Huge Victory For Lender

 In Business
1. Lender Induced to Make a Loan Under False Pretenses May Recover Triple the Amount Lent Even If the Borrower Is Never Criminally Convicted

In the case of Bell v Feibush, the California Court of Appeal, Fourth Appellate District, Case No. G046166 awarded triple damages to a defrauded lender based upon Penal Code § 496(a) even though the borrower was not criminally convicted of fraud. Penal Code § 496 makes receiving or buying property “that has been obtained in any manner constituting theft” a criminal offense, punishable by imprisonment. It further provides that a person injured by a violation of § 496 may bring an action for three times amount of actual damages, if any, sustained by the plaintiff, plus costs and reasonable attorney’s fees.

In this case, Bellloaned Feibush $202,500, based upon Feibush’s lie that he owned the trademark “ToughLove.” Feibush claimed he needed the money to settle lawsuits over the trademark and that he wanted to use the trademark is a business to rehabilitate troubled individuals with strict counseling and other forms of ToughLove. Feibush told Bell that they would earn millions of dollars.

Feibush’s representations were false, and the so-called ToughLove business was a scam. From her suit, Bell had obtained an award of $202,500 plus pre-judgment interest on the breach of contract and fraud causes of action, and was awarded three times damages of $607,500 on her Penal Code § 496(a) cause of action. She was also awarded attorney’s fees.

Comment: I do not know why more attorneys do not plead a cause of action for Penal Code § 496 violation when they have a clear case of fraud. It seems like a no-brainer and should catch the attention of any scam artist. The scam artist does not need to be convicted much less have charges brought against them for crimes involving the theft, and the judgment is probably non-dischargeable in bankruptcy. A win-win situation.

About the Author

  • Scott Souders
    Scott Souders Attorney & Author


Scott Souders is a real estate attorney who has practiced real estate law in excess of 42 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

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