In Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, a bankruptcy trustee that had succeeded to the interests of a corporation used to perpetrate a Ponzi scheme sued a law firm for malpractice and for aiding and abetting the Ponzi scheme. The court in Peregrine held that the doctrine of unclean hands barred both the corporation and its successor in interest (the bankruptcy trustee) from pursuing claims against the law firm. (Id. at pp. 679-680.) The court reasoned that the individual who owned and controlled the corporation was the primary architect of the Ponzi scheme and applied the doctrine of unclean hands to impute the owner's fraud to the corporation. (Ibid.) In Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) investors in a corporation that had declared bankruptcy and the bankruptcy trustee alleged they sustained investment losses arising out of a Ponzi scheme disguised as a mortgage lending business. The investors and the trustee sued the law firm which had represented the corporation and its officers for aiding and abetting a breach of fiduciary duty. In reversing an order denying the law firm's special motion to strike, Division Three of the First District Court of Appeal analyzed the allegations of the complaint and concluded that the actions of the law firm which helped its clients recruit investors and avoid the notice of securities regulators for a time constituted "garden variety transactional malpractice, which typically does not trigger the protections of section 425.16." (Peregrine Funding, supra, 133 Cal.App.4th at p. 670.) But the investors also alleged that the law firm breached its fiduciary duties to the corporation and its investors by stalling the progress of the SEC's investigation and lawsuit, which enabled the scheme's perpetrators to solicit and steal more money from investors. (Id. at p. 671.) The court reasoned that "although the overarching thrust of plaintiffs' claims may be that Sheppard's conduct helped advance the Ponzi scheme -- to their detriment -- some of the specific conduct complained of involves positions the firm took in court, or in anticipation of litigation with the SEC. We cannot conclude these allegations of classic petitioning activity are merely incidental or collateral to plaintiffs' claims against Sheppard. The complaint alleges plaintiffs suffered substantial losses due to Sheppard's conduct in delaying resolution of the SEC investigation and lawsuit and its legal strategies opposing early provisional relief." (Id. at p. 673.)