Wednesday, July 16, 2014
An attorney's self-report of misconduct led to his disbarment by the South Carolina Supreme Court.
The self-report took place in late 2012, when the attorney learned that his law firm's trust account was being investigated by the Office of Disciplinary Counsel.
The attorney admitted that he had been aware of trust account shortfalls for six years and that his partner had a solution of robbing Peter to pay Paul and keep the account afloat.
Respondent did nothing to prevent the implementation of this plan and, as a result, the firm began the self-perpetuating cycle of misappropriation of client funds. Respondent actively participated in this process.
The self-report came in the wake of a client complaint over his partner's misappropriation of the proceeds of a personal injury settlement. The partner committed suicide the next day.
The attorney was placed on interim suspension within a few days of the self-report. He was convicted of mail fraud and confessed to a judgment of over $1.2 million.
Here, he consented to the disbarment.
The Palmetto State reported with respect to the partner
In Schurlknight’s case, after he committed suicide, his clients learned that he had gambled away their money and, not only that, had taken out a life insurance policy that paid money to his bookie to reimburse the bookie for his gambling losses, according to lawsuits on file in the Florence County Court of Common Pleas.
The partner's estate is the subject of a class action lawsuit initiated on behalf of former clients, according to SC Now.com:
The suit alleges that between 2007 and 2012 while practicing personal injury law that Schurlknight on many occasions settled client’s personal injury claims without their knowledge, forged their signatures on the settlement checks and kept the money for himself, while lying to clients that their case was ongoing. There are also allegations that he took out fraudulent loans in his clients’ names as well.
In addition to the allegations that he operated his law practice as “the Schurlknight family piggy bank,” the suit also said that Schurlknight not only kept the funds, but settled for far less than their actual harm.
The suit tallies up $4,262,484 that the plaintiffs say he stole, but claims the ultimate total could be between $6 million and $10 million
While the case will require analysis of the allegations of stolen money prior to Schurlknight’s death, it also hinges on claims that the defendants hid investment-grade life insurance policies from the court after he died.
The plaintiffs allege that the Schurlknight family, while represented by legal counsel, approved an inventory of the late Schurlknight’s assets that was inaccurate, and left out the insurance money that was specifically required by the probate court’s form, even though it is technically not part of the estate and in theory should have been exempt from creditors per South Carolina law.
The suit claims the purpose of the falsified inventory was “luring creditors into believing that pursuing any type of claim against the estate or its beneficiaries was hopeless as there were no funds or other assets of any kind to pursue.”
Since then the $1.5 million, which was deposited in Lee Schurlknight’s account and has been partially transferred to Malinda Schurlknight, was used to purchase three new cars and to pay $80,000 to a creditor, who the suit does not name.