How Not To Handle Funds And The Resulting Investigation

An attorney who had converted entrusted funds should be suspended for a year, with six months stayed on probation, according to a recent report of the Illinois Review Board.

The attorney had settled a wrongful death claim for estates of two people killed in a fire for $90,000. He escrowed the settlement and properly paid out over $80,000. The rest remained in escrow because he was unable to locate two heirs.

The money stayed, the balance slipped below the amount due the remaining heirs.

When inquiries were made, the attorney’s initial response was not true. When subsequent inquiries were not responded to, a complaint was filed with the ARDC.  

Practice Pointer I:

This complaint likely could have been avoided if the attorney had been responsive to the concerns of the heirs and arranged to pay what was due.

Practice Pointer II:

If someone goes to the Bar to complain, don’t do this:

Throughout the investigation, and in discovery  after the Complaint against Respondent was filed, Respondent denied he converted  the settlement proceeds. Prior to hearing, he claimed to the Chair that the  proceeding against him was “frivolous” and that the bank had made errors which  caused a technical conversion by wrongly transferring money from his client fund  account to cover overdrafts in his other accounts. At hearing, Respondent  conceded that the funds were used for his business and personal expenses without  authorization from Rhodes and Scott. However, he continued to blame the  conversion on the bank’s transfers of funds from his client fund account to his  other accounts. He testified that he did not authorize the transfers and did not  notice them at the time. However, these bank transfers occurred in 2010 and  2011, after the account balance had already occasionally dipped below the amount  Respondent was supposed to be holding and after he had been informed that Rhodes  and Scott had not been paid.

Respondent had significant debts and was under a  good deal of financial pressure at the time of the conversions: creditors had  initiated legal action, his home was in foreclosure, he had financial  obligations arising from his divorce, he took out numerous loans, and his  personal and business account was overdrawn on occasion.

The board found that the conduct involved dishonesty.

There are places where findings like that can get a lawyer disbarred. (Mike Frisch)