Saturday, March 18, 2017

Ohio Lawyers' Client Protection Fund Shells Out $180K+ In Theft Reimbursements To 31 Victims Of Over A Dozen Sticky-Fingered Attorneys

Court News Ohio reports:
  • The Board of Commissioners of the [Ohio] Lawyers’ Fund for Client Protection awarded a $75,000 maximum claim as part of $180,445.18 distributed to 31 victims of attorney theft at its meeting March 3. Thirteen former or suspended Ohio attorneys were found to have misappropriated client funds. Three deceased attorneys also were involved in claims.
For more, including the hit parade of lawyers for which the Fund is shelling out the $180,000+, see 31 Victims of Attorney Theft Awarded More Than $180,000.
(1) In Ohio, the Lawyers’ Fund for Client Protection, formerly known as the Clients’ Security Fund, was created in 1985 by the state Supreme Court to reimburse victims of attorney theft, embezzlement, or misappropriation.

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.

Five More Florida Attorneys Get Either Booted Or Suspended In Connection With Faulty Handling Of Client Money &/Or Related Trust Account Records

In the most recent issue of its periodic gossip sheet, The Florida Bar, the state’s guardian for the integrity of the legal profession, announced that the Florida Supreme Court in recent court orders disciplined 15 attorneys – disbarring two, revoking the licenses of two, suspending nine, and publicly reprimanding two. Two attorneys were also ordered to pay restitution.

Of the 15, five (5) of the following attorneys have either been booted or suspended amidst allegations of playing fast and loose with their clients' cash(1) and/or the related trust account records; one other attorney was found not to have engaged in any intentional misappropriation, but was at fault for inadvertent trust account negligence and, consequently, received a reprimand.
  • Sholom Boyer, North Miami Beach, to receive a disciplinary revocation, with leave to seek readmission after five years, effective retroactive to Feb. 21, 2016, following a Jan. 19 court order. (Admitted to practice: 2001) Disciplinary revocation is tantamount to disbarment. Disciplinary matters pending against Boyer included misappropriation of client funds and failure to communicate with the client. (Case No. SC16-2081)

    Avery Spencer Chapman, Wellington, to be publicly reprimanded by publication, following a Jan. 19 court order. (Admitted to practice: 2001) Further, Chapman shall attend a trust accounting workshop. Chapman represented a client in varied business and personal matters, who wired substantial monies into his trust account during an approximate three-year period from which Chapman was authorized to draw his compensation. When the client relationship ended, Chapman undertook an accounting and discovered a shortfall, which he promptly disclosed and fully reimbursed to the client. A Bar audit found no evidence of intentional misappropriation, but that he was negligent with bookkeeping and commingled client trust funds. (Case No. SC16-2258)

    Donald Richard Kerner, Jr., Homestead, suspended for three years, effective 30 days from a Jan. 19 court order. (Admitted to practice: 2000) In three separate matters, Kerner failed to diligently represent clients. Kerner received a settlement of $25,000 on behalf of a client, but on several occasions, the account balance fell below that amount. He also failed to timely disburse the proceeds to the client. Kerner failed to properly maintain trust account records, and he failed to keep his client reasonably informed about the status of a case. (Case No. SC16-1034)

    Teddy Sliwinski, Cleveland, Ohio, permanently disbarred effective immediately, following a Jan. 5 court order. (Admitted to practice: 2003) In several instances, Sliwinski misappropriated client funds, and he repeatedly paid for personal and business expenses out of his Interest on Lawyers Trust Account. (Case No. SC16-1008)

    Pamela Bruce Stuart, Washington, D.C., suspended for one year, effective 30 days from a Jan. 5 court order. (Admitted to practice: 1994) After being appointed by her father as trustee to his trust, Stuart breached her fiduciary duties by failing to provide the required annual accountings and loaning herself substantial funds to assist in carrying out the trust’s responsibilities and her own living and medical expenses. (Case No. SC16-2204)

    Vito Torchia, Jr., Los Angeles, Calif., suspended for three years, effective 30 days from a Jan. 5 court order. (Admitted to practice: 2006) Further, Torchia shall pay restitution of more than $25,000 to at least three clients. After being retained and receiving advance fees, Torchia failed to provide competent representation. In some instances he failed to add clients as plaintiffs in mass joinder litigation; he failed to provide legal services; he failed to appear; and he failed to communicate. Upon being terminated by clients, Torchia also failed to promptly return unearned fees. (Case No. SC16-1267)
Source: Supreme Court Disciplines 15 Attorneys (Summaries of orders issued – Jan. 5 – 23, 2017).

Editor's Note: Key discipline case files that are public record are posted to attorneys’ individual online Florida Bar profiles.To view discipline documents, follow these steps.
(1) The Clients' Security Fund was created by The Florida Bar to help (at least partially) compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Florida-licensed attorney.

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.

Indiana Supremes Yank Law License From Attorney For Playing Fast & Loose With Clients' Funds, Converting Cash For His Own Use, Failing To Maintain Adequate Trust Account Records

In Fort Wayne, Indiana, The Indiana Lawyer reports:
  • A Fort Wayne attorney who repeatedly failed to cooperate in a disciplinary action has been disbarred for mismanagement of his trust account and converting client funds.(1)

    The justices of the Indiana Supreme Court disbarred Donald Edward James Tuesday [March 7] after previously suspending him in January for failing to respond to a September 2016 show cause order related to two disciplinary cases.

    In the per curiam opinion, the justices wrote that James’ disciplinary trouble began in July 2016 when the Indiana Supreme Court Disciplinary Commission first filed a disciplinary complaint against him. The disciplinary complaint stemmed from James’ conduct in 2015, when he “significantly overdrew his attorney trust account on three occasions, regularly commingled personal funds with client funds, made unauthorized cash and check withdrawals from the trust account for his own personal purposes, and failed to maintain adequate trust account records.”

    James largely failed to cooperate with the investigation into his misconduct, the justices wrote, and did not participate in any of the disciplinary proceedings. As aggravating factors, the hearing officer cited James’ “dishonest and selfish motive,” his multiple offenses, the criminal nature of his misconduct, his deceptive practices during the investigation and his refusal to acknowledge the wrongfulness of his actions.
Source: Fort Wayne attorney disbarred for fund mismanagement.
(1) The Clients’ Financial Assistance Fund of the Indiana State Bar Association provides compensation, as a matter of grace, and not as a right, to qualified applicants who have suffered a monetary loss as a result of dishonest acts of an Indiana lawyer, acting either as a lawyer or as a fiduciary. Go here for Claim 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.

Louisiana Supremes Allow Attorney To Voluntarily Relinquish Law License In Lieu Of Getting The Boot After Bar Probe Concluded That She Mishandled Client Trust Account Money, Failed To Provide Accountings Upon Client Request Or Return Unearned Fees

In New Orleans, Louisiana, the Louisiana Record reports:
  • The Louisiana Supreme Court reviewed Sunset attorney Olita Magee Domingue’s request to resign from the practice of law in lieu of discipline on Feb. 3.

    The Office of Disciplinary Counsel had commenced an investigation into “numerous complaints of serious professional misconduct against (Domingue).” According to Supreme Court documents archived on the Louisiana Attorney Discipline Board’s website, Domingue allegedly mishandled her client trust account, failed to provide accountings upon request, and failing to return unearned fees. During the ODC investigation, Domingue allegedly failed to cooperate.

    The ODC recommended that the attorney’s request for permanent disbarment be granted. The Supreme Court ordered Domingue to make restitution to either her clients or the Louisiana State Bar Association’s Client Assistance Fund.(1) In addition, the ODC determined that Domingue should be permanently prohibited from practicing law in any jurisdiction and may not seek readmission at any time.
Source: State accepts resignation of attorney under investigation.
(1) The Client Assistance Fund of the Louisiana State Bar Association was created to compensate clients who lose money due to a Louisiana lawyer's dishonest conduct. The Fund can reimburse clients up to $25,000 for thefts by a lawyer. It covers money or property lost because a lawyer was dishonest (not because the lawyer acted incompetently or failed to take certain action).

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.

Failed Audit Triggers Florida Bar's Complaint To Prosecutor, Subsequent Warrant For Attorney's Arrest For Allegedly Looting Hundred$ Of Thousand$ Of Clients' Cash From Trust Account

In Pensacola, Florida, the Pensacola News Journal reports:
  • A Pensacola attorney has been arrested on charges of racketeering and grand theft.

    A warrant for James C. Corrigan, who does business as James M. Corrigan, PA, was issued by an Escambia County judge based on an investigation of the Office of State Attorney. The Florida Bar filed a complaint after conducting an audit of Corrigan's trust account. Corrigan was arrested on Friday.

    Corrigan represents clients in personal injury and medical malpractice cases. According to the warrant and supporting documents, Corrigan engaged in a multi-year, complex, continuous scheme in which he misapplied and misappropriated hundreds of thousands of dollars of his clients’ funds.(1)

    The Office of State Attorney will continue the investigation and anyone with information should contact Investigator Taylor Wells at (850) 595-4200.
Source: Pensacola attorney arrested for racketeering, theft.
(1) The Clients' Security Fund was created by The Florida Bar to help compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by an attorney. Go here for Claim 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.

Friday, March 17, 2017

NH Developer/Landlord Agrees To Cough Up $90K In Deal With Federal Lead Paint Cops Over Alleged Violations Of Rules Regulating Renovations Of Pre-1978-Built Residential Property

From the U.S. Environmental Protection Agency (Boston, Massachusetts - Region 1):
  • The U.S. EPA finalized a settlement agreement with two N.H. companies for their alleged failure to follow lead-safe work practices and provide proper lead paint disclosure to tenants at a residential property in Manchester, N.H. The agreement ensures that Brady Sullivan Millworks II, LLC and Brady Sullivan Millworks IV, LLC (Brady Sullivan) of Manchester, N.H will comply with federal rules ensuring lead-safe work practices and proper disclosure of information pertaining to lead paint, thus protecting the health of building occupants.

    Under the terms of the agreement, Brady Sullivan will pay a penalty of $90,461 for its violations of the federal Real Estate Notification and Disclosure (Disclosure) and Renovation, Repair and Painting (RRP) Rules and will certify that it is currently in compliance with these Rules. These violations occurred at a four-story, historical mill building known as "The Lofts at Mill West" or "Mill West" located at 195 McGregor Street in Manchester.

    In May 2015, EPA performed a series of inspections at 195 McGregor Street following the referral of a complaint(1) about lead dust in the building resulting from sandblasting occurring on a lower, unoccupied floor received by the N.H. Dept. of Health and Human Services (NH DHHS).

    During the inspections, EPA observed dust and chipping paint throughout the interior common areas of the building (areas to which tenants continued to have access during renovation activities). At the time of the inspections, building residents included vulnerable populations like children and at least one pregnant woman.

    As part of the joint EPA and NH investigations, NH DHHS conducted dust-wipe sampling which confirmed levels of lead in the dust and in paint chips well above acceptable health-protective standards. Additional testing showed that there was dust containing levels of lead above the regulatory limit in numerous residential units on the third and fourth floors of the McGregor Street building.

    These inspections were part of an initiative by EPA to focus attention on high risk communities with the goal of reducing lead poisoning through education and compliance with federal lead laws.

Two North Dallas Communities At Opposite Ends Of Income Spectrum Share Common Bond: Both Were Contaminated By Industrial Lead For Nearly 50 Years

In Dallas, Texas, The Dallas Morning News:
  • The low-income neighborhood of older wood-frame homes in West Dallas is a far cry from the suburb of newly built brick houses in Frisco 30 miles to the north.

    But the two North Texas communities share a bond: Both were contaminated by industrial lead for nearly half a century.

    The 1984 closure of RSR Corp.’s smelter, where used car batteries were recycled, was just the beginning of West Dallas’ struggles with lead. Contamination from the smelter still exists there today, residents say. That raises questions about the road ahead for Frisco, where cleanup is just starting at the Exide Technologies smelter that shut down [].

    Overwhelming evidence points to the dangers of lead. And a strong link exists between the amount of lead in soil and the amount of lead exposure in children. They are the ones most susceptible to lead’s harmful effects because of their developing brains. Even small amounts of lead in a child’s blood can affect IQ scores, academic achievement and the ability to pay attention.

    “It’s really critical to prevent these exposures in the first place,” said Bruce Lanphear, an international expert on lead toxicology. Lanphear is based at Simon Fraser University and BC Children’s Hospital in Vancouver, British Columbia.

    “The problem with lead is it gets stored in our bones and stays with us for the rest of our lives,” he said.(1)

    In an effort to determine what levels of lead contamination exist in West Dallas today, The Dallas Morning News commissioned a toxicologist to test soils from more than 30 residential yards. The results show lead levels that can cause harm to children — though, in all but two cases, they fall below today’s federal cleanup standards for residential areas.(2)

    But those standards are getting a closer look. A landmark report released [in 2012] by the Advisory Committee on Childhood Lead Poisoning Prevention noted that the federal standards for lead in residential soil, as well as in dust and water, are not sufficient to protect health. Much lower levels of lead exposure can cause harm.

    The U.S. Environmental Protection Agency is examining whether its lead policies need to change in light of the latest science. It is also trying to ensure sites already cleaned remain safe for residents.

    The continuing lead problems in West Dallas should serve as a warning for Frisco, said Jim Schermbeck, an environmental advocate. Schermbeck has spent years fighting for more stringent standards for lead smelters and the subsequent cleanups, first in West Dallas and most recently in Frisco.

    “If I was living in Frisco,” he said, “I’d want the best cleanup based on the best science.”

    Smelter fallout

    Both communities are dealing with the fallout from years of toxic emissions during the smelting process at what are known as secondary lead smelters. These smelters extract lead from used vehicle batteries and other scrap metal.

    RSR and Exide came under scrutiny because of their too-high lead emissions, though the air-quality standard prior to the West Dallas smelter’s closure was less stringent than it is today.

    All of that lead in the air eventually settled on the ground, where it bound to dirt in people’s yards and dust in their homes.

    Another danger came from smelter wastes, such as crushed battery pieces, that were spread throughout neighborhoods where residents had little knowledge about the hazards. In West Dallas, the pieces were used in hundreds of yards and muddy driveways. In Frisco, they were used as a base in road and parking lot construction.

    These battery chips often — but not always — signal lead contamination. No records exist on where or when they were dumped. But after all these years, they are still turning up. In the past 18 months, they’ve been found in Frisco on city property and along a creek, as well as in a few West Dallas yards.

    Cleanups in West Dallas in the 1980s and ’90s, along with the help of a Superfund designation, removed tons of tainted soil.

    But it doesn’t take much lead to contaminate soil. The amounts being measured are too small to be visible. Consider the contents of a packet of artificial sweetener, which equal 1 gram. One-millionth of a gram equals 1 part per million. Lead in soil is measured in parts per million.

    Lead occurs naturally in the soil at about 15 to 30 parts per million. The EPA standard for cleanup in soil where children play is 400 parts per million.
For more, see The Burden of Lead: West Dallas deals with contamination decades later.
(1) See, generally:
(2) According to the story:
  • The samples in the test commissioned by The News came from soil on the surface. The theory is that the surface is where children are most likely to come in contact with tainted soil.

    Schermbeck, director of the environmental group Downwinders at Risk, said higher levels of lead contamination in West Dallas might be found deeper down.

    Surface samples don’t take into account the contamination from battery chips and fill that were mixed into the dirt in yards. It also doesn’t take into account any shifting that might push lead contamination deeper.

    “There’s still stuff out there that nobody will know about,” Schermbeck said. “It hasn’t been inventoried. It hasn’t been catalogued. It’s not on a list anywhere. It’s out there, waiting to be dug up by a dog in a backyard or be dug up by kids playing in a vacant lot.” Environmental Protection Agency EPA smelter foundry

Hazards of Lead-Contaminated Soil May Be Hidden In Plain Sight Long After Factories Have Been Abandoned & Forgotten

From a USA Today investigative report:
  • Government regulators were warned a decade ago about more than 400 forgotten lead smelting firms that operated in the 1930s to 1960s and may have deposited dangerous levels of lead contamination in nearby soil. Yet the EPA and state officials have left families and children in harm's way, doing little to assess the danger around many sites, USA TODAY's 14-month investigation found.
For more, see Ghost Factories-Poison In The Ground: A government's failure to protect (Many people are aware of the risk of lead-based paint in older homes. Less known is that your home could be surrounded by lead-contaminated soil, even if you don't live near an old factory site. Lead particles can build up in the top few inches of soil from several sources: lead-based paint, factory emissions and exhaust from vehicles that once burned leaded gasoline). Environmental Protection Agency EPA foundry smelter

Thursday, March 16, 2017

Central NJ Man Cops Guilty Plea To Fleecing 3 Different Prospective Tenants Out Of Deposits By Renting Out Home In Foreclosure Owned By Unwitting 3rd Party; Defendant To Be Allowed To Buy Out Of Jail Time By Paying $9,200 Restitution Before Sentencing

From the Ocean County, New Jersey Prosecutor's Office:
  • Ocean County Prosecutor Joseph D. Coronato announced that Keith Boyce, 54, of Ocean Gate, NJ, pled guilty yesterday (3/7) to Theft and Failure to File a State Tax Return on the day he was scheduled for trial.

    The plea stems from his indictment by the Grand Jury for Theft and Terroristic Threats against one victim and Theft against a second. The Tax charge was part of a separate indictment against Boyce and his wife Camilla, 27, for failure to file State Tax returns for a number of years. The accompanying case indictments are attached.

    The investigation by OCPO Economic Crimes Unit found that in January of 2014 Boyce took security deposits and prepaid rent from two women to occupy 1226 Laurel Blvd in Lanoka Harbor, yet then rented and gave occupancy of the same home to a third person. The victims became suspicious when Boyce demanded additional money before they were allowed to move in. They then learned that another person was the actual owner and the house was actually in foreclosure.

    In the plea agreement Boyce is required to make full restitution of $9200 to the two victims prior to sentencing, which would require him to serve probation in lieu of receiving a jail sentence. The Tax charge for his wife, Camilla, is pending future court action. The case was prosecuted by OCPO Senior Assistant Prosecutor William Scharfenberg.

Northern NJ Pair Pinched, Face Theft By Deception Charges For Allegedly Using Craigslist Ads To Run Online Rent Scams; Multiple Would-Be Tenants Get Fleeced Out Of Thousands In Upfront Cash Deposits; Detectives Believe Add'l Victims May Come Forward

In Linden, New Jersey, reports:
  • Following a five-month investigation, a man and a woman have been arrested in connection with operating a series of rental housing scams, including in Linden last summer.

    Allan Betancourt, 45, and Myra Sullivan, 40, both of Union, who operated under the alias of Marcos Cardenas and Mirna Grant, were arrested Feb. 22 following an investigation by Linden Detective David Kother. Betancourt and Sullian are accused of defrauding multiple victims of more than $9,000 by falsely listing apartments for rent on Craigslist.

    They have both been charged with theft by deception and were released pending a court appearance.

    On Aug. 14, 2016, Linden police took reports from a Linden couple and an Elizabeth couple who were scammed out of nearly $5,000 in cash after answering a fake ad for a Cedar Avenue apartment in Linden.

    A 30-year-old man and a 27-year-old woman, both from Elizabeth, paid $2,650 in cash to a man named "Marcos" for two months' rent and a lease agreement for the Cedar Avenue apartment. When they went to move in, the key they were given did not work.

    The couple called "Marcos" but were unable to reach him. Police contacted the property owner who said he did not offer any apartment for rent.

    While at the Cedar Avenue home, police encountered a second couple from Linden who said they had paid $2,2000 in cash as a security deposit and signed a lease agreement for the same apartment listed on Craigslist. The couple said they had met a woman earlier in the month named "Mirna" who took their money and had them sign a lease agreement.

    Residents were warned to be cautious of scams involving cash deposits up front before inspecting the property. Prospective tenants also were encouraged to ask to see documentation that the landlord is the actual owner of the property by checking a tax bill or utility receipt.

    Police Chief Jonathan Parham said the public played a critical role in identifying Betancourt and Sullivan.

    "The credit for these arrests belongs to the dozens of citizens who cooperated with detectives to make the identification of these suspects possible," Parham said.

    Police also thanked Union Township Police Detective Patrick Bradley for his help in the investigation. Last Friday, [March 3] Union police announced the arrest of Betancourt for similar scams.

    Union Township police had received reports from several people that they had given money to Betancourt to reserve an apartment in town in which he took the deposits but never allowed anyone to move into the apartment, according to the Union Township Police Department Facebook page.

    Linden police said the cases remain under investigation and detectives believe there may be additional victims. Anyone who has been victimized by Betancourt and Sullivan is asked to report the incident to the police department where the incident occurred.

Head Of Loan Modification Scam That Used False Promises To Clip Over A Thousand Distressed Homeowners Out Of More Than $3.5 Million Gets 15 Years Prison Time

From the Office of the U.S. Attorney (Brooklyn, New York):
  • [D]avid Gotterup was sentenced at the federal courthouse in Brooklyn, New York, to 15 years in prison for leading a loan modification scheme that defrauded distressed homeowners. Gotterup pleaded guilty on June 16, 2016, to conspiring to commit wire, mail and bank fraud. In addition, as part of the sentence, the Court ordered Gotterup to pay $2,500,050 in forfeiture.
    According to public filings, from 2008 to 2012, Gotterup and his co-conspirators made a series of false promises to convince more than a thousand distressed homeowners seeking relief through government mortgage modification programs to pay thousands of dollars each in advance fees to numerous companies owned or controlled by Gotterup, including Express Modifications, Express Home Solutions, True Credit Empire, LLC, Green Group Today, Inc., The Green Law Group, Inc., and JG Group.

    Among other things, Gotterup directed telemarketers and salespeople to lie to distressed homeowner victims by telling them that they were “preapproved” for loan modifications and that they were retaining a “law firm” and an “attorney” who would complete their mortgage relief applications and negotiate with the banks to modify the terms of their mortgages.

    Contrary to these representations, Gotterup and his co-conspirators did little or no work in connection with these fraudulently induced advanced fees. Gotterup was arrested in October 2015 and has been incarcerated since then.
Source: Long Island Man Sentenced To 15 Years In Prison For Defrauding Homeowners In Loan Modification Scheme (David Gotterup Admitted to Causing More Than $3.5 Million in Losses).

Wednesday, March 15, 2017

Contractor Gets 10 Years For Racket That Targeted Elderly Homeowners; Used $49.95 Bait & Switch Offer To Initiate Contact w/ Over 2 Dozen Victims, Then Used Scare Tactics To Armtwist Them Into Contracts Fleecing Them For Thousand$; $300K+ In Fraudulent Mechanics' Liens Slapped On Homes Of Those Disputing Inflated Charges

In Ventura, California, the Ventura County Star reports:
  • A Camarillo man was sentenced to 10 years in state prison after pleading guilty last month to numerous felonies, Ventura County prosecutors said on Friday [February 24].

    Albert Solano, 50, pleaded guilty on Jan. 24 to two counts of first-degree residential burglary, eight felony counts of elder theft, a felony count of obtaining money by false pretenses, a felony count of attempted grand theft by false pretenses, 15 counts of filing a fraudulent instrument and three counts of insurance fraud, prosecutors said [].

    His case was handled by investigators from the [California] Contractors State License Board, the Santa Barbara County Sheriff's Office, the Ventura County Sheriff's Office, the Santa Barbara County District Attorney's Bureau of Investigation and the Ventura County District Attorney's Bureau of Investigation, prosecutors said.

    They said Solano ran a fraudulent plumbing business since 2010 that targeted the elderly. They also said he advertised a $49.95 drain-clearing special as a bait and switch tactic to get access to victims' homes.

    Once there, he fabricated more plumbing problems, prosecutors said, and used scare tactics to induce victims to sign contracts for thousands of dollars. He would then arbitrarily raise the cost of work, often changing contracts after they'd been signed.

    When victims disputed the charges, he would send them to collection agencies and file fraudulent mechanic's liens on their homes.

    "The total amount of fraudulent liens exceeded $309,000," prosecutors said.

    Ventura County Superior Court ordered Solano to pay full restitution to 31 victims.

Previously-Convicted Contractor At It Again; Gets Over 11 Years Prison Time On Charges Of White-Collar Grand Theft, Diverting Construction Funds After Fleecing Over 20 Homeowners Out Of Thousand$

In Merced, California, the Merced Sun-Star reports:
  • A Merced man who pleaded no contest to scamming more than 20 people out of thousands of dollars for contracting work he failed to do has been ordered to serve more than 11 years in prison, officials with the Merced County District Attorney’s Office reported.

    Jesse Munoz, 40, was accused of five counts of white-collar grand theft of more than $100,000 and five counts of diverting construction funds, Deputy District Attorney Walter Wall said. He pleaded no contest and was issued the sentence by Merced Superior Court Commissioner Jeanne Schechter on Friday [February 24].

    Munoz posed as a contractor from May 2012 to December 2013, taking deposits for his work and then disappearing after starting the jobs or failing to show up altogether, Wall said. Munoz cheated more than 20 people out of their money, causing financial hardship for many of his victims, he said.

    “I trusted Munoz, and I gave him the money,” Jesus Rojas said in a statement to the District Attorney’s Office. “I’m a hardworking man. ... Munoz lied to me, betrayed my trust and stole from me.”

    Munoz was convicted once before of scamming people out of their money. In 2009, he was sentenced to five years in state prison on 15 counts of theft by false pretense.

Trio Get Bagged For Allegedly Bilking Elderly Homeowner Out Of Over $80K For Home Improvement Work That Was Never Started Or Completed

In Joplin, Missouri, The Joplin Globe reports:
  • Three defendants accused of bilking an elderly Carl Junction man out of more than $80,000 on nonexistent home repairs have been ordered bound over for trial.

    Torrey E. Rickey, John W. Rickey Jr. and Troy L. Slankard were scheduled for preliminary hearings Thursday in Jasper County Circuit Court on charges of financial exploitation of the elderly.

    John Rickey Jr., 59, of rural Carl Junction, and Slankard, 58, of Galena, Kansas, waived their hearings and were ordered bound over for trial by Associate Circuit Judge Joe Hensley.

    John Rickey and Torrey Rickey face two counts each of financial exploitation of the elderly, with second alleged victims in addition to the Carl Junction man. Slankard faces a single count involving just the Carl Junction man.

    Torrey Rickey was ordered bound over for trial after a preliminary hearing at which the Carl Junction man testified that a crew of about six men had come to his home to perform some remodeling over a period of several days in September 2015. He testified that he made several payments to them, including two checks made out to a “Torrey Rickey” that had been cashed at his bank.

    The man was unable to identify the defendant as one of the men who bilked him, although he believes he would be able to identify a couple of them on sight. He could not recall which of the men told him to make the checks payable to “Torrey Rickey.”

    Assistant Prosecutor Will Lynch called Carl Junction police Officer Doug Dickey to testify that he was able to identify Torrey Rickey on bank surveillance video as the man who cashed the checks. Dickey said he was able to identify him by comparison with the photo on the defendant’s driver’s license.

    Dickey said he determined that the Carl Junction man had paid the men over $80,000, but he was unable to detect any signs of recent remodeling actually done in his home.

    The sister of a deceased elderly Joplin woman identified Torrey Rickey in court as one of the men who swindled her sister in a home improvements scam in April 2016. Authorities said she was cheated out of more than $7,500.

Tuesday, March 14, 2017

After Having Their $111 Million Jury Award Kiboshed, Lot-Leasing Homeowners Settle For Just Under $10 Million In Lawsuit Against Largest Nat'l Mobil Home Park Landlord For Its Failure To Properly Maintain Premises

In San Jose, California, The Mercury News reports:
  • Of all the horror stories about poor maintenance at the California Hawaiian mobile home park in South San Jose, David McIntyre’s is arguably the worst: The software engineer was evicted on Christmas Eve after complaining that an avocado tree growing underneath his South San Jose mobile home had burst through his shower wall.

    But McIntyre and the other 60 residents of the California Hawaiian Mobile Home Estates who took the rare step of banding together in 2007 and suing the corporate owner in 2009 got justice last week, in the form of settlement checks. McIntyre’s was for $460,000, enough to overcome the stain the eviction left on his credit record.

    “It was nine years of hell,’’ McIntyre said, “but I can finally buy a house.’’

    The case highlights what the tenants’ lawyers contend is a common problem statewide — the failure by some owners to maintain their mobile home parks. At California Hawaiian, residents say they were plagued by sewage backups, potholes, electrical blackouts and a swimming pool filled with goose droppings. Water for the entire park of 420 households often was shut off without notice for up to 20 hours at a time, they said.

    In 2014, a Santa Clara County jury found the owner negligent and awarded residents a record $111 million in compensatory and punitive damages. At the time, the award represented about 10 percent of the assets of the owner, Equity Lifestyle Properties, the largest mobile home park owner in the nation.

    But the judge in the case overturned the award on the grounds it was excessive, prompting the parties to settle in December for just under $10 million to avoid a second trial on damages. The plaintiffs agreed to settle partly because a third of them are 65 or older and five already have died since the suit was filed, said Jim Allen, one of the residents’ lawyers.

    Equity, a publicly traded corporation chaired by billionaire Sam Zell, said in a written statement last week that the settlement was in the best interests of the company, which denied wrongdoing in the case.
    The California Hawaiian award sent shock waves through the industry, prompting park owners throughout the state to improve conditions, including at California Hawaiian itself, said David Semelsberger, another lawyer who represented the residents’ group.

    It also may have kicked off a trend. In August, a San Diego County civil jury made another sizable award, giving the first 10 of many households in the Terrace View Mobile Home Park about $58.3 million in compensatory and punitive damages against the park owners, Tom Tatum and Jeff Kaplan. The case, which is on appeal, involved accusations of unreasonable rents and other practices causing residents to lose their homes.
    [A]ccording to a report by state Sen. Connie Leyva, D-Chino, many managers at California’s nearly 4,600 mobile home parks continue to threaten eviction without cause. Residents have also reported that some managers refuse to explain unusual charges on rent statements.

    Many residents are leery of suing because they can be held individually liable for the owner’s legal costs, which can total millions. In the California Hawaiian case, more than 150 residents dropped out of the case after receiving letters from Equity reminding them of their potential liability. But a core group of residents stuck together because they said conditions were so intolerable.

    “We never got into the lawsuit for the money,’’ said Ruben Castillo, one of the main organizers. Castillo, a dental technician, says his marriage fell apart because he spent so much time on the suit. His share, $210,000, will go primarily to paying off debts, he said.

    Tenants gathered to receive their settlement checks Thursday at a pizza and spaghetti dinner buffet the lawyers held at BJ’s Restaurant in San Jose. The amounts ranged from about $25,000 to hundreds of thousands, depending on how long the tenants lived in the park and their living conditions. But the mood was more subdued than celebratory, perhaps because the group already held a celebration party after the case settled in December, and because the money won’t go far in pricey Silicon Valley.

    Gary Stutzman, 62, who lives on less than $2,000 a month, got a check for nearly $160,000, not quite enough to fulfill his dream of living on a houseboat. He complained for years about water from one of the park’s artificial ponds lapping right up against the house, causing one corner to crumple and the driveway to be laced with cracks.

    “All of this pain we went through,’’ he said, “if it helps other people, it was worth it.’’

    Other plaintiffs, like George Stagnaro, plan to move out of state for the cheaper cost of living. McIntyre, the guy whose mobile home was ruined by the tree, says he’ll never live in a mobile home again. Over and over, the park owners who rented him the land the tree grew on denied responsibility, he said.

    “The next time a tree grows through my house,” he said, “at least I’ll know who is responsible.”

Lot-Leasing Homeowners In 156-Space Mobile Home Park Blame Newly-Installed Sewer Line's Crappy Design As Cause Of Poisonous Sewer Gas Permeating Their Homes; Landlord: No Way!

In Laguna Beach, California, The Indy reports:
  • A top city official rejects the conclusions of a preliminary investigation into the source of sewer gases conducted by the owner of Laguna Terrace Mobile Home Park and has asked state regulators with authority over the park to intervene.

    Hometown America Inc. recently released findings of an inquiry into complaints by park residents that began in May 2015 after a main line sewer was replaced. The presentation by Hometown chief executive Stephen Braun suggested the sewer gas hydrogen sulfide detected in homes as originating offsite. Residents believe long-term exposure to the gas, which smells like rotten eggs, is making them sick.

    “We disagree with their conclusions that it’s outside the park,” said David Shissler, the city’s water quality director, who attended the Jan. 31 presentation where a third of the 60 to 70 residents present raised hands to report smelling sewer gases in their homes.
    Shissler suspects the park problem originates with the design of the gravity-based sewer system that failed to account for elevation changes in the 156-space park. Some homes enjoy ocean views from atop a coastal bluff while others ascend into a slot canyon.

    In a sewer line inadequately adjusted for the grade, the contents picks up velocity and could completely fill pipes that are designed to operate only partially filled. Full pipes will force the accompanying sewer gases out somewhere, Shissler explained. “That’s the theory; it’s the people at the bottom of the hill,” where gases are entering homes, he said. In a canyon, a proper sewer installation would slow the velocity with stair-steps, he said.

    While Shissler lacks the authority to compel action, he said he’s called on Hometown and HCD to hire third-party odor control experts “to pull this thing apart” in order to prove out their design.

    I wouldn’t expect anyone to tolerate hydrogen sulfide,” he said.

    Hometown America owns 45 properties for prefabricated-homes nationwide, many designed for adults 55 and older. The Chicago-based company bought Laguna Terrace for a purported $72 million in 2013 from the Esslinger family, who founded the community decades ago.
    Some residents say Braun isn’t living up to his pledges: requests for hourly gas monitors have gone unanswered. So did the Indy’s calls to Braun this week seeking comment.

    “I feel like we’re the peon people; they are going to put us off,” said park resident Megan Hampton, who expressed frustration that Hometown officials seem dismissive of advice from experts such as Shissler. A monitor installed last October in her home shows hourly readings of hydrogen sulfide ranging from 2 to 3 parts per million. Occupational Safety and Health Administration standards don’t address long-term exposure. “I can’t live where my health is in jeopardy,” Hampton said.

    Resident Jeff Bardzik says he’s received no response to his request for a monitor. “Communication is pretty one-way,” he said.

    “They don’t tell us what they’re doing,” added Michele McCormick, a psychologist, who contends the gases in her home are responsible for respiratory problems, fatigue and eye irritation. Other residents have resorted to closing off rooms to avoid exposure to odors, she said. “That’s why people aren’t coming forward.”

    Filing a formal HCD complaint about the presence of sewer gases, as McCormick did in 2016, would require disclosure by an owner wanting to sell their home, she said. Current listings in the park on range from $119,000 to $400,000, which excludes monthly space rents of $3,200 to $4,028 on 20-year leases.

    Yet, the lack of formal complaints and quantified data on the presence of sewer gases may be a reason regulators have not intervened more aggressively.

Private Guardianship Racket That Allegedly Bilked At Least 150 Elderly, Infirm Out Of Their Property, Life Savings Gets Busted; Primary Defendant Faces Over 200 Felony Charges; One Victim Compared Being Taken Away From Home, Family & Put In Nursing Home To His 'Auschwitz' Experience, "Taken Without Announcement, Without Ability To Make A Phone Call"

In Las Vegas, Nevada, the Las Vegas Review-Journal reports:
  • As a guardian, April Parks was tasked with caring for the elderly and infirm in Southern Nevada.

    As a guardian, she had full control over those people’s finances, their property and nearly every aspect of their lives.

    And as a guardian, Parks exploited at least 150 of those vulnerable Nevadans and “systemically bilked them out of their life savings,” law enforcement officials said Wednesday [March 8].

    A Clark County grand jury indicted Parks on more than 200 felony charges that include racketeering, theft, exploitation and perjury. Parks and her husband were arrested in Pennsylvania just hours after the indictment came down. It was unclear Wednesday night what agency made the arrests.

    Three other people were indicted Wednesday: Parks’ business partner, Mark Simmons; her husband, Gary Neal Taylor; and her former attorney, Noel Simpson Palmer. Simmons was arrested in Indiana sometime Wednesday, according to a Metropolitan Police Department press release.

    But Clark County District Attorney Steve Wolfson made it clear in a press conference that Parks “was the No. 1 target in this investigation.”

    The 123-page indictment, which laid out the 212 felony charges levied against Parks, claimed she used her position and her company, A Private Professional Guardian, LLC, “to steal funds belonging to elderly and disabled persons over whom they had guardianship authority.”

    The indictment said that Parks used fraudulent billing practices, and that Parks and Simmons organized and directed a “criminal syndicate” while stealing roughly $559,000 from 150 victims between 2011 and 2016. Most of those victims, Wolfson said, are no longer alive.

    Simmons faces 134 felonies similar to the charges levied against Parks. Taylor faces seven charges, and Simpson was charged with one count each of theft and filing a false document.

    Judge Jennifer Togliatti issued a no-bail arrest warrant for Parks and Simmons and set the bail at $200,000 for Taylor. Palmer, who appeared at the hearing, agreed to pay $7,500 for bail and to return to court March 22.

    Parks was one of the most active private professional guardians in Southern Nevada. She often acted as the surrogate decision maker for 50 to 100 elderly and mentally incapacitated people, called wards, at a given time. As the guardian, Parks had full control of the wards’ finances, estates and even medical decisions.

    Last year, Parks left Nevada, leaving dozens of wards behind and forcing the already-overburdened Clark County public guardian’s office to step in to care for them. Guardianship Judge Cynthia Dianne Steele issued a separate bench warrant for Parks’ arrest last summer after Parks failed twice to appear in court for one of the cases she abandoned. Attorneys claimed Parks grossly overbilled her wards, and they called for a law enforcement investigation of her practices.

    One of Parks’ former wards, Rudy North, said he never expected these charges to come.

    North, 80, and his wife, Rennie, spent two years under Parks’ guardianship.

    The indictment claims Parks stole $1,300 from the couple through overbilling, but North said the impact was much larger and went beyond finances.

    North said the couple was taken from their home and put into an assisted living facility in Boulder City. Parks sold nearly all their possessions shortly after moving the couple, North claimed.

    He compared being taken away from their home and family to his experience living in Auschwitz, the World War II Nazi concentration camp for Jews.

    We were taken without announcement, without the ability to make a phone call,” North said. “The only thing we beat them on, really, is we’re alive today.”

    The indictment and arrests mark a newfound focus from law enforcement at the state and local levels to protect the elderly and mentally incapacitated from fraud and abuse by those who are supposed to care for them.

    In the past, law enforcement rarely investigated guardianship abuses, because they were seen as either a court or civil issue. But a new 10-person unit inside the attorney general’s office and a joint task force between that office and local agencies have given law enforcement the needed teeth to dig into the abuses committed because of those failures.

    “There are failures in our community in how we’ve dealt with this issue,” Wolfson said.

    At the court level, an overburdened system and a lack of oversight left these wards vulnerable to exploitation. A Las Vegas Review-Journal series published in April 2015 detailed those shortfalls.

Monday, March 13, 2017

Arizona AG Bags Real Estate Operator For Allegedly Running Contract For Deed Scam That Targeted Dozens Of Unsophisticated Homebuyers; Defendant Pocketed Victims' Deposits & Monthly Payments While Failing To Disclose Or Pay Off Existing Liens, Allowing Homes To Go Into Foreclosure

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • The Arizona Attorney General's Office announced Tuesday [March 7] the owner of several real estate companies had been indicted by a grand jury for stealing hundreds of thousands of dollars from several dozen Arizona families.

    In a news release, state prosecutors say Francisco Aguirre is accused of stealing between $300,000 and $500,000 from 40 families between 2013 and 2015. Officials say he owned three companies, Montecristo Properties, LLC, Montecristo Property Investments and San Marino Property Investments, LLC and used them to steal from families looking to buy homes.

    Aguirre is accused of making false statements and material omissions to families who believed they were buying homes from him and gave him a down payment. The victims also paid Aguirre monthly for mortgage payments, only to find out they never owned nor had a title to the home.

    Silvia Gallo told ABC 15 that she has lost hundreds of thousands of dollars in connection with the case. "It's not just a financial issue, it's an emotional issue, a physical issue," Gallo said.

    Gallo has lost hair and taken medication as a result of the stress of losing so much money, she said. She has had to pay for several homes, purchased as investment properties, twice, she said. Catching up has meant 16-hour days, she said.

    The victims found out about Aguirre's scheme when his company defaulted on the loans to the properties, resulting in foreclosure notices to those who thought their monthly payments had been going through, ABC15 previously reported.

    Aguirre faces felony charges of conspiracy, mortgage fraud, money laundering and illegally conducting an enterprise, among others.
Source: Arizona Attorney General's Office: Francisco Aguirre indicted for real estate fraud.

For the indictment, see State of Arizona v. Aguirre. land contract for deed rent-to-own rent skimming wraparound mortgage

Use Of Wraparound Mortgage Scams By Predatory Real Estate Operators To Skim House Payments From Unsophisticated, Credit-Lacking Home Buyers Attract Attention From Texas Lawmakers

In El Paso, Texas, the El Paso Herald-Post reports:
  • Home mortgage scams in El Paso and Austin have prompted three senators to propose legislation to curb the abuse and protect homeowners.

    Senators Judith Zaffirini (D-Laredo), Kirk Watson (D-Austin), and José Rodríguez (D-El Paso) today [March 10] filed several bills to address “wraparound” home mortgage scams, which leave homeowners at the mercy of a middleman who may or may not keep up with the mortgage payments.

    In one particularly egregious case in El Paso, a wrap scammer absconded with nearly $2 million from 200 families before the Texas Department of Savings and Mortgage Lending was able to intervene.

    “Unfortunately, El Paso has become a prime area for predatory wrap scammers, in particular those that target our military families who might need to sell their homes quickly, our unbanked immigrant population, and inexperienced first-time homebuyers who may struggle to obtain credit through a traditional bank,” Sen. Rodríguez said. “All of these people are simply striving for the American dream of home ownership, and providing a better life for their families.”

    A wrap loan involves the sale of a house with a preexisting lien. The second loan “wraps” around the first, and the new owner typically pays a higher interest rate on the wrap loan. The wrap lender should then use the wrap loan payments to pay down the first mortgage so that by the time the wrap loan is paid, the first mortgage is also paid off.(1)

    But in a typical case, an unscrupulous wrap lender fails to pay the first mortgage, triggering a foreclosure. Alternatively, the first mortgage may have a due-on-sale clause, which the first lender may activate when they learn about the wrap loan, meaning the first mortgage suddenly becomes due in full without any funds available to pay it.

    Current law has failed to prevent these scams and make victims whole. For example, wrap lenders take advantage of de minimus exceptions to avoid agency regulation and a current disclosure requirement is often ignored because it lacks teeth.

    “Predatory lenders have found a new tool to take advantage of those who are working hard to save and buy their own home,” Sen. Watson said. “It is clear our current laws are inadequate to prevent this abuse, which is why the Legislature needs to act.”

    The bills were developed with assistance from the Texas Department of Savings and Mortgage Lending, legal aid attorneys, and banking groups.

    Other wrap scams have affected about 40 homes in the Dove Springs area of Austin. The Texas Department of Savings and Mortgage Lending has been investigating these scams as well.
For the story, see Bills Filed to Curb Predatory “Wraparound” Mortgage Scams.

See also, Austin American Statesman: Texas bills target ‘wraparound’ mortgage lending practices.
(1) Unscrupulous real estate operators acting as middlemen can also achieve a similar payment arrangement through the use of land contracts, contracts for deed, rent-to-own / lease purchase contracts, and rent skimming schemes. land contract for deed rent-to-own rent skimming wraparound mortgage

Two Brothers Finally Win 5-Year Legal Battle To Obtain Transfer Of Shares Appurtenant To NYC Co-Op Apartment Bequeathed To Them By Deceased Mom; Court: HOA Violated Proprietary Lease By "Unreasonably Withholding Its Consent" For Shares Transfer From Estate Of Long-Time (55-Year) Resident

In New York City, Habitat Magazine reports:
  • A five-year legal battle by two sons trying to take over the Manhattan apartment bequeathed by their late mother has raised questions about the power of co-op boards to review the applications of family members.(1) The ruling has also pointed out that co-op board powers, though vast, do have limits.

    The New York State Court of Appeals agreed with a lower court ruling that the co-op board at 33 Fifth Avenue had violated the proprietary lease by “unreasonably withholding its consent” to transfer shares from the estate of Helen Del Terzo to her adult sons, Michael and Robert.

    Decisions of co-op boards are usually protected by the Business Judgement Rule, and courts are loath to get involved if transactions are made in good faith and without discrimination against a member of a protected class.

    But a provision in the Del Terzo’s proprietary lease states the board would not “unreasonably withhold consent” to the assigning of the lease and shares to a financially responsible member of the lessee’s family – a provision that, in the courts’ opinions, trumps the Business Judgement Rule.
    Michael Del Terzo, a physician in Pennsylvania, told the board he would pay for the maintenance and other expenses associated with the co-op even though he did not plan to live there. According to court records, Robert had moved in with his family to help care for his mother in the final years of her life. She died in 2010. Their parents had lived in the apartment since 1955 and purchased the apartment in 1986, after the building was converted to a co-op.

    The brothers sued in 2012 after their application was rejected. In court papers, the board stated that only Michael Del Terzo met the requirement of financial responsibility. The board was also concerned that Michael would not be living in the apartment even though he was a lessee.

    “The board believed it had reasonable grounds to reject the application,” says attorney Bryan Mazzola, a partner at Boyd, Richards, Parker and Colonnelli, who represented the co-op board in the litigation. “There was a list of things they went through in making their decision. I really think this is a warning to other boards that when determining whether something is unreasonable or not, they need to take this case into consideration.”

    But attorneys Ken Jacobs and Jack Malley, partners at Smith, Buss and Jacobs, which represented the Del Terzos, believe the circumstances of the case were unique and would not change the way boards do business.

    “We would love to tell you this case represents a sea change, but it doesn’t,” says Jacobs. “This is a specific clause in a proprietary lease that under certain circumstances applies a different standard. It gives weight to the wishes of a decedent. What’s wrong with that?”

    Sea change or no sea change, this court ruling carries an important message: co-op boards have tremendous powers, but the power to be unreasonable is not among them.
Source: There Are Limits to Co-op Boards’ Powers (Court rules that co-op board “unreasonably” blocked transfer of dead woman’s shares).
(1) As described by the court's ruling, the brothers both lived in the apartment throughout their childhood and as young adults.

Sunday, March 12, 2017

Ohio's Compensation Fund For Victims Of Crooked Lawyers Awards Maximum $75K Payout To Ex-Client Fleeced By Since-Disbarred Attorney

In Trumbull County, Ohio, WKBN-TV Channel 27 reports:
  • Thirty one victims of attorney theft in Ohio were awarded a settlement, including two clients in Trumbull County.

    The Board of Commissioners of the Lawyers’ Fund for Client Protection(1) awarded a $75,000 maximum claim to a Trumbull County client as part of $180,445 distributed to 31 victims of attorney theft at its meeting March 3.(2)

    Thirteen former or suspended Ohio attorneys were found to have misappropriated client funds. Three deceased attorneys also were involved in claims.

    In Trumbull County, the ex-spouse of a former client of David K. Roland was reimbursed the maximum award of $75,000 as a result of Roland’s failure to account for funds deposited with him, and a former client of suspended attorney Timothy E. Bellew was reimbursed $500 for Bellew’s failure to provide services, and

    Roland was disbarred on Aug. 31, 2016,,and Bellew was suspended from practicing law in Ohio on Jan. 24.
Source: Trumbull County client awarded $75,000 in lawyer theft investigation (Thirteen former or suspended Ohio attorneys were found to have misappropriated client funds. Three deceased attorneys also were involved in claims).
(1) In Ohio, the Lawyers’ Fund for Client Protection, formerly known as the Clients’ Security Fund, was created in 1985 by the state Supreme Court to reimburse victims of attorney theft, embezzlement, or misappropriation.

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.

See 31 Victims of Attorney Theft Awarded More Than $180,000.

Florida Supremes Belt Attorney w/ 1-Year License Suspension For Improper Use Of $500 Payment Received From Client; Cash Meant To Cover Cost Of Deposition Transcripts Was 'Temporarily Borrowed' (& Subsequently Repaid) To Pay Office Expenses Instead

The South Florida Daily Business Review reports:
  • Mishandling $500 from a real estate client cost attorney Michael E. Wynn much more than he might have imagined: a year suspended from the practice of law.(1)

    A Florida Bar referee recommended a 90-day suspension and two years' probation for the Fort Myers lawyer. But the bar sought review, arguing that a year's suspension was the appropriate sanction, according to a Feb. 16 Florida Supreme Court ruling, which rejected the referee's suggestion and imposed the stiffer penalty.(2) Wynn had no prior disciplinary proceedings, according to his bar record.

    The high court has the final word on attorney discipline and sometimes exercises that authority to impose tougher sentences than referees recommend.

    In Wynn's case, the bar brought ethics charges alleging conversion of funds belonging to client Sylvia Rhodes, whom he represented in a landlord-tenant suit. It also claimed Wynn later failed to inform his subsequent employer, the Office of Criminal Conflict and Civil Regional Counsel, of the ongoing disciplinary proceedings.

    Wynn has been a member of the bar since September 2000. The parties stipulated that Rhodes paid him $500 for deposition transcripts in October 2013, but the attorney deposited the money into his operating account, rather than his trust account. About two months later, when she had not received the document, Rhodes made several inquiries. In January 2014, she learned of Wynn's financial hardships and that he'd used the money to pay electricity and other law firm bills.

    "During the conversation, respondent indicated he could obtain a loan to pay for the deposition transcripts," according to the referee report. "However Ms. Rhodes indicated she would pay the court reporter directly. Respondent further agreed to repay the funds to Ms. Rhodes when he had the financial ability to do so."

    A review of Wynn's bank records revealed he'd used the funds for business and other expenses, according to court filings.

    Rhodes dealt directly with the court reporter from that point but had no payment from Wynn for nearly a year. She requested compensation by Christmas 2014.

    "By reply email on Sept. 15, 2014, respondent reiterated to Ms. Rhodes that he had completed additional post-judgment legal services which were not part of the original representation and that the fees for services were higher than the $500 respondent owed Ms. Rhodes," the referee's report stated. "Respondent further offered to forgo billing Ms. Rhodes for the additional services in exchange for not having to remit the $500 owed."

    Wynn never executed a new representation agreement, and his client never agreed to apply the money toward legal fees. Rhodes filed a bar complaint, prompting the attorney to arrange a meeting at a local bank, where the client signed a notarized document acknowledging payment and requesting dismissal of the grievance.

    Wynn requested the bar close the case, but the bar pressed for a written response, which the attorney submitted without the "required Certificate of Disclosure form," according to court records. On that form, Wynn incorrectly completed the section for sole practitioners instead of disclosing his employer.
For the story, see Year's Suspension for Attorney Who Used Client's $500 to Pay Bills (may require subscription; if no subscription, GO HERE, then click the appropriate link for the story).
(1) According to the court's decision, the attorney is also on the hook for $3,945.45 to cover the cost of the bar's investigation & disciplinary proceeding.

(2) The following excerpt from the court's ruling reflects the court's analysis for arriving at the stiffer penalty:
  • The Bar concedes that the referee properly found significant mitigating circumstances that weigh in favor of suspension rather than disbarment in this case. The Bar does dispute, however, the referee’s recommendation as to the appropriate length of the suspension.
    In Florida Bar v. Smith, 866 So. 2d 41 (Fla. 2004), the Court imposed a one-year suspension on an attorney who deposited a $1665 check from a client for filing fees into her operating account and then used the funds for other expenses; failed to diligently represent that client and another client in an immigration matter; and issued a worthless check. The referee in Smith found significant mitigation in the form of, among other things, very serious medical issues, an absence of dishonest or selfish motive, rehabilitation, and remorse.

    In Florida Bar v. Corces, 639 So. 2d 604 (Fla. 1994), the Court imposed a two-year suspension where an attorney intentionally debited a client trust account over $6000, used the funds to pay personal bills, then over the course of twenty months repaid the deficit in the client trust account.

    Finally, in Florida Bar v. McNamara, 634 So. 2d 166 (Fla. 1994), an attorney converted for his own use a $5000 check from a third party that was either to be held in escrow or be used to reduce his client’s tax obligation. Although the Court noted that there was evidence in the record to support several mitigating factors, we imposed a three-year suspension.

    Here, as in several of the cases discussed above, Respondent converted client funds for his own use and repaid the funds at a later time. In addition, as in [The Florida Bar v.] Frederick, he attempted to condition the repayment upon the client’s agreement not to complain to the Bar about his misconduct.

    Based on the existing case law, we conclude that the Bar is correct that a one-year suspension, followed by two years’ probation with the conditions recommended by the referee, is warranted.

    As we have noted many times, misuse or misappropriation of client funds is one of the most serious offenses a lawyer can commit, and disbarment is presumed to be the appropriate punishment. Fla. Bar v. Travis, 765 So. 2d 689, 691 (Fla. 2000). We see no reason under the circumstances of this case, even given the referee’s uncontested findings of mitigation, to impose anything less than a rehabilitative suspension.

Conga Line Of Attorneys Disbarred For Stealing Money Obtained/Held For Their Clients Keeps On Growing

In Lee's Summit, Missouri, the Kansas City Business Journal reports:
  • Dennis J. Bonner, an attorney from Lee's Summit and a former member of the Missouri House, was disbarred by the Missouri Supreme Court on Tuesday [February 28].

    Bonner, who had a solo practice, admitted to violating five rules of professional conduct for attorneys and filed a motion with the court to voluntarily surrender his license to practice law in Missouri. Bonner was under investigation for mishandling his client's personal injury settlement funds.

    "The audit and investigation revealed that (Bonner) often used client settlement funds to pay his own law firm and personal expenses and (Bonner) had to delay paying clients until he received settlement funds from other clients," the Missouri Supreme Court wrote. "In short, (Bonner) has been systematically 'robbing Peter to pay Paul' in conscious, fraudulent disregard of his professional responsibilities."

    The court cited 10 examples of Bonner delaying payments for one client until he got a new settlement from another, then using the money to repay the first client. The court also cited six examples of Bonner misappropriating about $55,000 in third-party funds that were designated for medical bills and other expenses and now not having the means to repay the money. Bonner drew upon a $25,000 line of credit he had at Bank of Grain Valley and deposited it into the trust accounts but was still unable to repay everyone he owed.
Source: Lee's Summit attorney, a former legislator, gets disbarred.
(1)The Missouri Bar maintains a Client Security Fund to (at least partially) compensate clients victimized by sticky-fingered lawyers. 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. Go here for an application form and instructions.

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

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.

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.


    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.
(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.

Attorney Faces Theft By Deception Charge For Allegedly Pilfering $180K From 87-Year Old Client Who Sought His Help For Estate Planning; Probe Triggered By Suspicious Nursing Home Official Who Noticed Cash Being Diverted From Victim's Bank Account

In Pittsburgh, Pennsylvania, KDKA-TV Channel 2 reports:
  • A Washington County lawyer is accused of stealing from an elderly client.(1)

    Michael Alberty, 57, is charged with theft by deception, theft by unlawful taking and misapplication of entrusted property and property of government or financial.

    The alleged victim is an 87-year-old woman who had been staying at the Norbert Elderly Care Home. Alberty was originally called by the victim for help on her estate plan and South Side home restoration project,

    Police became aware of the situation when a Norbert Elderly Care Home official told officers she believed that Alberty had used “undue influence” over the victim to divert money from the victim’s bank account for his own benefit.

    Police say Alberty continuously instructed the victim to sign checks that he told her were payments for construction workers who were remodeling her home.

    But, over a period of six and a half months, $180,470 of the victim’s money was paid to Alberty’s account.(2)

    The victim’s case was referred to the Allegheny County Department of Human Services – Agency On Aging, resulting in an elder financial abuse audit.

    Alberty told the auditor that he was paid as a construction consultant and personal assistant. At one point he told the auditor that the victim was a millionaire and that she could afford this.

    He provided alleged contracts for this arrangement, but the victim told officials she had never seen the documents and that her middle name was misspelled in them.

    When the victim was made aware of how much of her money had been directed into Alberty’s account, she said she was unaware and said that he “needs to be thrown in jail.”
Source: Washington Co. Lawyer Charged With Stealing $180K From Elderly Client.
(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 (while 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 Pennsylvania Lawyers Fund for Client Security which was established by the Supreme Court of Pennsylvania in 1982 to reimburse clients (at least partially, if not fully) who have suffered a loss as a result of a misappropriation of funds by their Pennsylvania attorney.

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.