Theft Of Client Funds Concerns Connecticut Bar Association

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A report published yesterday in The Advocate (Stamford / Fairfield County, Connecticut) discusses what staff writer John Nickerson describes as a "[a] spate of attorney arrests and convictions for stealing client funds in the area and across [Connecticut]".

Two officials, working together "to determine why up to $20 million in client funds have been misappropriated statewide over the past three years" describe it as "the middle-aged white guy scenario" since many of the approximately 20 Connecticut attorneys alleged to have stolen money from their clients over the last couple of years fit that description.

Included in the list of specific incidents detailed by this article are:

• a case where attorneys reportedly collected the proceeds from the sale of a client's home but failed to pay off their client's mortgage and home equity loan (to read more, see this 2005 report at The Mortgage Fraud Blog/The Prieston group), and

• a case of an attorney, hired by a husband & wife to protect their interests while they refinanced their existing mortgage, who never paid off the original loan when the money came in (to read more, see 2003 Grievance Committee Decision).

Reportedly, the Connecticut state legislature will be considering a law this year requiring that attorneys who hold money for clients be bonded.

One official stated, "few clients have been taken to the cleaners by their lawyers in part because of the Connecticut Client Security fund set up in 1999. The account, which has paid out more than $7 million in claims since its inception, is funded by each lawyer practicing in the state."

As should be obvious (and as pointed out in this article), all attorneys should not be "painted with the same brush" (readers of this blog know that the property owners in the equitable mortgage cases reported on recently were only able to get their unfortunate transactions voided through the effective representation of competent legal counsel). Additionally, in many states, non-attorneys are allowed to conduct real estate closings and handle the exchange of money; a homeowner's home sale proceeds are no less at risk in these cases.

To read the entire article, see:

Thefts have bar seeking new reforms

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theft of home sale proceeds