Thursday, March 28, 2013

The Missing $4.38 Million

The Florida Supreme Court has rejected a referee's proposed suspensions and disbarred two attorneys as a result of trust account deficiencies.

The matters involved two complaints that were consolidated. The referee found that "100's of millions of dollars passed through" the firm trust account and that the trust account "imbalance" was "roughly $4.38 million."

The attorneys claimed that a non-lawyer bookkeeper had embezzled that amount. The referee found that there was no evidence of misappropriation by the attorneys.

When the shortfall was discovered, the attorneys did not address the problem for several months. They eventually hired outside counsel and an outside accountant, restored most of the funds to the trust account from a number of souces including malpractice insurance, contacted the police and explained the situation on the Bar's ethics hotline.

However, the court noted that the attorneys had taken an excessive amount of time to resolve the deficiencies once discovered and that

...the actions that Respondents took to manage the drastic shortages in the trust account included additional acts of misconduct. Respondents accepted funds from client when Respondents knew the account was underfunded. This was a conflict of interest. They did not inform clients of the firm's financial issues when dealing with them, yet they continued to represent the cnts. In addition, they were using this "fresh money" from some clients to satisfy past due client liabilities.

One of the attorneys also solicited a personal loan from a client.

The court also rejected referee's "equitable adjustment" that reduced the costs awarded to the Bar. (Mike Frisch)

Bar Discipline & Process | Permalink

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