Sunday, October 30, 2016

Bank Blows Whistle On $67 Overdraft, Triggering Probe Leading To Attorney Ethics Charges Against NJ Lawyer For Allegedly Using Client Trust Account To Hide Income From Creditors While In Bankruptcy; Accused Of Improperly Withdrawing Fees Thru Cash Withdrawals, Rather Than Cutting Check To Business Account

In Hunterdon County, New Jersey, nj.com reports:
  • A Hunterdon County lawyer is facing multiple ethics violations filed by the state's Office of Attorney Ethics for allegedly using a trust account to hide income from creditors during a time when he filed for bankruptcy.

    The violations came to light when TD Bank informed the office that Paul F. Clausen's attorney trust account was overdrawn by $67.10.(1)
    ***
    According to a five-count complaint filed on Sept. 27, an audit by the office revealed 77 occasions when Clausen allegedly "withdrew his fees directly from the trust account rather than issuing a check payable to his business account."

    The complaint was first reported on Random Notes on NJ Government [], a website run by New Jersey watchdog John Paff.

    State ethics law requires attorneys to deposit and withdraw their fees from an attorney account, rather than from a trust account. The latter is only to be used to hold money for others, such as clients. The office performed an audit on Clausen's accounts from March 1, 2014, to April 23, 2015, according to the complaint.
    ***
    Clausen's "deposit of his earned and unearned legal fees in his trust account and subsequent cash withdrawals therefrom was intended to insulate (his) personal assets and to attempt to place them beyond the reach of his creditors," it was stated in the complaint.
For more, see Lawyer faces ethics violations after $67 bank overdraft.
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(1) See A Hunterdon County lawyer's $67.10 overdrawn trust account led to multiple ethics charges being brought against him:
  • When a New Jersey lawyer overdraws his or her trust account, Court Rule 1:21-6(b) requires the bank to notify the Office of Attorney Ethics (OAE).

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