Wednesday, December 20, 2017

Withdrawal A Good Option When Client Threatens To Cut Your Throat

A nine-month suspension was imposed by the South Carolina Supreme Court for misuse of entrusted funds in connection with a (fraudulent) purchase of an Oklahoma oil rig by an Israeli company ("NTB").

The attorney received a wire transfer of $48,000 into an account that at the time held $2.43.

He made disbursements (some in cash) but drew the wrath of the company 's American director Roland Nelson

During an angry telephone call, Nelson claimed one or both of NTB's third-party vendors had not been paid and threatened to cut Respondent's throat. Desiring to terminate his relationship with NTB, Respondent decided to withdraw the balance from his WF Trust Account. Respondent forgot to account for the transfers he made for his fees equal to $8,500, so he believed the balance in the WF trust account was higher than it actually was. He signed a cash withdrawal slip for $33,987.43 to purchase a cashier's check made payable to his firm and deposited the check into his BOA Trust Account. Once these transactions were processed, Respondent's WF Trust Account was overdrawn by $8,485.

Although NTB is a legitimate company, the purchase of the oil rig was a fraudulent transaction. The wire from Liberty into Respondent's WF Trust Account was initiated by an email scam perpetrated on NTB. When Wells Fargo contacted Respondent about the overdraft and the fraudulent wire, Respondent agreed to return $33,987.43 to his WF Trust Account and authorized the return of the account balance equal to $25,467.43 to Liberty. He elected to retain the $8,500 in fees he paid to himself, claiming he failed to understand from his conversation with Wells Fargo that the funds belonged to Liberty. He admits he did not ask enough questions to learn what actually happened.

 The admitted violations

Respondent admits his conduct violated Rule (2)(c) (cash withdrawals from client trust accounts are prohibited) and Rule 6 (no item shall be drawn on a trust account made payable to cash) of the Financial Recordkeeping Rules found in Rule 417, SCACR. Furthermore, he admits his conduct violated Rule 8.1(b) (a lawyer in connection with a disciplinary matter shall not fail to respond to a lawful demand for information from a disciplinary authority) and Rule 8.4(e) (it is professional misconduct to engage in conduct that is prejudicial to the administration of justice) of the Rules of Professional Conduct, Rule 407, SCACR.

The sanction is effective as of the date of his November 2016 interim suspension. (Mike Frisch)

Bar Discipline & Process | Permalink


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