Fraud, Corporate Fraud Compensation Fund, Judgment for Fraud, 1, 5
The Corporate Fraud Compensation Fund, administered by the Secretary of State, compensates victims of corporate fraud in amounts of up to $50,000 per victim or victim couple. Corp. Code 2280 et seq. To obtain compensation, a victim must first obtain a final judgment in a court of competent jurisdiction against a corporation based upon the corporation’s fraud, misrepresentation, or deceit. This decision holds that a bankruptcy court’s non-dischargeability judgment qualifies as such a judgment, at least when the judgment or supplementary evidence about the judgment shows that it was based on the corporation’s fraud. It is not necessary (but is helpful) that the complaint have a cause of action labeled fraud or misrepresentation. The decision distinguishes Yergan v. Department of Real Estate (2000) 77 Cal.App.4th 959 which denied recovery under a similar fraud victim fund. In Yergan, the underlying litigation had been settled, and the settlement agreement expressly provided that the settlement was based on the complaint’s claims other than the fraud claim.