Texas has a broad statute aimed to protect beneficiaries of a trust, estate, or receivership. As compared to the federal statutes in which criminal intent to defraud is required, the Texas statute curiously criminalizes a "substantial risk of loss." Does this mean that the only way a trustee can safely avoid any criminal liability is to invest in government bonds or treasury notes? A trustee has a fiduciary duty to not only safeguard the assets of the trust, but to also invest and grow the assets for the trust's beneficiaries. Does a trustee then violate his fiduciary duty by parking a money in a certificate of deposit when higher rates of return - albeit more risky - are available? The text of the statute is as follows:
MISAPPLICATION OF FIDUCIARY PROPERTY OR PROPERTY OF FINANCIAL INSTITUTION
A person commits an offense if he intentionally,
knowingly, or recklessly misapplies property he holds as a
fiduciary or property of a financial institution in a manner that
involves substantial risk of loss to the owner of the property or to
a person for whose benefit the property is held.
For purposes of this section, the Penal Code defines "fiduciary" to include:
(A) a trustee, guardian, administrator,
executor, conservator, and receiver;
(B) an attorney in fact or agent appointed under
a durable power of attorney as provided by Chapter XII, Texas
Probate Code;
(C) any other person acting in a fiduciary
capacity, but not a commercial bailee unless the commercial bailee
is a party in a motor fuel sales agreement with a distributor or
supplier, as those terms are defined by Section 153.001, Tax Code;
and
(D) an officer, manager, employee, or agent
carrying on fiduciary functions on behalf of a fiduciary.
Although the term "misapply" is also defined in this section, it doesn't add much in the way of enlightening a citizen about what constitutes a substantial risk of loss between a significant-but-less than substantial risk of loss:
"Misapply" means deal with property contrary to:
(A) an agreement under which the fiduciary holds
the property; or
(B) a law prescribing the custody or disposition
of the property.
Finally, the punishment range for Misapplication of Fiduciary Property follows the Standard Value Ladder:
An offense under this section is:
(1) a Class C misdemeanor if the value of the property
misapplied is less than $20;
(2) a Class B misdemeanor if the value of the property
misapplied is $20 or more but less than $500;
(3) a Class A misdemeanor if the value of the property
misapplied is $500 or more but less than $1,500;
(4) a state jail felony if the value of the property
misapplied is $1,500 or more but less than $20,000;
(5) a felony of the third degree if the value of the
property misapplied is $20,000 or more but less than $100,000;
(6) a felony of the second degree if the value of the
property misapplied is $100,000 or more but less than $200,000; or
(7) a felony of the first degree if the value of the
property misapplied is $200,000 or more.
There is also an additional enhancement if the beneficiary was a person 65 years or older:
An offense described for purposes of punishment by
Subsections (c)(1)-(6) is increased to the next higher category of
offense if it is shown on the trial of the offense that the offense
was committed against an elderly individual as defined by Section
22.04.
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