When John Otto's clients finally realized he had cheated them out of millions, he committed suicide to evade the consequences. Now, an appellate court has ruled that Otto's widow must pay the millions her husband stole via the large Ponzi scheme he was running- over $114.5 million in damages.
Fresno County Superior Court Judge Donald S. Black originally ruled in January 2012 that Kathleen Otto benefitted financially from her husband's Ponzi scheme, and was therefore liable to pay back the millions owed to her husband's hundreds of clients. That ruling was brought to the Fifth District Court on appeal, but the original ruling was upheld.
John Otto's Ponzi scheme created 800 victims throughout the state of California, about 300 of them from Fresno. Although the judge ruled that Otto's widow is liable to the victims, The Fresno Bee reports that many of the victims may never collect the money damages owed them.
This is because Mrs. Otto has recently filed for bankruptcy. Even partial liquidation of her assets may mean that she wouldn't have the money to compensate victims. Ara Jabagchourian, the lead attorney that represented the victims of this Ponzi scheme, estimated that Mrs. Otto's assets may now only amount to $1 to $1.5 million.
The appellate ruling stated that "a surviving spouse is personally liable for the debts of a deceased spouse" which is why even though the jury did not find Mrs. Otto liable, the appellate justices ruled that she was vicariously liable as the surviving spouse according to California law.
If you or someone you know has been defrauded in a Ponzi scheme such as John Otto's HL Leasing scheme, Meyer Wilson is here to help. As some of the most experienced securities fraud lawyers in the nation, our firm's goal is to fight for victims of investment misconduct. Call today for a free case evaluation.