Sunday, March 12, 2017

NC Attorney Loses Law License For Using Client-Entrusted Money As Personal Piggy Bank Involving Hundred$ Of Thousand$, Improperly Making Transfers Between Bank Accounts As Needed To Meet Immediate Needs As They Arose, Disbursing Money To Clients From Non-Trust Accounts

In Wilson, North Carolina, The Wilson Times reports:
  • Wilson attorney Paul Blake was stripped of his law license last week because the N.C. State Bar claims he embezzled and misappropriated money from three client accounts.(1)

    The bar’s Disciplinary Hearing Commission disbarred Blake in a Feb. 15 order of discipline. A commission panel found Blake moved money from clients’ trust accounts to his cost advance account and tried to cover up the misappropriation by submitting fraudulent records to the state bar.
    ***
    Blake was appointed co-executor of Joseph C. Speight’s estate on Jan. 23, 2013. The other co-executor, Speight’s stepdaughter M. Paige Reece, contacted the state bar in January 2016 after she “became concerned about Blake’s handling of the Speight estate,” according to the disciplinary order.

    In its investigation, the bar found that Blake never filed an inventory, annual account or final account for the Speight estate with the Wilson County clerk of superior court. The order says Blake mishandled money after selling the estate’s farm on Bartee Bridge Road in Saratoga known as the McKeel farm property.

    Blake deposited $360,838.71 from the property’s sale into his trust account on July 2, 2014, and made disbursements from the account “in accordance with the closing statement” from July 2 through Aug. 26, leaving a balance from the sale proceeds of $325,698.13, according to the disciplinary order.

    State bar investigators found that Blake disbursed nearly $283,000 from the trust account in the following 17 months, leaving the account with a balance of $42,733.30 on Jan. 29, 2016.

    A finding of fact in the disciplinary order states that “Blake used the Speight Estate funds for personal expenses.”

    Blake told an attorney for the state bar on Jan. 27, 2016, that roughly $300,000 from the property sale remained in his trust account, according to the order.

    The bar asked for bank records and says Blake provided some documents and withheld others.

    Blake transferred $290,536.48 from his cost advance account to the trust account and $380.45 from his operating account to the trust account on Feb. 3, 2016, the disciplinary order states. That day, he allegedly sent bar attorneys a document showing the trust account balance to be $331,168.09.

    “Blake made these transfers and provided a document showing that balance in an attempt to support his false statement that he had continuously maintained the McKeel farm sale proceeds in his trust account since the settlement date,” Prentiss wrote in the disciplinary order.
    ***
    Blake also misappropriated funds from a car crash settlement after a client identified only as L.P. hired him in August 2013, according to the disciplinary order. The contract between the client and Connor, Bunn, Woodard, Fleming & Blake states that the firm was entitled to 25 percent of any settlement prior to the filing of a lawsuit and 33.3 percent of any settlement reached after a suit was filed.

    Blake received a $30,000 settlement check from the insurance company of the driver involved in the crash with L.P. in January 2015. The check was made payable to the Paul N. Blake III Law Firm, PLLC, and L.P., according to the state bar.

    Regulators say Blake told L.P. he would deposit the check in his trust account pending further action on an underinsured motorist claim, but directed his paralegal to deposit it into his cost advance account instead.

    Between Jan. 20 and Feb. 22, 2015, he “made numerous disbursements from the ‘cost advance account’ to himself and for his benefit,” the disciplinary order states. The balance fell to $6,448.

    “By depositing L.P.’s funds into his cost advance account, and then making transfers to his personal bank account and writing checks for cash, Blake misappropriated L.P.’s funds,” according to the order.

    When L.P. requested his funds from the settlement, Blake gave him a $20,000 check drawn on an account Blake maintained that was not a trust account, the state bar said.

    In the third and final case cited in the disciplinary order, Blake allegedly received a $134,167.76 check in November 2012. The money was to be held in escrow pending the outcome of a lawsuit in which he represented the plaintiff. The bar says he failed to keep the money in his trust account.

    Blake’s trust account balance had fallen to $11,699.09 as of June 14, 2012, the order states.

    When his client lost the lawsuit and the defendant was entitled to recover the full $134,167.76, Blake disbursed the money from his cost advance account on Sept. 15, 2015, according to the order.

    Citing bank records, the state bar says Blake transferred $139,000 from his trust account to his cost advance account the same day, “misappropriat(ing) other entrusted funds in his trust account.”

    The trust account balance stood at $108,317.71 after the transfer, the disciplinary order says.

    “Blake should have had at least $330,470.23 in his trust account for other clients when he made the $139,000 transfer to his ‘cost advance account,’” the order states.

    NO DEFENSE OFFERED

    Blake didn’t try to defend himself in the disciplinary proceedings against him, according to the order resulting in his disbarment.
For more, see Blake disbarred over claims of embezzlement.
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(1) The North Carolina Client Security Fund was established by the North Carolina Supreme Court in 1984 to reimburse clients who have suffered financial loss as the result of dishonest conduct of lawyers engaged in the private practice of law in North Carolina. There is a reimbursement limit of $100,000 for an applicant who suffered a reimbursable loss (or losses) as the result of the dishonest conduct of one lawyer. Go here for application form.

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.

posted by Home Equity Theft Reporter at 4:02 AM