

MsAva, cash-is-king, and myself. We didn't recieve anything and won't. I've already checked. As ira has pointed out its a fine not restitution.

do you figure that the folks which got money back from Merrill Lynch didn't get it from FL's portion of the NASAA fine?  maybe their "final settlement" also included a restitution portion not mentioned in the article - a little misleading.

[Beerbud1]

As a result of events culminating with today’s Final Order, a substantial amount of investors’ funds have been returned to investors who had purchased auction rate securities. 

This quote was taken from the press release page of Florida's financial regulation website:

http://www.flofr.com/PressReleases/ViewMediaRelease.asp?ID=3270

so... are there any FL lenders here on ORG?  how much did you get?

<eta color/emphasis>

MsAva, cash-is-king, and myself. We didn't recieve anything and won't. I've already checked. As ira has pointed out its a fine not restitution.

do you figure that the folks which got money back from Merrill Lynch didn't get it from FL's portion of the NASAA fine?  maybe their "final settlement" also included a restitution portion not mentioned in the article - a little misleading.

Nice, You must know my wife. My point was that earlier in the thread Ira01 had pointed out to someone that the state fined Prosper as a result of their violation of "Blue Sky" laws. It almost seemed as though he was trying to say that they never or rarely seek resititution on behalf of state residents for their losses.
I added to the thread where the very same office, Florida Office of Financial regulation did indeed get restitution for state residents but it was in another case. My point wasn't to mix the issue, or confuse readers, but simply to point out in other cases that they have seeked restitution and have succeeded. Why, any of the States including mine (Florida), did not seek resititution for the injured parties is beyond comprehension to me(especially since they've done it in other cases).

[Fred93]

.. the very same office, Florida Office of Financial regulation did indeed get restitution for state residents but it was in another case. My point wasn't to mix the issue, or confuse readers, but simply to point out in other cases that they have seeked restitution and have succeeded. Why, any of the States including mine (Florida), did not seek resititution for the injured parties is beyond comprehension to me(especially since they've done it in other cases).

Well they got $56,364 for 112,408 loans, which is $0.5014 per loan.  Would cost them more than that to send those checks to the individual lenders.

[Capital_Finance_Group]

MsAva, cash-is-king, and myself. We didn't recieve anything and won't. I've already checked. As ira has pointed out its a fine not restitution.

Securities violations are normally what is considered a crime against Society. In a crime against Society Society is the receipent of the fine(s) and Government is the Agent of Society. Individuals are free to bring their own claims to the Court System if they so desire for their personal damages. That is the way it has always worked and I see no reason under the current state of economic affairs for the governments of the several States to change the way business is being done.

[Senator]

Well they got $56,364 for 112,408 loans, which is $0.5014 per loan.  Would cost them more than that to send those checks to the individual lenders.

They wouldn't be issuing 112,408 individual checks for $0.50 each as most lenders have more than a few loans.  msava has 290 loans herself.

[Tokyo Joe]

Well they got $56,364 for 112,408 loans, which is $0.5014 per loan.  Would cost them more than that to send those checks to the individual lenders.

They wouldn't be issuing 112,408 individual checks for $0.50 each as most lenders have more than a few loans.  msava has 290 loans herself.

There are 112,408 loans, with a few dozen lenders on each loan, reducing the per-lender cut of each loan to below a penny.  So a lender on 50 loans or so would probably get about 50 cents, if it were to be distributed.

Ava might have gotten somewhere in the neighborhood of $2.50-$2.90

[ira01]

Well they got $56,364 for 112,408 loans, which is $0.5014 per loan.  Would cost them more than that to send those checks to the individual lenders.

They wouldn't be issuing 112,408 individual checks for $0.50 each as most lenders have more than a few loans.  msava has 290 loans herself.

There are 112,408 loans, with a few dozen lenders on each loan, reducing the per-lender cut of each loan to below a penny.  So a lender on 50 loans or so would probably get about 50 cents, if it were to be distributed.

Ava might have gotten somewhere in the neighborhood of $2.50-$2.90

But not all those lenders are in Florida.  So that greatly reduces the number of payments (or, if you want to apply the restitution logic nationally, it greatly increased the total amount of the payments).

Also, in theory, the settlement could have simply required Prosper to pay the restitution directly to lenders, by crediting their Prosper cash accounts.  That would reduce the overhead to about zero. 

Of course, none of the above changes the basic point that fines are not restitution (notwithstanding what may have happened in some other, different, case).

[mothandrust]

I don't care if they pulled names out of a hat and mailed $1000 to the luckiest Florida lenders.

On the Sopranos when someone in the extended family was victimized, the gangster would shake down the bad guy, take a big cut for himself, and give the rest to the victims (to pay medical bills, for example).

Here the Florida lenders (taxpayers) are paying the government lawyers (gangsters) who collect money from the perpetrators.

But unlike the Sopranos, these government gangsters keep every last penny for themselves and give nothing back to the victims.