Wednesday, April 22, 2015
Seventy-year-old Arizona attorney Rodney Matheson was found guilty on charges of theft and fraud for stealing money from his deceased clients’ probate accounts. Maricopa County Superior Court Judge Bruce R. Cohen sentenced Matheson to 2 ½ years in prison and also ordered Matheson repay more than $1 million to an attorney representing the Mayo Clinic. Cohen placed Matheson on probation on a fraudulent schemes conviction for seven years, which will begin once he is released from prison.
According to court documents, Matheson orchestrated an elaborate “shell game” by stealing money from several estates in order to satisfy a court order for payment of $800,000 to the Mayo Clinic, the major beneficiary of a third estate. The fraud was uncovered when the Mayo Clinic filed a civil suit to collect $1.2 million left to the hospital as a beneficiary by the Mary Jane Schalow Trust.
See Disbarred East Valley Attorney Sentenced to Prison in Probate Theft Case, AZ Central, Apr. 21, 2015.
Friday, April 17, 2015
An Ohio lawyer who has been charged with multiple felonies now faces ethics charges as well. Paul Kormanik is accused of misappropriation of funds and incompetent representation from his guardianship of several state appointed wards. Allegedly, he made his clients out to be indigent in order to take taxpayer money and was stealing from a trust for which he was trustee. This case goes to show that courts and the public must carefully scrutinize any attorney that will be granted a fiduciary duty.
See Lucas Sullivan, Lawyer’s Work as Guardian Prompts Ethics-Violation Case, The Columbus Dispatch, Apr. 16, 2015.
Wednesday, April 8, 2015
The Supreme Court of Nevada recently held that the law firm, Woods & Erickson, LLP, was not liable for the fraudulent transfer of assets belonging to a debtor who was dodging a creditor judgment. The court opinion noted that a “majority of jurisdictions do not recognize accessory liability for fraudulent transfers.” The rationale is to protect attorneys who are not parties to the transfer but are instead acting as a “mere scrivener,” which contrasts with someone who knowingly assists with a fraudulent transfer and could be held liable.
Attorneys should follow the principle of KYC (know your client), because litigating these types of cases can be costly and time consuming. Even if not held liable, attorneys cannot recoup attorney fees for fighting these actions and malpractice insurers do not cover these types of cases. Because clients often lie about themselves, attorneys should diligently research a potential client to avoid any problems that could arise.
See Jay Adkisson, Nevada Supreme Court's Fraudulent Transfer Ruling Keeps Innocent Law Firm Out Of The Woods, Forbes, April 02, 2015.
Wednesday, March 25, 2015
In 2013, Christine Clark underwent months of testing so that she could donate her kidney to a longtime friend with end-stage renal disease. On July 2, 2013, almost an hour after doctors removed Clark’s kidney, they put her friend under anesthesia to receive the transplant. Her friend had been under anesthesia for two hours when the hospital canceled the surgery. Clark says doctors stopped the transplant because she had tested positive for hepatitis C.
Clark and her husband subsequently filed a complaint in the Dauphin County Court of the Common Pleas, claiming the failure to perform the correct test in time “caused catastrophic consequences.” The complaint further stated, “had appropriate protocols been established and/or followed, the intended recipient would have received plaintiff’s harvested kidney . . . Instead, they purportedly donated the kidney to a hepatitis C-positive patient at a different facility and obtained financial gain and prestige for said transplant.”
Having never received an explanation from the hospital about the failure of the transplant, Clark says the loss of her kidney has left her with various injuries including low blood pressure, nerve damage, scarring and humiliation. She and her husband are seeking punitive damages from the hospital, Central Pennsylvania Transplant Foundation Inc., and its doctors and nurses for negligence, misrepresentation, and battery.
See Lana Morelli, Kidney Donor Says Surgery Was a Disaster, Courthouse News Service, March 24, 2015.
Thursday, February 19, 2015
A Richmond lawyer is responsible for $603,409.10 after preparing a will that failed to provide the fully intended bequest to the Richmond Society for the Prevention of Cruelty to Animals (RSPCA).
In 2003, Alice L. Cralle Dumville asked James B. Thorsen to prepare a will for her that would keep her estranged husband from receiving any of her estate. In an oral contract, Thorsen agreed to draft the will that would leave all of Dumville’s property to her mother and, if her mother predeceased her, to the RSPCA. Dumville’s mother died in 2007 and Dumville died in 2008. Thorsen subsequently sought to have the will interpreted to leave the entire estate to the RSPCA, but a Chesterfield County judge concluded the will left only tangible personal property to the society.
Thorsen was sued for malpractice and agreed the will did not incorporate Dumville’s intentions regarding the disposition of her property. However, he argued that the RSPCA was not an intended third-party beneficiary of his legal services contract, effectively barring the malpractice claim.
The case was heard in November and the judge adopted the RSPCA’s reasoning that Dumville wanted everything to go to her mother and wanted everything to go to the SPCA in the event her mother predeceased her. Furthermore, the RSPCA met Virginia’s stringent test for a third party to have standing.
Thorsen and his firm have filed a notice of appeal, indicating they will ask the Supreme Court of Virginia to review the lower court’s decision.
See Peter Vieth, Botched Will Cost Lawyer $600,000, Virginia Lawyers Weekly, Feb. 9, 2015.
Special thanks to Ada-Marie Aman (Law Office of Ada-Marie Aman) for bringing this article to my attention.
Tuesday, January 6, 2015
Today an attorney was sentenced to sixteen months in prison for siphoning $262,000 from the estate of a disabled Army veteran.
Cuyahoga County Common Pleas Judge Timothy McCormick sentenced Kevin Purcell, 62, after hearing how the attorney stole the money from the estate of John Kane, who suffered from schizophrenia. “There is a special place in hell waiting for attorneys who steal from the defenseless,” said an assistant Cuyahoga County prosecutor.
Purcell served as a guardian for Kane since 1993 and administrator of his estate after he died in 2012. Last month, he pleaded guilty to aggravated theft and agreed to never practice law again. He also was ordered to pay restitution to Kane’s estate.
See John Caniglia, Lawyer Gets 16 Months in Prison for Fleecing the Estate of a Disabled Army Vet, Cleveland.com, Jan. 6, 2015.
Monday, December 29, 2014
Hired to oversee the estates of deceased loved ones, Robert DePalma, 53, is now accused of stealing $700,000 by Queens County District Attorney Richard A. Brown.
DePalma, who has a law office in St. George and is a former prosecutor at the Staten Island District Attorney’s Office, was charged with second-degree grand larceny and first-degree scheme to defraud during his arraignment in criminal court.
According to the charges, one of DePalma’s clients sold a home for $274,00 but never saw the proceeds. Another client was scammed out of $150,000 following the sale of their deceased mother’s Staten Island property. DePalma also told another client that proceeds from a real estate sale was being held in escrow, when in reality it was deposited into his bank account.
“The defendant is accused of breaching his fiduciary duty and unjustly enriching himself at the expense of his clients. Such allegations cannot go unpunished.” If convicted, DePalma faces up to fifteen years in prison.
See Mira Wassef, Staten Island Attorney Accused of Embezzling $700,000 From His Clients, SI Live, Dec. 26, 2014.
Wednesday, October 29, 2014
Whitney Ball plays a large role in the conservative movement. She controls DonorsTrust, a fund that has distributed more than $400 million to underwrite right-wing operations such as the National Rifle Association, the Heritage Foundation, and Americans for Prosperity.
Ball set up this fund fifteen years ago to act as a cashbox for wealthy conservatives who wanted to be sure their money would be used for conservative causes after they die. The priority of DonorsTrust is to “safeguard donor intent.”
A few years ago, Ball became involved in an estate controversy when her father, a lawyer in Virginia, unethically handled the wills of three elderly people and Whitney Ball and her brother personally benefitted from his misconduct, with almost half a million dollars deposited into their bank accounts.
According to the West Virginia Supreme Court of Appeals, which conducted a disciplinary proceeding regarding this matter, John Ball prepared wills for two octogenarian sisters. The court ruled that the “evidence in this case clearly established that Mr. Ball drafted three wills in which he gave himself excessive fees as an executor, drafted two wills that improperly conveyed property to himself and his wife, and assisted in changing a client's annuity to benefit" his children.
The court noted that Ball’s conduct was intentional and violated the rules of professional conduct. Ball’s misconduct resulted in him receiving millions of dollars. The court annulled Ball’s law license and ordered he pay restitution of nearly $3 million to the three estates. This amount included the money that went to his children.
While Whitney Ball and her brother were not accused of wrongdoing or misconduct, the court acknowledged they did receive hundreds of thousands of dollars that had been transferred to them due to the unethical action of their father.
See David Corn, How a Top Conservative Strategist Ended Up With More Than $200,000 in Shady Money, Mother Jones, Oct. 27, 2014.
Tuesday, October 21, 2014
An Austin lawyer and her firm have been sued by fifteen family members, alleging she failed to hire a handwriting expert to show their deceased matriarch’s will was forged and they should have received more from the estate.
The lawyer representing the plaintiffs, William Robertson, commented, “My clients disputed it from day one. The allegation against the lawyer in this case is that there should have been a careful expert examination of the handwriting. That was not done.”
The October 10 original petition and request for disclosure said the plaintiffs hired Holly Gilman and her firm to contest the handwritten will of decedent Carolina Torres. A woman named Lisa Navarro offered the will for probate. Gilman contested the will, arguing it “was fabricated and provided that Lisa Navarro was to receive the largest portion of the assets of the estate of Carolina A. Torres.” At the will contest hearing, no expert testimony was provided, rather writing samples were utilized.
The court ruled against the plaintiffs and found the will to be valid. The plaintiffs subsequently hired a new lawyer and continued to probate the case. The court then made a final ruling and distributed assets in accordance with the will. However, Robertson noted that the “distribution in the will was real lopsided.”
After a handwriting expert was hired, the plaintiffs became aware that the holographic will of Carolina A. Torres was forgery and that Lisa Navarro had perpetrated fraud. The plaintiffs are now suing for negligence, gross negligence and breach of contract.
See Angela Morris, Handling of Handwritten Will Lands Lawyer In Legal-Mal Lawsuit, Texas Lawyer, Oct. 17, 2014.
Wednesday, September 10, 2014
On Monday, Judge Paul Gardephe handed down one of the longest prison sentences for insider trading. Mathew Martoma, the portfolio manager who worked for an affiliate of Steve Cohen’s SAC Capital Advisors hedge fund firm, was found guilty of obtaining material non-public information about the development of an Alzheimer’s drug from a doctor and trading the information to make more than $200 million in profits. The judge sentenced Martoma to nine years and ordered that he pay back the $9 million he received in bonuses for himself.
The evidence accrued against Martoma was large, including the testimony of an 81-year-old doctor. Although some lawyers and reporters were baffled by Martoma’s decision not to settle the case, some suggest his ability to obtain a good settlement was hindered after it was discovered he had been expelled from Harvard Law School for doctoring his transcript to make up better grades.
See Nathan Vardi, Mathew Martoma Sentenced to Nine Years For Insider Trading, Forbes, Sept. 8, 2014.