Debt Collection Scam Duped Now-Ex Attorney; Forced Him To Come Clean, Cop Felony Plea On $1.5M+ Client Swindle; State Bar's "Ripoff Fund" Left On Hook

In Montgomery County, Maryland, The Maryland Daily Record reports:

• Had the American Bar Association's warning of the scam come three months earlier, disbarred lawyer Bradley D. Schwartz might not be facing a possible prison sentence. Schwartz, who consented to disbarment last year amid allegations of having dipped into client funds, pleaded guilty last week to felony theft in Montgomery County Circuit Court.

• Prosecutors said Schwartz, 62, stole more than $1.5 million from about 20 clients over the past five years. Montgomery County Circuit Judge Steven G. Salant is scheduled to sentence Schwartz on Aug. 23. As The Washington Post first reported [...], Schwartz's scheme might have gone undetected had he himself not fallen victim to a con aimed at attorneys.

• Around December 2008, Schwartz was contacted by a purported Singapore company, saying it needed legal help collecting debts in the United States. Schwartz agreed to represent the firm and soon received a $385,000 check from a purported debtor. He deposited the check and used the funds to pay clients whose money he had skimmed, prosecutors said. When the "debtor's check" turned out to be bogus, Schwartz's bank contacted authorities and prosecutors began to investigate.

• A short time later, Schwartz contacted Maryland Bar Counsel Melvin Hirshman to confess to having misused client funds. "He called me from South America and told me what he had done," Hirshman said Friday. The clients have been reimbursed through the Client Protection Fund,(1) Hirshman added. Schwartz, in turn, is reimbursing the fund "to a degree that he's able," said his defense attorney, Thomas L. Heeney.(2)

• In addition, Schwartz has changed his life-insurance policy to name the fund as a beneficiary of $750,000, said Heeney of Heeney & Arii Chtd. in Rockville. On Feb. 6, 2009, the ABA posted on its website a story warning its members of the debt-collection scam. Schwartz was disbarred by consent on March 23, 2009.

Source: Ex-lawyer duped by scam pleads guilty in Montgomery County Circuit.

(1) If a Maryland attorney, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, go to the The Client Protection Fund of the Bar of Maryland (formerly "The Clients' Security Trust Fund") for information on how to recover some or all of your losses from the fund.

For other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

(2) My guess is that, to the degree Schwartz is unable to cough up the cash to reimburse the Client Protection Fund, the rest of the licensed attorneys in Maryland may be hit up in the form of increased fees when their law licenses come up for renewal in order to replenish the fund.