I’ve been meaning to make a quick comment on ASB’s decision to pursue the prostitute that their former employee Stephen Versalko spent $2.4million on, claiming that the prostitute should “return” the money because keeping it would be “unconscionable” .
This is a big mistake for 3 reasons:
1) They cannot/will not win
2) It would create all sorts of terrible precedents
3) It would be a PR disaster
First reason: they cannot win. We can say that because case law says that: if someone enters into a contract with you, it is not their problem where you get the money from, unless they knowingly entered into the contract to deliver services armed with the knowledge that the money was illegally obtained. This would in turn make them a party to fraud.
Since the woman in question has never been charged, or has never even been investigated for being a party to the fraud then ASB cannot have a case.
Essentially ASB are saying that the woman received stolen goods. There are two conditions that must be met in order for you to be charged with receiving stolen goods: firstly, you must willingly take the goods, or enter into some arrangement whereby you agree to take the goods. This is why if someone steals something and then throws it onto your property you haven’t committed a crime.
Secondly, you have to know that the goods were stolen.
The only way that ASB have a case is if they can prove, beyond any doubt that the woman knew that she was being paid in stolen money. Not only that, but they must prove that she knew AT THE TIME that the contract was entered into.
ASB’s case is that the woman should return the money, after the fact, because she is now aware that the money was acquired from her client fraudulently in order to meet his contractually arrangement with her. They are asking the woman to retroactively ex post discover the source of her income.
Prostitution is legal in New Zealand, if you engage in it then you are simply providing a service, and earning payment from that service. The media may be titillated by the fact that sexual acts are included in those services, but a contract is a contract is a contract.
I’m sorry ASB, but you simply cannot argue that. It would be the equivalent of one of your mortgage holders coming into one of your branches and attempting to nullify their mortgage with you because, looking back, if they had known, at the time that they entered into the contract, that mortgage rates would go down they wouldn’t have entered into the mortgage contract with you. You would quite rightly laugh in their face.
When I say that the woman had to “know” that the money was obtained fraudulently I mean she had to “KNOW”, not “had a vague feeling” or “somehow suspected” or even that a “reasonable person would suspect” the money was stolen. ASB has a huge hurdle to clear if they want a judgment.
Unless ASB can prove that the woman knowingly and willingly entered into a criminal conspiracy with Mr Versalko to defraud ASB and benefit from the crime then they simply have no case.
Second, imagine what would happen if they succeed. The “grey economy” is about 10% of the New Zealand economy–about 10% of all economic activity involves some undeclared, unaccounted for or just plain dodgy act. What ASB are saying is that not only are those transactions illegal, but every subsequent use of that money is illegal. Guess what? everyone is a criminal.
The economy (including the banking system) could not function if every single dollar had to be kosher.
This would simply be unenforceable and silly.
Are ASB going to go after the guy that Versalko bought his paper off every morning? Why not? Why stop there? Why not go after the publishers of that morning paper as well? After-all, they benefited from the crime.
Third reason. ASB are making a big mistake by going after this woman. If they do continue with the case they will be on the news every night, reminding the country how one guy managed to dupe them and their security. They would also come over as the big bad bully.
Here’s what I think has happened. This woman is pretty smart by the looks of it, and has invested the money wisely in property. I think ASB are hoping that this woman would rather pay them some of the money she earned, rather than risk her identity being exposed.
ASB want something, anything, back after being made to look like chumps by one of their former employees. But, as Judge Judy would say: “You’re suing the wrong guy Ma’am!”
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