Certain people have legally-enforceable financial responsibilities to other individuals and organizations. They must uphold their ethical duties because fiduciary duty is taken seriously in Texas.
Fiduciary duty generally arises when a party gives another party legally enforceable trust to manage interests or assets. Some common examples of people who have fiduciary duty to others are trustees, corporate officers, partners and financial advisors. Any individual who has a fiduciary duty to another party must always act in the best interests of the party entrusting them with their assets or interests.
Civil versus criminal matters
A breach of fiduciary duty often involves fraud, self-dealing or gross negligence. It’s possible for a person who breaches fiduciary duty to face both civil and criminal cases. These matters are handled in different courts and are completely separate from each other. This means that the following outcomes are possible:
- Guilty in criminal court; liable in civil court
- Not guilty in criminal court; not liable in civil court
- Guilty in criminal court; not liable in civil court
- Not guilty in criminal court; liable in civil court
Civil repercussions typically involve restitution and damages. When a breach includes fraudulent activities, theft or other intentional misconduct, it can cross into matter that may also be prosecuted criminally.
In Texas, criminal charges can arise from a breach of fiduciary duty if there is clear evidence of intent to defraud or deceive. For instance, if a fiduciary embezzles funds, falsifies documents or deliberately misleads a beneficiary, they can potentially face criminal prosecution.
Consequences of criminal charges
Facing criminal charges for breaching fiduciary duty can result in severe penalties, including hefty fines, restitution and imprisonment. In some cases, probation is ordered instead of imprisonment. A criminal record can result in long-lasting effects on a person’s career and reputation.
Facing a criminal case for something related to a breach of fiduciary duty is a situation that must be taken seriously. There is much at stake in such cases, so starting on a defense strategy quickly is critical. Having a legal representative who can assist with determining what options are best suited for one’s unique case may help defendants determine how best to proceed.