Tuesday, July 1, 2014

"Poorly Conceived Short Cut"

The Illinois Administrator has filed an amended complaint in the disciplinary matter involving former Sidley Austin partner Lee Smolen.

The charge

Between 2007 and 2012, Respondent was a partner  at Sidley Austin LLP, based in the firm's Chicago office. During that time, he  was the head partner in charge of the Chicago office's real estate practice  group, and was a global coordinator of the firm's real estate practice group. In  addition to the responsibilities listed above, after October of 2008, Respondent  served as a member of the firm's executive committee. Respondent was responsible  for, among other things, billing matters affecting real estate transactions  involving a major financial institution, one of the firm's largest clients. One  account relating to that client ("the unallocated account") contained funds that  had been paid by the client as fees, but against which additional charges could  be made for various matters, including post-closing fees. In the absence of such  charges, funds in the unallocated account belonged to the law firm.

Between 2007 and 2012, Respondent submitted more  than 800 requests that the firm reimburse him from the unallocated account for  cab rides that he knew he had not taken. In support of the false requests,  Respondent fabricated false taxi receipts, in amounts averaging approximately  $80 each, and the firm paid Respondent approximately $69,000 based on the false  submissions.

During the same period, Respondent also  submitted, or caused to be submitted, fabricated cab receipts totaling at least  $567 that were charged to other firm clients.

 By causing funds to be paid to himself from the  unallocated account, Respondent reduced the amount of money in that account that  would otherwise have been paid to the firm and, eventually, distributed to  Respondent and Respondent's partners.

The amended answer is linked here.

The amended answer states, in part

Respondent admits that, between 2007 and 2012, he submitted more than 800 requests that the firm reimburse him from the "unallocated account" for cab rides that he had not taken. Respondent also admits that he fabricated taxi receipts in amounts averaging approximately $80 each, and that the firm paid him approximately $69,000 based on his submissions, further stating that funds so obtained were utilized for purposes that he considered related to the firm. In further clarification, Respondent states that his submission of fabricated taxi receipts was a poorly conceived short cut around the firm's expense reporting procedures in order to secure more time to address his substantial and demanding commitments to the firm. While wrong, Respondent's conduct was not the result of any intent to profit personally. Respondent affirmatively states that he has reimbursed the firm for the approximately $69,000 at issue.

(Mike Frisch)


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