Wednesday, May 24, 2006

Attorney Indicted for Stealing $13.5 Million from Injured Clients

Clients are supposed to be able to trust their lawyers, so when an attorney is accused of stealing from the funds paid out to injured clients it is particularly troubling.  Louis Robles, who at one time headed one of the largest class action and mass tort firms in the country, has been indicted in the Southern District of Florida on 41 counts of mail fraud for misappropriating $13.5 million from clients who received settlements in asbestos litigation.  Robles was disbarred in 2003 by the Florida Supreme Court, and in his personal bankruptcy a report asserted that Robles overcharged his clients by $30 million for expenses (see Daily Business Review article here).  A press release issued by the U.S. Attorney's Office (here) states:

According to the Indictment, Robles used client trust account money for his personal benefit, including financing his movie production and waste management companies, leasing apartments in New York and Los Angeles, making mortgage payments of up to $101,000 per month on four different properties, including a 9,000 square-foot waterfront mansion in Key Biscayne, and paying his ex-wife’s alimony, as well as payments to other clients.

According to the Indictment, Robles, acting contrary to his fiduciary duty and duty of loyalty as an attorney, misappropriated trust monies belonging to his asbestos clients and used this money for his own personal and business purposes. Specifically, in April 1994, Louis Robles stopped the automatic disbursement to his clients of settlement funds he had received on their behalf, and directed that no disbursements be made without his prior authorization. At around the same time, Robles began requesting bulk withdrawals of funds from client trust accounts without his clients’ knowledge or consent. According to court records, over time, the gap between settlements moneys received versus settlements paid grew until by September 30, 2002, the gap exceeded $13,522,000.

According to the Indictment, Robles further defrauded his clients by making materially false statements regarding his receipt of settlement funds from asbestos corporate defendants. Between April 1994 and February 19, 2003, Robles caused mailings to be sent to his asbestos clients falsely stating that the payment of their claims would be delayed due to the bankruptcies of certain asbestos corporate defendants. In fact, Robles had already received settlement checks for many of his asbestos clients from several of those same asbestos corporate defendants before their bankruptcies.

Robles had a court-appointed lawyer for his initial appearance, and the first issue will likely be sorting out his finances to determine whether he can afford counsel.  A court order has frozen his bank and brokerage accounts, and the government is seeking forfeiture of $13.5 million.  Robles sold his Key Biscayne house last year for over $12 million. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/05/attorney_indict.html

Fraud, Legal Ethics, Prosecutions | Permalink

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