One significant issue in the creditor-debtor battle involves the term "fraud" as used in the ethical rules. The term "fraud" is specifically defined under the Model Rules.
Under Rule 1.2(d): Scope of Representation, "A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent..." Model Rule 8.4(c) defines professional misconduct to include "[engaging] in conduct involving dishonesty, fraud, deceit or misrepresentation."
Model Rules 1.2(d) and 8.4(c) are the only references in the Model Rules to conduct of the attorney or client which involves fraud. Does that term also encompass the terms of "fraudulent conveyance" or "fraudulent transfer" as defined under the Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act, or a similar remedy statute?
The term "fraud" or "fraudulent" under the Model Rules denotes "conduct that has a purpose to deceive." The definition makes no reference to a definition or element of a fraudulent conveyance or fraudulent transfer as applicable to the Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, or a similar statute. The definition appears to be in keeping with the understanding that the "fraud does not include conduct, although characterized as fraudulent by statute or administrative rule, which lacks an element of scienter, deceit, intent to mislead or knowing failure to correct misrepresentations which can be reasonably expected to induce detrimental reliance by another." Thus, the term "fraud" under the Model Rules refers to the law of deceit and not other conduct which is described by statute or administrative rule.
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