Another Lawyer Gets Hit With Disbarment After Pilfering Nearly $300K In Trust Account Cash Belonging To Two Clients; Says He Was Only Following Instructions Of Firm's Managing Partner

In San Francisco, California, the Northern California Record reports:

• Robert L. Anderson, an attorney who practiced in Santa Rosa, was disbarred May 28 for allegedly misappropriating $294,459 from two clients, arguing that he was only following instructions given to him by his firm’s managing partner.(1)
  
  The California Bar document explained that a three-judge review panel found clear and convincing evidence supporting the hearing judge’s recommendation of disbarment.
  
  The evidence provided reportedly showed that between November 2009 and February 2010, Anderson signed 30 checks and ordered a wire transfer from funds in his firm’s client trust account that were supposed to go toward paying debts allegedly incurred by a client’s late husband.
  
  “Instead, Anderson dispersed a total of $192,978.64 to cover law firm expenses,” the document said. “In another matter, in late 2011, Anderson misappropriated in excess of $41,000 that was supposed to be held in trust for a client while his firm negotiated a lower settlement with the plaintiffs in a civil case.”
  
  ***
  Because of Anderson's alleged activity, both clients ended up in even deeper financial peril, as well as caused them emotional anguish.
  
  “It is clear from both the standards for attorney sanctions for professional misconduct and decisional law that disbarment is the presumed sanction for intentional misappropriation of funds,” the court document said.
  
  Anderson was also ordered to pay all fines and reimburse both clients.

Source: Santa Rosa attorney disbarred for allegedly misappropriating clients' funds.

------------------------

(1) The California State Bar's Client Security Fund is intended to be a public service of the California legal profession. The State Bar sponsored the creation of this fund to help protect consumers of legal services by alleviating losses resulting from the dishonest conduct of attorneys. The amount the fund may reimburse for theft committed by a California lawyer depends on when the loss occurred. A maximum of $50,000 is reimbursable if the loss occurred before January 1, 2009. A maximum of $100,000 is reimbursable if the loss occurred on or after January 1, 2009.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes Canadian recovery funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Media Report On Sticky-Fingered Lawyer Triggers Bar Probe, Leading Him To Hand In His Bar Ticket Under Threat Of Disbarment Over Charges Of Failing To Timely Distribute Lawsuit Settlement Funds To His Clients

In Bensonhurst, Brooklyn, WABC-TV Channel 7 reports:

• A Long Island attorney is off the job after the Eyewitness News Investigators dug into why it took him months to pay his injured client the $500,000 settlement he had won.
  
  The last time we tried to speak to Paul Vesnaver, he had no good explanation for why his injured client still hadn't received the half-million dollars.
  
  The Investigators' Jim Hoffer: "Well, you said you just sent the check. The first one bounced."
  
  Vesnaver: "That was from a wrong account."
  
  After our investigation, he finally paid his client. But our report also triggered an investigation by the Judicial Grievance Committee, which found similar complaints from other clients about Vesnaver holding on to their settlement money.
  
  Just weeks ago, under the threat of being disbarred by the court, Vesnaver submitted his resignation on the grounds of professional misconduct and failure to safeguard client funds. He is no longer able to practice law in the state of New York.
  
  "He needs more," client Xhevat Misku said. "It's not enough, just to resign."
  
  Misku, who still suffers from his construction injuries, is unforgiving when it comes to the man whom he claims tried to keep his money.
  
  "For me, he has to go to jail," he said.
  
  We made several attempts to reach Vesnaver, but no one answered at his home. And at his office, we were told he retired. Meanwhile, Misku's son Adnan wonders how many other clients may still be out there with diminishing hopes of ever getting their money. Some, he says, have reached out to him out of desperation.
  
  "I had someone from the Bronx call in," he said. "I had another person from Massachusetts call in. It was a lady, and she said that he owes her up to $200,000, that she's got no way of getting it."(1)
  
  Vesnaver is prohibited from even working as a law clerk in the state for at least seven years.

Source: Lawyer who held $500,000 settlement disbarred.

--------------------

(1) The Lawyers’ Fund For Client Protection Of the State of New York manages and distributes money collected from annual dues paid by members of the state bar to members of the public who have sustained a financial loss caused by the dishonest conduct of a New York-licensed attorney when acting as an attorney or a fiduciary.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes a listing for Canadian client protection funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

2-Month Law License Suspension For Attorney Who Gave Business Client The Jerk-Around In Response To Request For Return Of Over $400K In Cash That Was Supposed To Be Held In Escrow; Client Forced To File Lawsuit To Recover Money

In Somerset, Kentucky, the Commonwealth Journal reports:

• A local attorney has been suspended from practicing law for approximately two months following an order by the Supreme Court of Kentucky.
  
  Dan Thompson, a local personal injury attorney who also previously served as Burnside City Attorney earlier in the decade, was the subject of what was termed an “agreed upon disciplinary sanction” in the written opinion.
  
  The ruling was entered on Thursday, dated August 25, 2016, and signed by Chief Justice John D. Minton, Jr.
  
  The suspension is for 181 days; however, the order calls for 120 of those days to be suspended for a period of two years under the condition that Thompson commit no further ethical violations during that time, meaning Thompson is ultimately penalized only 61 days.
  
  According to the court document, Mabab Trade, LLC, entrusted Thompson with $775,000 to be used in connection with a proposed investment transaction between that company, an individual named Jason Castenir, and four other investors, placing the funds into Thompson’s office escrow account.
  
  “About seven weeks later, Mabab requested the return of the funds in their entirety,” reads the document. “An attempt to wire the escrow funds back to Mabab was unsuccessful due to a lack of funds in (Thompson’s) escrow account. At the time of the refund request, the escrow account contained a balance of approximately $373,131.13.”
  
  Thompson wired the company $300,000 about two weeks later and an additional $47,000 another two weeks or so after that, according to the document; the remaining amount of money, $427,500, was eventually returned to Mabab from an entity called Maverick Asset Management, which had originally received the funds from the escrow account via a transfer initiated by Castenir, it read.
  
  Thompson, according to the court, had given Castenir, who not an attorney, access to the account with instructions to obtain prior approval from him before making any transfers, but Castenir did not do so before initiating the fund transfer to Maverick, according to the document.
  
  The document stated that Thompson “falsely told the manager of Mabab that the funds were secure even though a portion of the funds had already been transferred to Maverick Asset Management; falsely told him that the escrow account could not be accessed temporarily due to an audit when, in fact, there was no audit; and falsely told him that the funds were ‘tied up’ due to a pending lawsuit in Texas when, in fact, there was actually no such lawsuit.”
  
  Mabab filed a lawsuit against Thompson and others in connection with the incident, and the case was eventually settled, with Thompson’s portion being $95,000, which he paid, according to the court. Thompson has fully complied with his obligations under the settlement.
  
  The document stated that the Inquiry Commission charged Thompson with violating multiple Supreme Court Rules (SCR), including SCR 3.130(1.15)(a) (failure to maintain funds in escrow); SCR 3.130(5.3(b) (inadequate supervision of a non-lawyer); and SCR 3.130(8.4)(c) (dishonest, fraud, deceit, or misrepresentation).
  
  “Thompson admits that his conduct as described above violates the rules as charged by the Inquiry Commission, and we accordingly hold that the Movant violated the rules as just described,” stated the court in the document.
  
  Thompson is also ordered to notify in writing all courts in which he has matters pending of his suspension, as well as notifying his clients of his inability to represent them and of their need to retain new counsel.
  
  The Commonwealth Journal attempted to contact Thompson for comment on Saturday, but did not receive a response by presstime.

Source: Local attorney agrees to suspension of practice.

For the court's opinion and order, see Thompson v. Kentucky Bar Association, 2016-SC-000262-KB (Ky. August 25, 2016).

Lawyer Belted With Indefinite Suspension For Taking No Action On Three Clients' Cases & Being Largely Unresponsive To Their Inquiries After Pocketing Upfront Fees From Them, Then Failing To Refund Unearned Fees & Stiffing Bar Disciplinary Commission During Subsequent Investigation Into Client Complaints

The Indiana Lawyer reports:

• Kenneth C. Kern, of Marion County, [Indiana] has been suspended for at least one year, without automatic reinstatement, beginning Sept. 22.(1) Kern took no action on three clients’ cases after accepting flat fees, was largely unresponsive to client inquiries, and failed to refund any unearned fees. Kern also failed to cooperate with the Disciplinary Commission on two of the matters. The costs of the proceedings are assessed against him. Justice David voted to disbar Kern.

Source: Discipinary Actions - 8/24/16.

-------------------

(1) See In re Kenneth C. Kern: Published Order Finding Misconduct and Imposing Discipline:

• Facts: In Count 1, “Client 1” hired Respondent to obtain a hardship driver’s license and settle an IRS tax lien. Client 1 paid Respondent a $1,900 flat fee. Over the next several months, Client 1 repeatedly and unsuccessfully tried to contact Respondent regarding the status of the case. Meanwhile, Respondent took no action toward resolution of Client 1’s legal issues.
  
  Client 1 eventually fired Respondent. Respondent told Client 1 he would refund unearned fees, but he failed to do so.
  
  In Counts 2 and 3, “Clients 2 and 3” hired Respondent to complete criminal record expungements and paid Respondent flat fees. Thereafter, Respondent was largely unresponsive to inquiries from Clients 2 and 3 regarding the status of their cases, took no action toward resolution of their legal issues, and failed to refund any portion of the unearned fees.
  
  Respondent also failed to cooperate with the Commission’s investigation into both of these matters.
  
  Respondent has prior discipline. Matter of Kern, 655 N.E.2d 339 (Ind. 1995); Matter of Kern, 555 N.E.2d 479 (Ind. 1990). Respondent also has been the subject of three recent show cause proceedings for failing to cooperate with disciplinary investigations

Another Long-Time Lawyer Ends Career In Disgrace; Resigns From State Bar In 2015 For Stealing Clients' Money From Lawsuit Settlements, Now Belted With 41 Felony Charges; State Court's Client Protection Fund Coughs Up $189K In Partial Reimbursements To Victims

In Cleveland, Ohio, cleveland.com reports:

• A Cuyahoga County grand jury indicted a former Cleveland attorney [] for stealing money from his clients.
  
  Paul Kaufman, 67, is charged with 41 felony counts including theft and forgery. He resigned from his law practice in 2015 after numerous clients filed complaints with the Lawyers' Fund for Client Protection.(1) Victims were awarded $189,000 out of the fund.(2)
  
  Kaufman, of Shaker Heights, now faces prison time if convicted of stealing from 15 clients. The attorney won the clients more than $215,000 in a class action settlement with drug maker Merck in 2009, the Cuyahoga County prosecutor says, but failed to distribute the funds to the plaintiffs in the settlement.
  
  "Attorneys like Paul Kaufman are why so many people look down on the legal profession," Assistant County Prosecutor James A. Gutierrez wrote in a news release. "He chose to ignore his responsibilities as a lawyer and to cheat his clients, and now he is going to have answer for those crimes."
  
  The Ohio Supreme Court suspended Kaufman's law license last year. In its order, the court writes that Kaufman "has engaged in conduct that violates the Ohio Rules of Professional Conduct and poses a substantial threat of serious harm to the public."

Source: Former Cleveland attorney indicted for stealing money from clients.

---------------------------

(1) The Ohio Lawyers’ Fund for Client Protection is an agency of the Supreme Court of Ohio created to reimburse victims of attorney theft, embezzlement or misappropriation. The fund is not taxpayer funded, but is funded by registration fees paid by every Ohio attorney. The Board of Commissioners of the Lawyers' Fund for Client Protection determines which claims are eligible for reimbursement. After the Lawyers' Fund for Client Protection staff investigates the claims, they are submitted to the Board for a determination of eligibility.

The maximum award amount is $75,000 per client. Clients who believe they have sustained financial losses resulting from theft, embezzlement or misappropriation by an Ohio attorney should contact the fund at 614.387.9390 or toll free in Ohio at 1.800.231.1680.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes a listing for Canadian client protection funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

(2) See Fund for Client Protection Reimburses $189,000 to the Victims of One Attorney (A total $422,220 was paid to 35 victims of attorney theft as well as the clients of four deceased attorneys during the calendar quarter).

Federal Lead Paint Police Tag New Hampshire Landlord, Contractor With Legal Action Seeking Over $290K In Penalties For Allegedly Failing To Comply With Rules Applicable To Renovations Of Pre-1978-Built Residential Property

From the U.S. Environmental Protection Agency (Boston, Massachusetts):

• Three N.H. companies – two residential property owners, and a company hired for renovation work – face significant penalties from EPA under two civil complaints filed by EPA alleging that the companies failed to follow federal lead paint regulations at a commercial and residential property in Manchester.
  
  In the first of the related actions, EPA has issued an administrative complaint against Brady Sullivan Millworks II, LLC and Brady Sullivan Millworks IV, LLC (Brady Sullivan) of Manchester N.H., seeking a penalty of $139,171 for alleged violations of the Real Estate Notification and Disclosure Rule and the Renovation, Repair and Painting (RRP) Rule.
  
  In the second of the related actions, EPA has issued an administrative complaint against Environmental Compliance Specialists, Inc. (ECSI) of Kingston N.H., seeking a penalty of $152,848 for alleged violations of the Renovation, Repair and Painting Rule. Both cases are being brought under the federal Toxic Substances Control Act (TSCA). The alleged violations occurred at a residential and commercial property located at 195 McGregor Street in Manchester.
  
  EPA's complaint against Brady Sullivan alleges that the company violated TSCA when it failed to provide tenants in fourteen apartments at 195 McGregor Street (known as the Lofts at Mill West) with lead paint disclosure information. The complaint also alleges that Brady Sullivan Millworks IV violated three provisions of the RRP Rule during renovation activities occurring in portions of the building which it owns.
  
  EPA's complaint against ECSI alleges that during renovation activities at the McGregor Street building in 2015, the company violated six provisions of the RRP Rule, including the failure to properly contain the work area. ECSI was hired by Brady Sullivan Millworks IV as a subcontractor to perform demolition and renovation work on the first and second floors of the building as part of an effort to convert the space to residential units.
  
  In May 2015, EPA performed a series of inspections at the building following the referral of a complaint about lead dust in the building received by the N.H. Dept. of Health and Human Services (NH DHHS). During the inspections, EPA observed dust and chipping paint throughout the interior common areas of the building (areas to which tenants continued to have access during renovation activities). At the time of the inspections, building residents included children.
  
  As part of the joint EPA and NH investigation, NH DHHS conducted dust-wipe sampling which confirmed levels of lead in the dust and in paint chips well above acceptable health-protective standards.
  
  Further, one building tenant hired a licensed lead paint inspector/risk assessor to perform independent dust testing in their unit and in the common hallway. Analysis of these dust wipe samples also revealed the presence of lead in the dust above the established regulatory levels. Additional testing showed that there was dust containing levels of lead above the regulatory limit in numerous residential units on the third and fourth floors of the McGregor Street building. The source of the dust was sandblasting being performed by ECSI on the first floor.
  
  The City of Manchester ordered a halt to the sandblasting on May 11, 2015, because the subcontractor, ECSI, had not obtained the required permit from the City to conduct such activity. On June 19, 2015, EPA issued a unilateral order to Brady Sullivan to clean up lead dust and chipping lead paint on the third and fourth floors of the building and in common areas throughout the property.

Source: Three N.H. Companies Face EPA Penalties for Failing to Disclose Lead Paint Information or Follow Lead-Safe Work Practices at a Residential Property in Manchester.

See also, EPA wants NH Brady Sullivan Properties to pay nearly $140,000 in fines (In May 2015, tenants sued because they said a contracting company hired by Brady Sullivan was responsible for lead dust found in their apartments).

Another Contractor Gets Tripped Up By Federal Lead Paint Regulations; Slammed By EPA With $58K+ Fine For Failing To Comply Rules Applicable To Renovation Of Pre-1978-Built Homes

From the U.S. Environmental Protection Agency (San Francisco, California):

• The U.S. Environmental Protection Agency recently fined Clearview Home Improvements Inc. $58,450 for failing to comply with the federal Renovation, Repair and Painting Rule while working at seven residential properties in Southern California. This rule was created to protect the public from lead-based paint hazards that occur during repair or remodeling activities in housing built before 1978.
  
  “While renovations can make homes energy efficient, it is crucial to protect residents from the hazards of lead paint dust,” said Alexis Strauss, EPA’s Acting Regional Administrator for the Pacific Southwest. “Lead-based paint is the main source of lead poisoning for children, and even low levels of lead in their blood can cause irreversible harm.”
  
  Clearview, which operates as Clearview Home Energy Solutions, is located in Anaheim. The company performs energy efficient home improvements, such as installing windows and vinyl siding. An EPA inspection found that in 2013 the company performed renovation work at pre-1978 homes in Los Angeles, San Pedro, Huntington Beach, Carson, Mission Viejo and Riverside without:

• confirming that a certified renovator, who ensured compliance with the Renovation, Repair and Painting Rule, was assigned to the job

• keeping records to show that the renovator complied with lead-safe work practices

• maintaining proper certification as a Renovation, Repair and Painting firm

• providing clients with the required federal Renovate Right brochure, which gives basic facts about lead and information about lead safety during renovation work

• Lead-contaminated dust can be easily ingested or inhaled. Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips that can settle on home surfaces. Exposure to such contamination through hand-to-mouth contact or breathing can result in lead poisoning for children, families and construction workers.

Source: U.S. EPA requires Orange County contractor to protect residents from lead-based paint dangers.

NJ AG Prosecution Wraps Up With Final Guilty Plea In Guardianship Racket Conspiracy That Targeted Vulnerable South Jersey Seniors With Substantial Assets & No Immediate Family; Defendants Took Control Of Victims' Finances By Forging POAs Or Obtaining One Under False Pretenses, Then Fleeced Them Out Of Their Life Savings

In Atlantic County, New Jersey, nj.com reports:

• An employee at a senior care company in Atlantic County pleaded guilty to her role in an alleged scheme to bilk millions of dollars from elderly clients, the state Attorney General's Office announced [].
  
  Susan Hamlett, 57, of Egg Harbor Township, who worked as an aide at the company, A Better Choice, is the fifth and final defendant to plead guilty in the investigation, the office said.
  
  Hamlett pleaded guilty on a charge of second-degree conspiracy on the eve of her trial, admitting that she conspired with her co-defendants to steal more than $100,000 from one client, an elderly woman, the office said. She faces three to five years in state prison, according to the office. Sentencing is Oct. 21.
  
  Hamlett was indicted in March 2015 with three other people:
  
  • Jan Van Holt, 60, of Linwood, the owner of the company, which offered in-home care and legal financial planning for senior citizens.
  
  • Sondra Steen, 61, of Linwood, Van Holt's sister, who helped run the company.
  
  • William Price, 58, of Linwood, a former county social worker who conspired with the others to steal from an elderly couple.
  
  Another defendant, Barbara Lieberman, 64, of Northfield, a lawyer, pleaded guilty before the indictments.
  
  All of the defendants pleaded guilty in the case, each on different charges.
  
  In all, Van Holt and Steen conspired with Lieberman to steal more than $2.7 million from 12 elderly clients from 2003 to 2012, the Attorney General's Office said.
  
  Steen and Lieberman were each sentenced to 10 years in prison, while Price got five years. Van Holt faces a 12-year sentence.
  
  "By stealing the life savings of elderly clients who had no family to look out for them, these defendants placed themselves among the lowest of con artists," said Attorney General Christopher Porrino said in a statement. "The victims are gone, but we've persisted in our quest for justice for them, securing prison terms for all of the perpetrators."
  
  Ellie Honig, the director of the criminal justice division of the attorney general' office, called the scheme "one of the most egregious cases of elder fraud that we have prosecuted in recent years."
  
  The defendants targeted elderly clients with "substantial assets" but no immediate family, offering to do things such as household chores, errands and budgeting, according to the Attorney General's Office.
  
  Eventually, the defendants took control of the victims' finances by forging a power of attorney or obtaining one in false pretenses, the office said.
  
  Once in control of the bank accounts, the defendants stole from the victims, the office said.

Source: N.J. senior care employee pleads guilty to stealing from elderly clients.

For the New Jersey Attorney General press release, see Employee of Senior Care Company in Atlantic County Pleads Guilty to Conspiring to Steal From an Elderly Client (Five defendants face prison in investigation that revealed millions of dollars in thefts from the elderly).

For the 4-part, June, 2015 Asbury Park Press investigative report on this racket, see:

• Betrayal of trust (An Attorney's Shocking Crimes Show How Easy It Is To Steal Millions From Seniors),
• Easy prey (Elderly And Vulnerable, 16 Men And Women Became Prime Targets For Theft),
• Broken system (Vulnerable Seniors Have Few Options For Protection. Will This Happen To You?),
• How to help the vulnerable (Billions are stolen from the elderly and infirm across the country each year. Here's how to stop it).

Nassau County DA: Long Island Woman Abused Guardianship Relationship To Pilfer Over $50K From Minor Child Who Was Placed Under Her Legal Supervision After His Mother Passed Away

From the Office of the Nassau County, New York District Attorney:

• Nassau County District Attorney Madeline Singas announced that a court-appointed guardian and executrix was arrested [] for allegedly stealing more than $50,000 from the guardianship accounts of the minor.
  
  Angela Parson, 58, of Hempstead, was arraigned [...] and charged with Grand Larceny in the Second Degree (a C felony). The defendant was conditionally released to probation and is due back in court on July 21. Parson faces up to five to 15 years in prison if convicted.
  
  “This defendant is charged with stealing more than $50,000 from a child who was placed in her guardianship after his mother passed away,” said DA Singas. “Guardians are entrusted by our legal system with special responsibilities to act in the best interests of those in their care, but this defendant allegedly violated that trust for her own personal self-enrichment. My office will aggressively prosecute this case and seek full restitution for this young victim.”
  
  DA Singas said that in April 2009, the mother of the complainant passed away. The defendant was named executrix of the deceased’s Last Will and Testament and named guardian of the person and property of the deceased’s child, the complainant, who was 11 years old at the time.
  
  ***
  The matter came to the attention of the NCDA in November 2015 when the now adult complainant notified the office that he was unable to contact Parson, his appointed guardian. The victim further alleged that his guardianship account had been withdrawn by her in violation of the order of the Nassau County Surrogate’s Court.

For more, see Court-Appointed Guardian Arrested For Stealing More than $50,000 from Minor (Angela Parson faces up to five to 15 years in prison).

Antitrust Feds Put Pinch On Co-Owner Of Firm That Locates People Entitled To Inheritances ("Heir Locators") From Those Dying Without Wills For Allegedly Conspiring With Competitor To Suppress & Eliminate Competition

From the U.S. Department of Justice (Washington, D.C.):

• A Salt Lake City-based heir location services provider and its co-owner have been indicted for participating in a conspiracy to allocate customers with another heir location firm, the Department of Justice announced [].
  
  According to the one-count felony indictment filed [] in the U.S. District Court for the District of Utah, Kemp & Associates Inc. and its co-owner and vice president, Daniel J. Mannix, conspired with a competitor to suppress and eliminate competition by agreeing to allocate customers of heir location services sold in the United States between 1999 and 2014.
  
  Heir location firms identify people who may be entitled to an inheritance from the estate of someone who died without a will. The heir location firms then enter into agreements with those people to help secure their inheritances in exchange for a fee.
  
  “For over a decade, the defendants schemed to line their pockets at the expense of beneficiaries,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “These charges underscore the division’s commitment to hold heir location services executives and their companies accountable for cheating heirs whose relatives died without a will.”
  
  With [these] charges, three executives and two companies have been charged as a result of the ongoing federal antitrust investigation into customer allocation, price fixing, bid rigging and other anticompetitive conduct in the heir location services industry, which is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Salt Lake City Division, with assistance from the U.S. Attorney’s Office of the District of Utah and the U.S. Attorney’s Office of the Northern District of Illinois.
  
  Anyone with infomation concerning the focus of this investigation should contact the Antitrust Division’s Chicago Office at 312-984-7200, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Salt Lake City office at 801-579-1400.

Source: Heir Location Services Company and Co-Owner Charged with Customer Allocation Scheme.

For the indictment, see U.S. v. Kemp & Associates, Inc., et ano.

Antitrust Feds Run Count Up To 21 Guilty Pleas In Ongoing Probe Into Atlanta-Area Foreclosure Sale Bid Rigging Racket

From the U.S. Department of Justice (Washington, D.C.):

• A Georgia real estate investor pleaded guilty [] for his role in bid-rigging and bank fraud conspiracies in connection with public real estate foreclosure auctions in Georgia, the Justice Department announced [].
  
  Otto Gogolin admitted that he agreed not to bid against other real estate investors at certain public real estate foreclosure auctions in an effort to subvert the competitive process. Additionally, according to court documents, Gogolin and his co-conspirators defrauded banks that owned the mortgage notes. Gogolin admitted to participating in the conspiracy in Forsyth County, Georgia, from July 2008 to December 2011.
  
  According to court documents filed in this case in the U.S. District Court for the Northern District of Georgia, the conspirators artificially suppressed the prices of properties sold at certain public real estate foreclosure auctions by agreeing not to outbid one another and then made and received payoffs to each other.
  
  Among other methods, the conspirators allegedly held secret “second auctions” of properties they had obtained through rigged bids and then divided the auction proceeds that otherwise would have gone to pay off the mortgage and other secured debt holders and, in some cases, to the previous owner of the foreclosed home.
  
  Including the charges filed against Gogolin, 23 defendants have been charged in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area, 21 of whom have either pleaded guilty or agreed to plead guilty.
  
  In addition to the cases filed in Georgia, the Antitrust Division has recently filed similar cases in Alabama, North Carolina and California. More than 100 defendants in total have been indicted or have pleaded guilty for rigging foreclosure auctions and lining their own pockets at the expense of banks and homeowners going through foreclosures.

Source: Georgia Real Estate Investor Pleads Guilty to Bid Rigging at Public Home Foreclosure Auctions.

Ex-NBAer Gets Pinched For Allegedly Duping Bank Into Eating Loss On Short Sale Of (Purportedly) Underwater Home To Live-In Girlfriend, Then Flipping It Months Later & Pocketing $176K Profit; Probe Triggered When Jock's Whistle-Blowing Ex-Wife Tips Off Authorities

In Dakota County, Minnesota, the Star Tribune reports:

• Former [University of Minnesota] Gophers basketball star and NBA player Sam Jacobson and his wife are charged with felonies involving the sale of his Apple Valley home.
  
  Sam and Traci Jacobson were charged in Dakota County District Court last week with theft by false representation and theft by swindle in connection with the August 2011 sale to Traci Jacobson, who was Traci Quam and his live-in girlfriend at the time.
  
  The transaction was a “short sale,” meaning the house was worth less than what Sam Jacobson owed on it, forcing the lender to eat the loss.
  
  In an effort to keep the home from falling into foreclosure, the short sale deal was approved by lender JPMorgan Chase after Jacobson told the company he had filed for bankruptcy, the charges read.
  
  That sale to Quam barred him from remaining in the five-bedroom Gibralter Terrace home and included an “arm’s length” condition that required the buyer and seller to be “unrelated parties ... acting in his or her own self-interest.”
  
  However, investigators say, Jacobson and his three children did not move out after the sale to Quam.
  
  Quam quickly sold the home in late 2011 for $538,000, netting “a significant profit” of $176,000, according to the charges.
  
  Quam then rolled the profit into another house, [...] in Apple Valley, and became engaged to Jacobson on the day that transaction closed. The two were married in June 2013, and they still live in the Cobblestone Lake Parkway home.
  
  The situation came to the attention of authorities from his ex-wife, Jennifer Jacobson, according to the charges.

For the story, see Short sale of home prompts felony charges against ex-Gopher basketball star, wife.

Homeowner Agrees To Forfeit 9-Bedroom Mansion To Feds As Part Of Plea Deal In Connection With Conviction For Consummating Fraudulent Short Sales Of Gas Stations

In Oak Brook, Illinois, Crain's Chicago Business reports:

• A 16,800-square-foot Oak Brook mansion formerly home to White Sox legend Frank Thomas will be forfeited to the federal government by its most recent owner as part of a fraud conviction.
  
  This is the second owner to lose the mansion since Thomas sold it in 2003.
  
  In March, Tahir Iqbal, the owner of the estate, and Shaukat Sindhu pleaded guilty to defrauding banks out of $2.5 million through fraudulent short sales of Ohio gas stations.
  
  The 3.3-acre Oak Brook estate, which Iqbal bought in late 2014, will be forfeited to the government as part of the plea deal, according to a statement from the U.S. Attorney's Office for the Northern District of Ohio.
  
  ***
  In July, Iqbal was sentenced to 366 days in prison and Sindhu to 45 months.
  
  Iqbal bought the estate for $2.71 million in 2014 from Bank of America, which had seized it in foreclosure from previous owner Frank Scarlato. Scarlato bought the estate from Thomas for $7.95 million in 2003.
  
  ***
  Thomas built the gated estate in 1997. It has nine bedrooms, 10 full baths, two outdoor swimming pools and a beauty salon.

Source: Former Frank Thomas estate to be forfeited in fraud conviction.

Colorado AG $queezes $125K Lawsuit $ettlement Out Of Real Estate Operators Who Allegedly Fleeced Homeowners With Excessive Fees For Providing Surplus Proceeds Recovery Services For Money Generated From Foreclosure Sales; Said Services Were Available At No Cost Thru Local Public Trustees' Offices; Three Defendants Also Allegedly Used Some Unwitting Victims' Homes To Run Rent Skimming Racket

From the Office of the Colorado Attorney General:

• Colorado Attorney General Cynthia H. Coffman announced that her office has settled a lawsuit against Austin Home Ventures, LLC dba Capital Asset Recovery dba Capital Realty, Bryan Jensen, Ethan Eaton aka Ethan Graham, Bailey Perez, and Billy Fuston. The settlement requires Defendants to pay $125,000 and includes injunctive relief to ensure compliance with the law and prevent future harm to consumers.
  
  ***
  The lawsuit, filed in December 2015, alleged that Defendants failed to comply with the Colorado Consumer Protection Act and Colorado Foreclosure Protection Act when they offered to assist foreclosed homeowners in obtaining overbid funds. An overbid occurs when a home is sold for more than the total amount owed on the mortgage loan. Although homeowners can obtain overbid funds at no cost through the appropriate public trustee’s office, Defendants charged 20-50% of the amount of the overbid for their services and misrepresented the nature of the overbid recovery process. Consumers who paid Defendants for their overbid recovery services will receive restitution under the settlement. The settlement also prohibits Defendants from acting as foreclosure consultants.
  
  Additionally, the Attorney General asserted that three of these Defendants—Austin Home Ventures, LLC, Mr. Jensen, and Mr. Eaton—violated Colorado law when they misled distressed homeowners about the services they would provide. Instead of helping homeowners, the Attorney General claimed that these Defendants rented homeowners’ properties to third parties and collected and kept rental payments without the knowledge or consent of the homeowners. Many of the impacted homeowners were members of the military who needed to quickly relocate.
  
  The settlement prohibits Defendants from acting as equity purchasers or entering into any agreement concerning real property that is either subject to a foreclosure or where the underlying mortgage loan is at least 30 days delinquent or in default.
  
  Attorney General Coffman thanks the public trustees of Adams, Arapahoe, Denver, El Paso, Larimer, Pueblo, and Weld counties for their assistance in this investigation and lawsuit.

Source: Attorney General Cynthia H. Coffman Announces Settlement Against Colorado Springs Company that Misled Distressed Homeowners, Including Members of the Military, in the Foreclosure Process.

Go here for links to the original lawsuit, final consent judgment, and other relevant court documents.

Michigan Man Pleads Guilty, Coughs Up $125K In Upfront Restitution For Running Loan Modification Scam, Debt Management Ripoff That Screwed Over Homeowners Needing Financial Relief

From the Office of the Michigan Attorney General:

• Michigan Attorney General Bill Schuette [] announced that Pasquale Longordo, 39, of Birmingham, and his company Modify Loan Experts, LLC, pleaded guilty to two felonies and 27 misdemeanors for stealing money from Michigan residents who were facing mortgage foreclosures or needed help managing their credit card debt.
  
  ***
  Longordo pleaded guilty [...] to the following charges:
  

• One count of False Pretenses, a five year felony;
• Six counts of Attempted Debt Management Act, a misdemeanor;
• Seven counts of Credit Services Protection Act violations, a misdemeanor; and
• One count of Unemployment Compensation Fraud.

• Longordo also paid $125,000 in restitution at [this] hearing. The money will be distributed to his victims. Longordo is scheduled to be sentenced on September 27, 2016, at 8:30 a.m. in the Oakland County Circuit Court.
  
  The Deapartment of Attorny General was assisted on this case by the Federal Housing Finance Agency, Office of Inspector General.
  
  “Pasquale Longordo took advantage of victims desperate to keep their homes. He not only mislead them in his ability to negotiate on their behalf, rendering them helpless, but he also took their money and used it for his personal gain,” said Catherine Huber, Special Agent in Charge, Midwest Region, Federal Housing Finance Agency, Office of Inspector General. “The guilty plea [] is the first step in holding him accountable for his criminal conduct. Our office is committed to working with our law enforcement partners to seek justice for victims of this type of fraud.”
  
  Case Background
  
  Longordo and Modify Loan Experts allegedly promised victims that they would have an attorney assigned to represent them and negotiate mortgage modifications on their behalf with mortgage companies. However, this did not happen and many victims lost their homes as a result.
  
  Additionally, Longordo, who also operated a credit card debt management service, allegedly told debt management victims he was putting their funds into an escrow account and that he would use the payments to negotiate their debt with credit card companies. In reality, Longordo put the victims’ funds into a regular bank account and allegedly used that account like his personal ATM.
  
  During this time, Longordo allegedly received unemployment compensation although he was ineligible.

Source: South East Michigan Man Enters Guilty Plea for Role in Mortgage and Debt Management Scheme.

Cops Raid Alleged Loan Modification Racket, Haul Away Evidence, Frog March Duo Accused Of Running Phony Law Firm (Unlicensed Practice Of Law); Over 300 Homeowners Seeking Debt Payment Assistance Say They Were Duped Out Of Money; Novice Lawyers Also Roped Into Participating In Scam, Using Their Names, Bar License Info For Corporate Filings, Retainer Agreements, Etc., Say Investigators

In Coral Springs, Florida, the South Florida Sun Sentinel reports:

• Authorities say two phony lawyers set up an office in Coral Springs and drew in more than 300 trusting homeowners on the brink of losing their homes to foreclosure.
  
  Joseph Anton Hilton, 56, and Adam Forman, 46, owned The Asset Protection Law Firm, 3921 NW 126th Ave., which offered residential loan modifications and debt consolidation, authorities said.
  
  But neither Hilton nor Forman, both of Parkland, was licensed to practice law in Florida, police said. Each has been charged with practicing law without a license, a third-degree felony. Hilton is jailed on $250,000 bond; Forman is being held on $75,000 bond, jail records show. Additional charges are pending.
  
  According to the Florida Attorney General's Office,(1) the pair "deceived homeowners into paying hefty upfront and monthly fees for legal services not supervised or approved by licensed attorneys."
  
  The state received 37 formal complaints from consumers, but police said the pair's client roster included more than 300 homeowners. Others may be implicated, police said, but there had been no further arrests as of Saturday.
  
  According to an attorney general's complaint, Hilton, who used the name Joseph Starr with clients, and Forman told homeowners not to pay their mortgages and ignore notices because the law firm would be dealing with their banks at a "higher level." They advertised a firm with an "elite network of over 100 attorneys."
  
  The pair also deceived legitimate lawyers, mostly novices, and recruited them through Craigslist to work for their bogus law firm, officials said. Hilton and Forman used these legitimate lawyers' names and bar license information for corporate filings, retainer agreements with desperate homeowners and other legal documents, according to the attorney general's office.
  
  Court documents were filed using the real attorneys' information to delay foreclosures and allow Hilton and Forman to continue collecting monthly fees from homeowners, officials said.
  
  When homeowners tried to stop paying the phony law firm, Hilton and Forman used other tactics — threats and harassment, the complaint said.
  
  The pair, along with other employees, also ran bogus law offices in Boca Raton and West Palm Beach, officials said.
  
  Thursday, investigators raided the Coral Springs law office and hauled away stacks of boxes containing evidence. Hilton was arrested at the office; Forman was apprehended on an arrest warrant Friday, records show.
  
  When police arrived, there were about 15 employees working at the fake law firm, according to Sgt. Scott Myers. Some may be implicated in the crimes, he said.
  
  The bogus law firm has had several names, police said, among them: Consumer Legal Advocates II, LLC; Consumer Legal Advocates, Inc.; The Asset Protection Law Group, P.A.; Oracle Marketing Co. and Consumer Legal Resources of Florida, LLC.
  
  "This is an active, ongoing investigation. We're interested in providing justice and fairness to everybody involved," Myers said.
  
  Authorities urge anyone who might have been a client of Hilton, Forman or their law firms to contact Coral Springs Detective Jason DeLuca at jdeluca@coralsprings.org or Broward Crime Stoppers at 954-493-8477.

Source: Phony lawyers preyed on financially strapped homeowners, authorities say.

-----------------------

(1) In addition to the criminal action brought by local law enforcement, the state Attorney General's office brought a civil suit against these suspects alleging essentially the same facts. See State of Florida v. Forman, et al.

Civil Rights Feds Hit Alleged Loan Modification Racket With Fair Housing/ECOA Lawsuit; Says Outfit Specifically Targeted Hispanic Homeowners When Peddling Unnecessary, Ineffective Forensic Loan Audits, Foreclosure Assistance

From the U.S. Department of Justice (Washington, D.C.):

• The Justice Department [] filed a lawsuit alleging that several mortgage loan modification service providers violated the federal Fair Housing Act and Equal Credit Opportunity Act by intentionally discriminating against Hispanic homeowners by targeting them for predatory mortgage loan modification services and interfering with their ability to receive financial assistance to maintain their homes.
  
  The defendants named in the lawsuit are The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc., Spieker Law Office and the principals of these entities: Omar Alcaraz, Araceli Castro, Oralia Gutierrez, Hortencia Leon, Raul Luna, Elena Ramirez and David Spieker.
  
  The complaint, which was filed [] in the U.S. District Court for the Northern District of California, alleges that the defendants engaged in a pattern or practice of marketing to and encouraging Hispanic homeowners to pay approximately $5,000 for unnecessary and ineffective loan audits. The defendants told the homeowners that audits were essential for a loan modification, but in fact the audits had no impact on the loan modification process and provided no financial benefit.
  
  As part of their advertised loan modification service, the defendants encouraged their clients to stop making mortgage payments and instructed them to cease contact with their lenders. This conduct resulted in many homeowners defaulting on their mortgage payments and ultimately losing their homes.
  
  This lawsuit arose as a result of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by two of the defendants’ former clients. The complainants elected to have the case heard in federal court and HUD referred the case to the Justice Department.
  
  “Intentionally targeting any community or person with predatory mortgage services because of their ethnicity or national origin violates federal law, harms working families and hurts our entire economy,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.
  
  ***
  Anyone with information on the loan modification services provided by The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc. or Spieker Law Office should contact the Civil Rights Division’s Housing and Civil Enforcement Section at 1-800-896-7743 (press 1 to continue in English, and select option 5) or at THLALawsuit@usdoj.gov.

Source: Justice Department Alleges California Loan Modification Service Providers Discriminated Against Hispanic Homeowners.

For the lawsuit, see U.S. v. The Home Loan Auditors LLC, et al.

Ex-HOA President Gets Five Years Prison Time, 15 Years Probation For Illegally Dipping Into Community Till For More Than $180K

In Tamarac, Florida, the South Florida Sun Sentinel reports:

• A former homeowners association president in Tamarac has been sentenced to prison for embezzling more than $180,000 from her community.
  
  Court records show that Michelle Changar-Coe, 46, changed her plea to guilty on a grand theft charge and was sentenced to five years in prison followed by 15 years of probation. She also was ordered to pay $192,416 in restitution during a court hearing Tuesday.
  
  Changar-Coe was president of the Mainlands Section 7 homeowners association from January 2009 through December 2013 and forged signatures on dozens of checks she deposited into her personal bank account, authorities said.
  
  A letter filed in court in January from Maureen Utich, a Mainlands resident, spoke of her wishes for prosecution of the crime and said more than 200 people in her community had suffered from Changar-Coe's actions.
  
  "She has caused hardship for many of her victims. Families with children, elderly on fixed incomes, laid off and unemployed people struggling to pay their bills," she wrote. "She stole from all of us."
  
  About a half dozen residents echoed her sentiments in letters to Broward Circuit Judge Michael Rothschild.
  
  ***
  Court records show that Changar-Coe pleaded guilty to charges of grand theft and uttering a forged instrument in 1997. At the time, the judge withheld adjudication, meaning there was no conviction on her criminal record, and she was given three years of probation. She also was ordered to pay about $4,500 in restitution.

Source: Ex-official who stole from Tamarac homeowners association gets prison sentence.

Rent-To-Own, Contract For Deed, Land Contract Rackets: A New Breed Of Landlord Blurs The Lines Between Renter & Homeowner; Confusing Contractual Terms Leave Customers Unsure If They're Owners Or Tenants

The New York Times reports:

• Alex Szkaradek is a landlord who seems to have the best of both worlds.
  
  Mr. Szkaradek, 36, collects rent, but he never has to pay for repairs on any of the more than 5,500 homes — many of them rundown — that his firm manages across the country.
  
  The firm, Vision Property Management, blurs the line between what it means to be a renter and a homeowner. These companies do not offer regular leases or mortgages — they offer “rent to own” contracts on homes that require tenants to make all repairs, no matter how big or small.
  
  Mr. Szkaradek says Vision, a leader in the fast-growing market, is bringing the dream of homeownership to Americans who lack good credit or are too poor to qualify for mortgages.
  
  In many communities, housing prices have recovered from the financial crisis. At the bottom end, however, banks have all but stopped making loans for homes worth less than $100,000, leaving millions of people with few options.
  
  But these rent-to-own agreements reside in a gray area of the law. An examination by The New York Times of contracts and court filings, as well as interviews with housing lawyers and more than a dozen of Vision’s customers across the country, found that these deals are risky, lack consumer protections and may not be enforceable in some states.
  
  Most tenants walk away with nothing, having sunk money for rent and repairs into homes they had once hoped to own. Others faced surprise evictions, having signed a contract that did not disclose what repairs were needed, yet set a deadline for making sure the home was up to local housing code. As different tenants move in and out of the same property over the course of years, many homes fall further into disrepair.
  
  ***
  “We’re seeing an influx in these contracts,” said Katarina Karac, a city lawyer for Columbus, who is involved in one case the city has against Vision. “It looks like a landlord-tenant relationship, except instead of having the landlord take care of the property, they are putting that obligation on the tenant,” she added.
  
  Blurred Lines
  
  Every home rented by Vision comes “as is” and has strict contractual terms that require a tenant to pay for any repairs, no matter how big. Renters are given a few months to deal with any outstanding building code violations and to make the homes habitable.
  
  In interviews, as well as in court documents, customers said they were confused by the contracts’ terms and requirements, and were not sure whether they were owners or renters.
  
  They signed their leases and put down an initial payment to reserve the right to buy the house. Unlike most typical home purchases, rent-to-own contracts have no requirement to obtain an independent home inspection. The customers contend they were not informed of outstanding issues with Vision homes, many of which the company had bought for $10,000 or less.
  
  Tenants who are evicted during the tenure of these seven-year contracts walk away empty-handed, receiving no credit for money spent on repairs or renovations.
  
  Rent-to-own leases are similar in many ways to contracts for deeds: long-term, high-interest installment contracts that call for the resident to make monthly payments to the seller. Unlike a contract for deed — which typically lasts 30 years, at the end of a Vision contract, tenants still need to find financing to complete the deal. The buyer does not receive legal title to the home until the last payment is made.
  
  ***
  “If you’re doubling your money off of people who are scraping by and you’re taking advantage of their vulnerability to enrich yourself, that is being predatory,” said Beryl Satter, the author of the 2009 book “Family Properties,” which chronicled the exploitation of black homeowners in Chicago.

For more, see Rent-to-Own Homes: A Win-Win for Landlords, a Risk for Struggling Tenants.

See generally, Spotlight Continues To Burn On Predatory Land Contract/Contract For Deed Real Estate Rackets (Arrangements "Are To Housing What Payday Loans Are To Banking & Rent-A-Centers Are To Furniture!").

Among Attorney's Last Words To Judge Before Being Shipped Off To Serve 46-Month Sentence For Fleecing Clients Of Over $300K: "I'm A Thief!"

In Brunswick, Georgia, The Florida Times Union reports:

• A lawyer who admitted to stealing hundreds of thousands from clients was sentenced [] to nearly four years in prison and ordered to pay restitution.
  
  Before Chief U.S. District Judge Lisa Godbey Wood sentenced him, Donald Carlton Gibson told Wood that he had tried his very first case in the courtroom where he stood before her with a “surreal sense of shame...”
  
  “Instead of that man full of promise,’’ Gibson said, “I am here to be judged for what I am. I’m a thief.”
  
  Wood sentenced Gibson to the maximum 46 months under the federal advisory guidelines, ordered him to pay $312,432.19 restitution and to serve five years on probation once he’s released. Gibson lived in Savannah and had a law practice in Brunswick but has voluntarily surrendered his license.
  
  ***
  Gibson had pleaded guilty in December to a single count of bank fraud for taking an $80,000 check one his clients had written in the settlement of a suit. Gibson forged the name of his law firm onto the front of the check and deposited it into his own account. He then lied to Vince Sowerby, the lawyer representing Cindy Taylor, who was supposed to have gotten the money. He told Sowerby that his client was refusing to pay and that Sowerby would probably have to sue.
  
  Taylor ultimately got her money because the bank had cashed a forged check.
  
  But Taylor was not the only victim, and one of them, the owner of a Brunswick convenience store made sure Gibson heard his victim impact statement.
  
  Given the choice of speaking from a lectern with his back toward Gibson or the witness stand, David Patel opted for the witness stand so he could look Gibson in the eye.
  
  Gibson had the guts to look him in the eye and lie when he stole from him, Patel said. “Now have the same guts to look at me and look at me in the face,” Patel said.
  
  Having his money stolen by Gibson was worse than losing it to an armed robber because he had trusted Gibson, Patel told the court.
  
  “You didn’t become a lawyer to help people,” but instead to prey on people when they were vulnerable, Patel told Gibson said.
  
  After the sentencing, Patel told the Times-Union that through “lies and deceit,” Gibson had stolen from him for 10 years. Gibson had forged others’ signatures on official-looking documents to explain why he wouldn’t be getting money he was due, Patel said.
  
  Patel said that many of his relatives who don’t speak English had needed a lawyer and he had referred them to Gibson only to have them lose money, too.
  
  “They still blame me,” he said.
  
  When Gibson was escorted into the courtroom, retired Army Maj. Edward Canady of St. Marys stood and stared him in the face. “He took my retirement money I had saved up for 32 years,’’ Canady said later.
  
  Gibson collected legal fees but never did anything in a suit and, as a result, Canady said he lost a valuable piece of property, all the improvements he had made to it and his legal fees. In all, Gibson probably caused him to lose $500,000, Canady said.
  
  Although Gibson got the maximum under the guidelines, Canady and Patel said it wasn’t nearly enough.

For the story, see 'I'm a thief,' Brunswick lawyer says before getting 46-month sentence for taking clients' money (Donald Carlton Gibson also must pay more than $312,000 restititution, judge orders).

Law Professor With Side Real Estate Practice Gets Bar Ticket Yanked For Temporarily But Improperly 'Borrowing' Funds From Contract Deposits Being Held In Escrow To Meet Personal, Business Expenses; Attorney's Issuance Of Rubber Check From Trust Account Triggers Probe

From a recent post in the Legal Profession Blog:

• A tenured member of the Rutgers Law faculty has resigned from the Bar of the New York Appellate Division for the First Judicial Department.
  
  [from the recent order]
  
  Respondent avers his resignation is voluntary, free from coercion and duress, and he is fully aware of the implications of submitting his resignation. Respondent acknowledges that he is the subject of an investigation into allegations of misconduct in connection with his attorney escrow account based upon a dishonored check drawn from his IOLA Trust Account. Admittedly, respondent misappropriated approximately $255,000 from his IOLA Account, in connection with real estate matters, in order to meet his personal and business expenses. Respondent later replenished the funds from an operating account.
  
  
  ----------------------------------------
  
  The court described the charges in an order of interim suspension
  
  Respondent is a tenured professor at Rutgers School of Law, who also maintains a transactional law practice. In two instances, respondent withdrew IOLA funds that did not belong to him in order to meet his personal and business expenses.
  
  In one instance, in December 2013, respondent received a $220,000 contract deposit on behalf of his client, the seller in a real estate transaction, which he deposited into his IOLA account. Between January 2 and February 14, 2014, when the transaction closed, respondent repeatedly invaded the $220,000 contract deposit such that, as of February 11, 2014, his account balance had fallen to $500. Respondent replenished the funds he withdrew with funds from his two operating accounts.
  
  In the second instance, on August 5, 2014, respondent deposited a $100,000 contract deposit he received from his clients, a married couple, whom he represented in connection with their purchase of a condominium; he deposited the funds into his IOLA account. At the time, respondent was holding $10,395.96 on behalf of another client in his IOLA account. Between August 5 and August 20, 2014, when the transaction closed, respondent invaded the IOLA funds by making transfers to his business and personal accounts such that, as of August 14, 2014, his account balance had fallen to $74,495.96.
  
  On the same day as the closing, respondent replenished the funds he withdrew by transferring funds from his two operating accounts. Nonetheless, an IOLA check in the amount of $15,914.93, representing the payment of a flip tax, was dishonored due to insufficient funds; this is the dishonored check that precipitated the Committee's investigation. On September 23, 2014, respondent replaced this check with a bank cashier's check drawn against his IOLA account.
  
  Respondent's documentary responses also reveal that he commingled client funds with his personal and business funds, failed to maintain required IOLA account records, and, on one occasion, made a cash withdrawal from his IOLA account for $1,500.

For the post, see Rutgers Law Prof Admits Misappropriation, Resigns From Bar.

More Discipline For Florida Attorneys

The Florida Bar, the state’s guardian for the integrity of the legal profession, has published the latest issue of its periodic gossip sheet, announcing that the Florida Supreme Court has recently disciplined 32 attorneys – disbarring six, revoking the licenses of two, suspending 16 and publicly reprimanding eight. Two attorneys were also placed on probation, and another was ordered to pay restitution.

Of those 32 lawyers, the following 17 have been disciplined either for playing fast and loose with their clients' money (including failure to make proper disclosure of fees collected when required), or for inappropriate conduct in connection with either foreclosure or other real estate matters (including one who forged judges' signatures on numerous orders pertaining to foreclosure cases):

• Joseph Bernstein, Fort Lauderdale. The Supreme Court granted Bernstein’s request for a disciplinary revocation, with leave to seek readmission after five years, effective immediately, following a June 9 court order. (Admitted to practice: 1977) Disciplinary revocation is tantamount to disbarment. Disciplinary matters pending against Bernstein involved misappropriation and commingling of client trust funds. (Case No. SC16-660)
  
  Jose Manuel Camacho, Jr., Miami, disbarred effective immediately, following a June 9 court order. (Admitted to practice: 2000) Camacho has a criminal case pending. He was charged in court with 14 counts of uttering a forged instrument – third-degree felonies. He forged the signatures of judges on numerous orders pertaining to foreclosure cases. Camacho forged the signature of one judge at least 31 times. He also commingled trust funds into his operating account. (Case No. SC16-145)
  
  Neil Franklin Garfield, Parkland, to be publicly reprimanded following a June 9 court order. (Admitted to practice: 1977) In at least four instances, Garfield accepted money to represent clients and failed to follow through. In one case, Garfield did not perform the work and, when asked for a refund, denied knowing the client. In other cases, he failed to communicate, charged excessive fees, failed to return refunds upon request and failed to timely respond to Bar inquiries. (Case No. SC15-2162)
  
  John R. Griffith, Lakeland, disbarred effective immediately, following a June 9 court order. (Admitted to practice: 1983) A Bar investigation revealed that Griffith misappropriated client trust funds. (Case No. SC16-900)
  
  Tonja J. Helton, Tampa, suspended until further order, effective 30 days from a June 13 court order. (Admitted to practice: 2009) According to a petition for emergency suspension order, Helton appeared to be causing great public harm by misappropriating thousands of dollars in client funds. (Case No. SC16-865)
  
  Bart Alan Houston, Fort Lauderdale, suspended for 30 days effective May 13, following an April 28 court order. (Admitted to practice: 1986) Houston was sanctioned by a bankruptcy court regarding statements filed in a bankruptcy proceeding and for failing to disclose the use of the $35,000 fee he collected to represent a client. (Case No. SC15-2120)
  
  William N. Hutchinson Jr., Fort Lauderdale. The Supreme Court granted Hutchinson’s request for a disciplinary revocation, with leave to seek readmission after five years, effective 30 days from a June 9 court order. (Admitted to practice: 1974) Disciplinary revocation is tantamount to disbarment. Disciplinary matters pending against Hutchinson involved misappropriation of client trust funds. (Case No. SC16-648)
  
  Daryl Lafayette Jones, Palmetto Bay, to be publicly reprimanded by publication in the Southern Reporter, following a June 9 court order. (Admitted to practice: 1988) In handling a loan modification and a foreclosure action for his client, Jones violated Bar rules regarding conflict of interest, competence and communication, when he secured a third party investor to purchase his client’s home in a bank-approved short sale. (Case No. SC16-897)
  
  Charles Jay Kane, Delray Beach, suspended until further order, following a June 14 court order. (Admitted to practice: 1965) Kane’s law firm and two other firms were hired by healthcare providers for the purpose of representation in personal injury protection claims against insurance companies, including Progressive. It was determined that Progressive was systematically refusing to pay valid insurance claims. The law firms then filed bad-faith claims for clients. After receiving a $5.25 million settlement from Progressive, Kane and his son and business partner Harley Kane paid clients $672,000 and kept more than $4 million as attorneys’ fees. The bad-faith attorneys subsequently sued Kane and the other PIP attorneys and firms for unjust enrichment and fraud. (Case Nos. SC13-388, SC13-389; SC13-390)
  
  Harley Nathan Kane, Delray Beach, suspended until further order, following a June 14 court order. (Admitted to practice: 1993) Kane’s law firm and two other firms were hired by healthcare providers for the purpose of representation in personal injury protection claims against insurance companies, including Progressive. It was determined that Progressive was systematically refusing to pay valid insurance claims. The law firms then filed bad-faith claims for clients. After receiving a $5.25 million settlement from Progressive, Kane and his father and business partner Charles Kane paid clients $672,000 and kept more than $4 million as attorneys’ fees. The bad-faith attorneys sued Kane and the other PIP attorneys and firms for unjust enrichment and fraud. (Case Nos. SC13-388, SC13-389; SC13-390)
  
  Darin James Lentner, Fort Lauderdale, suspended until further order, following a June 14 court order. (Admitted to practice: 1991) Lentner’s law firm and two other firms were hired by healthcare providers for the purpose of representation in personal injury protection claims against insurance companies, including Progressive. It was determined that Progressive was systematically refusing to pay valid insurance claims. The law firms then filed bad-faith claims for clients. After receiving a $3 million settlement from Progressive, Lentner and business partner Laura Watson(1) paid clients $361,000 and kept more than $2 million as attorneys’ fees. The bad-faith attorneys subsequently sued Lentner and the other PIP attorneys and firms for unjust enrichment and fraud. (Case Nos. SC13-388, SC13-389; SC13-390)
  
  Camella Lynn Manion, Jupiter, to be publicly reprimanded following an April 14 court order. (Admitted to practice: 2003) Manion represented a seller in a real estate action and attempted to collect more than $8,000 in attorney’s fees from the buyers. Despite their refusal, Manion again attempted to persuade them to pay her fees. (Case No. SC15-852)
  
  Jose Carlos Marrero, Miami, suspended for three years, effective 30 days from a June 2 court order. (Admitted to practice: 2002) Marrero violated Bar rules while serving as an escrow agent and when processing two mortgage loans on the same property. He drafted a mortgage which attached as collateral a piece of property that no signatory to the agreement actually owned or had authority to encumber. He did not protect the interests of the lender, and he intentionally disbursed funds prior to having the borrowers sign mortgage documents. Marrero received loan closing documents on the property in January 2006, and he did not record the mortgage until six months later, while simultaneously certifying to a subsequent lender that there were no prior encumbrances on the property. He failed to disclose pertinent information to both lenders regarding the loans. (Case No. SC11-1780)
  
  George Allen Orlowitz, Elkins Park, Pa., disbarred effective 30 days from an April 14 court order. (Admitted to practice: 1975) Orlowitz misappropriated and commingled thousands of dollars in client funds. He also prepared and presented false statements to several clients, stating that payments had been made on their behalf, when in fact, they had never been made. (Case No. SC15-2082)
  
  Antonios Poulos, Tampa, suspended for two years, effective immediately, following an April 14 court order. (Admitted to practice: 2007) Further, upon reinstatement, Poulos shall be placed on probation for one year. Poulos advised a client of his receipt of settlement funds in an employment discrimination case in September 2013. He then failed to communicate with the client and did not provide the funds to the client until May 2014. In another matter, a case was dismissed because Poulos failed to respond to the federal court and comply with local rules. When he appeared in court, Poulos falsely advised that he’d informed his client that the case had been dismissed. No. SC15-272)
  
  Adam Powell Rowe, Palatka, to be publicly reprimanded by publication in the Southern Reporter, following an April 7 court order. (Admitted to practice: 2006) Further, Rowe is placed on probation for two years, and he shall sign a rehabilitation contract with Florida Lawyers Assistance. Rowe was hired to assist a client in a foreclosure case. Rowe sent a letter to her with unprofessional and threatening language when she requested an itemized list of charges. (Case No. SC16-469)
  
  William Glenn Roy III, Altamonte Springs, suspended until further order, following a May 24 court order. (Admitted to practice: 2002) A Bar investigation found that Roy misappropriated approximately $125,000 of escrowed funds he held as an escrow agent. He also altered bank statements and other documents pertaining to the IRS in an effort to conceal the misappropriation. (Case No. SC16-848)

Source: Supreme Court Disciplines 32 Attorneys.

Note: To view discipline documents, follow these steps. Additional information on the discipline system and how to file a complaint are available at www.floridabar.org/attorneydiscipline.

--------------------------

(1) This is apparently the same Laura Watson who subsequently became a judge in Broward County, Florida, according to a media report. When word of this insurance racket came out, however, she was quickly ousted from the bench, the media report states. See Disbarment Recommended for Ex-Judge Laura Watson (requires subscription; if no subscription, GO HERE, then click the appropriate link).

See also, The Florida Bar v. Laura Marie Watson (Report of Referee).

Office Manager For Then-Hubby's Law Office Claims Full Responsibility For Pilfering Over $2.3 Million From Real Estate Closing Trust Account; Attorney Maintains His Innocence, No Criminal Charges Pending Against Him, But Faces Possible Disbarment Anyway; Another Title Insurer Left Holding The Bag

In Columbus, Georgia, the Ledger-Enquirer reports:

• The former wife of a prominent Columbus real estate closing attorney pleaded guilty Tuesday afternoon in federal court for her role in a scheme to steal more than $2.3 million from her then-husband’s legal trust account.
  
  Sonya Eddings, 51, appeared in front of U.S. District Court Judge Clay Land and freely admitted her role in years of fraud that was discovered in October 2012. [...] Currently living in Pennsylvania, Eddings was released on an unsecured $10,000 bond until sentencing.
  
  The guilty plea comes almost four years after Columbus Bank & Trust Co. alerted Muscogee County Superior Court about shortfalls in attorney Michael Eddings real estate trust account. Since the fraud was discovered, Michael Eddings has maintained his innocence, saying his wife was solely responsible for the missing funds. No criminal charges have been filed against Michael Eddings, though he does face potential disbarment from the Georgia Supreme Court.
  
  The Eddingses have since divorced, and Michael Eddings has remarried.
  
  ***
  At least four times under oath, Sonya Eddings has said that she, as her husband’s office manager, was solely responsible for the thefts from the real estate trust account. She admitted her role during a deposition for a civil case in December 2012, in FBI interviews in 2012 and 2013, and in a Georgia State Bar hearing in April 2013.
  
  ***
  In October 2012, the scheme fell apart when Sonya Eddings was out of town and the law office received a call from a client complaining that a payoff of a mortgage had not been made. Sonya Eddings immediately transferred the money, but by the time she did, First American Title Insurance, which insured their closings, became involved. Auditors were brought into the office, and Sonya Eddings confessed in a written statement.
  
  ***
  First American later sued Michael and Sonya Eddings, all of their restaurant holdings and CB&T in U.S. District Court, Middle District of Georgia. First American and CB&T settled out of court and terms of the deal were not released. In dismissing the case, Land issued a $1.99 million judgment for First American against Michael Eddings and a $2.09 million judgment against Sonya Eddings.
  
  ***
  Eddings continues to practice law in Columbus and Atlanta. A State Bar of Georgia Review Panel recommended earlier this year that Eddings be disbarred for his role in the theft. The recommendation goes to the state Supreme Court, which will make the final ruling.
  

For the story, see Sonya Eddings pleads guilty to stealing $2.3 million in federal court.

Another Lawyer Gets Bar Ticket Pulled For Fleecing Since-Deceased Clients; Currently Sits In State Prison Doing 30 Months For Pilfering Approx. $500K From 86-Year Old & Dementia-Stricken 98-Year Old Victims

In Belfast, Maine, WABI-TV Channel 5 reports:

• A Belfast lawyer in prison for embezzling hundreds of thousands of dollars from two elderly clients can no longer practice in Maine.(1)
  
  The Maine Supreme Court [] disbarred William Dawson, Jr., 62. He was also ordered to pay than $10,000 to the Board of Overseers of the Bar for disciplinary proceeding costs.
  
  Dawson was sentenced in March to two-and-a-half years in prison. He has to pay $520,000 in restitution, too. Dawson pleaded guilty to theft and failure to pay income taxes for three years, starting in 2011.
  
  Court documents say it was during that time, Dawson paid himself from the bank accounts of an 86-year-old woman and a 98-year-old woman. He over-billed them, too.
  
  Both women have since died.

Source: Belfast Lawyer Who Bilked Two Elderly Clients Disbarred in Maine.

See also, Belfast lawyer gets 30 months in prison for bilking elderly clients:

• In one case, William L. Dawson Jr. placed an 85-year-old Belfast resident in a nursing home for four years while he looted her bank accounts, according to court records.
  
  ***
  The theft was uncovered in March 2013 when a teller at Key Bank noticed Dawson was writing large checks to himself on at least a weekly basis from the account of Veronica Pendleton. She alerted her supervisor, and a review of the account was undertaken, as well as that of another customer, 97-year-old Doris Schmidt. In that case, Dawson also was writing large checks on her account, according to Assistant Maine Attorney General Leanne Robbin.
  
  ***
  Pendleton had told [her friend Anne] Cilley she felt like she had been incarcerated for four years and missed seeing the birds and squirrels in her yard, according to Cilley’s letter.
  
  Schmidt suffered from dementia and was in the same nursing home as Pendleton. Dawson had given himself power of attorney over Schmidt’s finances without going to probate court, according to the prosecutor.

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(1) The Maine Lawyers’ Fund for Client Protection was created by an Order of the Maine Supreme Judicial Court to promote public confidence in the administration of justice and the integrity of the legal profession, by reimbursing clients who suffer losses caused by an attorney’s dishonest conduct. Generally, such conduct involves the misuse of funds in the care of the attorney or the misappropriation of amounts for the attorney’s personal benefit. The Fund was not designed to address losses caused by legal malpractice and no amounts are payable to clients for such activity.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes a listing for Canadian client protection funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.