Saturday, February 04, 2017

Lawyer Who Pilfered $593K From Clients, Another Who Failed To Disburse Over $1.5 Million In Foreclosure Sale Proceeds Among Five Illinois Lawyers Disciplined By State Supremes For Playing Fast & Loose With Clients' Cash

On Jan. 17, the Illinois Attorney Registration and Disciplinary Commission announced the Illinois Supreme Court has disbarred four attorneys and suspended eight others.

Of those disciplined, the following five (5) were either disbarred or suspended for allegedly misappropriating or otherwise mishandling their clients' funds:(1)(2)

  • Michael J. O’Malley, of Schaumburg. The ARDC alleged he had “misappropriated $593,000 from six separate clients and attempted to mislead one … by sending them a copy of an order that had not been entered in court.”

    Sean P. Fleming, of Barrington. According to the ARDC release, Fleming “neglected 10 different bankruptcy matters, misappropriated over $3,000 in filing fees, made misrepresentations to his clients about the status of their legal matters and failed to return unearned fees.”
  • Laurence Kallen, of Oak Park, was suspended on an interim basis, and until further order of the court, while the ARDC considers a four-count complaint against him. The ARDC said Kallen is alleged to have failed to disburse more than $1.5 million in foreclosure sale proceeds from four different property sales;

    David M. Schrauth, of Winnetka, for three years and until further order of the court, after he allegedly “neglected a client’s foreclosure matter, dishonestly used his client’s retainer payment for his own purposes without authority, failed to return unearned fees to his client and engaged in a pattern of misrepresenting the status of the mortgage foreclosure matter to his client;”

    Harry A. Schroeder, of Chicago Heights, for one year and until further order of the court, for allegedly mishandling seven cases and not refunding $8,800 in fees.
Source: Cook County Record: Ex-Wrigley rooftop owner among four lawyers disbarred, eight suspended in Illinois in January.
(1) See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession (although Professor Miller's essay is over a quarter-century old, it appears that his observations maintain their vitality to this day):
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.
    The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(2) The Client Protection Program of the Attorney Registration and Disciplinary Commission (ARDC) was established by the Supreme Court of Illinois to provide reimbursement to clients who have lost money or property because of dishonest conduct by lawyers admitted to practice law in the State of Illinois. The Program reimburses clients who cannot get reimbursement from the lawyers who caused their losses, or from other sources such as insurance. (But see Stolen Inheritances: I-Team lawyer warning, in which one Illinois victim said of the program, "Their rules are vague, ambiguous and they are applied at their own discretion, and you can't get a straight answer[.]")

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

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