Saturday, January 07, 2017

No Criminal Prosecution (Yet?) For Actually Stealing Client Cash, But Attorney Gets 12 Months Federal Probation & Disbarment For Failure To Pay Income Tax On The Pilfered Proceeds

In Topsfield, Massachusetts, The Salem News reports:
  • A Topsfield lawyer who was sentenced last month to a year of probation and ordered to pay more than $300,000 in restitution to the IRS for unpaid taxes has now also been formally disbarred.

    John Molloy Jr., 53, surrendered his law license last month and was disbarred over conduct that includes both his federal tax fraud case as well as defrauding clients of his law firm or their treatment providers (conduct for which he was not criminally charged).

    In an affidavit, Molloy acknowledged that starting in 2008, he "intentionally misused" at least $57,500 in client funds.

    In a sentencing memorandum filed in the criminal case, federal prosecutors referred to Molloy's practice of using his firm's business accounts to pay his personal expenses, rather than taking a salary and reporting the income.

    They also referred to Molloy withholding portions of settlements or judgments from clients, telling them the funds were being used to reimburse third-party providers, when they were not.

    Molloy has been suspended from practicing law since September, following his guilty plea in the federal tax case.

    He was also suspended back in 2003 for three months for signing an affidavit in the name of a client, filing it in court and making misrepresentations to officials from the Office of Bar Counsel.
Source: Topsfield lawyer disbarred.

See also, Topsfield attorney gets probation, must pay back over $300K for tax fraud:
  • Prosecutors alleged that Molloy regularly deposited [lawsuit] settlement checks into his firm's business accounts, then made withdrawals to pay his personal expenses and bills rather than drawing a salary.

    Prosecutors say Molloy drew nearly $1 million from those firm accounts but did not report the money as income on four different tax returns, even as his accountants questioned the decision.

    In a sentencing memorandum, prosecutors described one $800,000 settlement for a case he had worked on with two other lawyers in 2007. In 2008, he began spending the money.

    "Molloy only reported a fraction of the income that he actually earned," prosecutors wrote.

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