Sunday, June 25, 2017

Prosecutor: 20 Months Prison Time Not Enough For Now-Disbarred Attorney Who Purloined Over $600K From Unwitting (Or Dead) Clients, Announces Plans To Appeal Sentence; State Bar's Indemnity Fund That Compensates Victimized Clients Of Thieving Lawyers Shells Out $160K

In Moore County, North Carolina, The Pilot reports:
  • A former Pinehurst attorney and Moore County Board of Education member has pleaded guilty to embezzling money from her clients.

    Lu Pendleton “Penny” Hayes was charged with two counts of felony embezzlement in excess of $100,000, three counts of felony embezzlement and two counts of felony obtaining property by false pretenses. The charges stemmed from incidents that occurred between November 2011 and March 2014 and affected six of Hayes’ clients and their estates.

    Hayes was disbarred in October 2014 after admitting to misappropriating more than $400,000 in entrusted funds and engaging in fraudulent bank transactions. The State Bureau of Investigation began looking into her conduct at the request of District Attorney Maureen Krueger, which led to Hayes being indicted on Nov. 17, 2015.

    The indictments were connected to incidents that allegedly occurred between November 2011 and March 2014 and affected six individuals or their estates.

    In four indictments for embezzlement, a grand jury found that Hayes “unlawfully, willfully and feloniously did embezzle, fraudulently and knowingly misapply and convert to her own use” $335,843.64 from the estate of Joseph George Wilson between October 2012 and March 2013 and another $213,712.76 from Andrea Fabiana Ale between March 12 and March 17 in 2014.

    According to the indictments, the amounts Hayes is accused of stealing varied over the years. For instance, one indictment lists a $100,000 withdrawal on Feb. 25, 2014. Another $100,000 was withdrawn from the same account the next day, using a sequential check. On Feb. 28, a check for $1,600 was withdrawn from the same account.

    Hayes, who has been represented by local defense attorney and former colleague Eddie Meacham, pleaded guilty to the charges Tuesday in Moore County Superior Court. Assistant District Attorney Craig Slagle presented evidence during the hearing “that Hayes victimized numerous clients and the total amount of funds embezzled exceeded $600,000,” according to a news release from the District Attorney’s Office.

    The release also said Slagle “presented evidence that Hayes had not paid restitution to any of the victims,” although $160,000 worth of compensation was provided by the North Carolina State Bar through its Client Security Fund.(1)

    Slagle reportedly asked visiting Superior Court Judge Mary Ann Tally to sentence Hayes to two consecutive prison terms of 58 to 82 months — the minimum sentence under state law for felony embezzlement. But Tally sentenced Hayes on Wednesday [June 7] to 20 months in prison and 36 months probation. She was also ordered to pay $449,564 in restitution, the release said.

    Tally reportedly said the lighter sentence was justified by “extraordinary mitigation,” citing Hayes’ “good standing in the community.” The state Attorney General’s Office plans to appeal the sentence, according to the release.
For the story, see Local Attorney Sentenced to Prison for Embezzlement.
(1) In North Carolina, the Client Security Fund was established by the state 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 dollar limit on reimbursements of $100,000 for an applicant who suffered a reimbursable loss (or losses) as the result of the dishonest conduct of one lawyer.

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