An Indiana real estate licensee, embezzled $10,000 from client A, $20,000 from client B, and $25,000 from client C. All three clients received final judgments and payments out of the Indiana Recovery Fund. How much money will each client receive?

Complete/Correct Question:

Eldon, an Indiana real estate licensee, embezzled $10,000 from client A, $20,000 from client B, and $25,000 from client C. All three clients received final judgments and payments out of the Indiana Recovery Fund. How much money will each client receive?

A. All three clients will receive the amount they lost.

B. The $50,000 lifetime aggregate for a licensee will be prorated according to the loss of each client.

C. There is a limit of $25,000 per judgment (not per client), and the money must be split three ways in this situation.

D. Only a total of $50,000 per judgment is allowed. Therefore, client A receives $10,000 and clients B and C each receive $20,000.

B, The $50,000 lifetime aggregate for a licensee will be prorated according to the loss of each client.

Explanation:

When a licensee embezzles funds of clients, the money is paid back through a Recovery fund. In the state of Indiana, the recovery fund usually is the lifetime aggregate of the licensee.

In the case of the above licensee, he will have his lifetime aggregate which is $50,000 shared among the 3 clients according to the ratio of their losses. It might not cover the entire amount that was embezzled but will go some way to alleviate the loss a little bit.

Cheers.    

Client A will receive $9,091

Client B will receive $18,182

Client C will receive $22,727

Explanation:

Indiana legislation establishes a $50,000 recovery limit that must be prorated between the three clients:

the total amount that was embezzled = $10,000 + $20,000 + $25,000 = $55,000

each client will receive $50,000 / $55,000 = $0.90909 per every dollar embezzled:

Client A will receive = $10,000 x 0.9090 = $9,091

Client B will receive = $20,000 x 0.9090 = $18,182

Client C will receive = $25,000 x 0.9090 =$22,727

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