Attorney Pleads Guilty While Law Partner Gets 12 Months Prison Time For Roles In Looting Client Trust Account Of Over $1.2 Million

From the Office of the U.S. Attorney (Kansas City, Missouri):

• Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Leawood, Kan., attorney pleaded guilty in federal court today [February 10] to his role in a fraud conspiracy, while his former law partner was sentenced for stealing more than $1.2 million(1) from St. Luke’s Health System, a client of their former law firm.
  
  Mark J. Schultz, 57, of Leawood, waived his right to a grand jury and pleaded guilty before U.S. District Judge Beth Phillips to a federal information that charges him with participating in a wire fraud and mail fraud conspiracy.
  
  Alan B. Gallas, 65, of Kansas City, Mo., was sentenced by U.S. District Judge Beth Phillips to one year and one day in federal prison without parole. The court also ordered Gallas to pay $1,224,264 in restitution to St. Luke’s. Gallas must report to the Bureau of Prisons by April 10, 2017, to begin serving his sentence.
  
  Schultz and Gallas were attorneys and partners in the law firm of Gallas & Shultz in Kansas City, Mo., which specialized in collection work for corporations. Gallas surrendered his license to practice law in Missouri and Kansas in November 2015.
  
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  Gallas admitted that he engaged in a scheme from 2009 through July 2015 to defraud a client, St. Luke’s Health System, of monies collected by his law firm totaling $1,224,264. By pleading guilty [], in a separate but related case, Schultz admitted that he participated in the conspiracy from January 2014 through July 2015.
  
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  Gallas was the attorney responsible for the St. Luke’s account at the law firm. After attempting to collect on patient accounts for a period of time, St. Luke’s would transfer its larger outstanding patient accounts to Gallas & Shultz for collection. As payments on patient accounts were received, the payments were logged into the case management system for the appropriate patient account. The monies were then deposited into the law firm’s trust account. On a periodic basis, often monthly, the firm would remit the patient payments collected to St. Luke’s.
  
  Gallas admitted that he caused personnel at the law firm to withhold money from payments made to St. Luke’s by placing thousands of payments on “hold” status, then directing those funds be transferred from the trust account to the firm’s operating account.
  
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  Schultz admitted [] that he agreed with Gallas and others to transfer funds from the trust account into the law firm’s operating account. The amount of funds diverted by Schultz, and the amount of restitution Schultz must pay to St. Luke’s for the total amount of its loss, will be determined by the court at Schultz’s sentencing hearing.

Source: Leawood Attorney Pleads Guilty to Fraud Conspiracy (Law Partner Sentenced for $1.2 Million Fraud Scheme).

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(1) The Missouri Bar maintains a Client Security Fund to (at least partially) compensate clients harmed by a fraudulent or dishonest act by a Missouri attorneys, including but not limited to a defalcation or embezzlement of money, the wrongful taking of property, or the failure to remit or turn over money or property belonging to the client. Payments are limited to 80% of the amount of the loss over $2,500 and there is a maximum payment of $50,000 per claim.

See, generally, The Missouri Bar: Righting Wrongs (Compensating Clients Financially Harmed By Their Attorneys' Actions).

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 (February 2017) (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.