Conversion Of Bankruptcy Payments Alleged
The Illinois Administrator has filed a complaint alleging that husband and wife law partners converted funds ordered to be paid their client out of a bankruptcy estate
Beginning in at least 2001, Respondent Coston and Respondent Rademacher practiced law as partners in the Chicago law firm of Coston and Rademacher, P.C., which represented asset-based lenders and equipment financing companies. Respondents renamed the firm Coston and Coston LLC in 2004, and remained law partners in that firm until it dissolved in August 2014. Respondents were married in 1997, and Respondent Rademacher also used her married name, Coston. In October 2014, Respondent Rademacher set up her own law practice, and incorporated her firm as Rademacher, Inc.
In or around July 2009, Respondents and Associates Asset Management (“AAM”) agreed that Respondents would represent AAM in various consumer debt collection and bankruptcy proceedings in Illinois. AAM engaged in debt collections relating to consumer receivables, including mortgage debt.
In July 2009, Respondents and AAM agreed that Respondents would accrue 30% of any amounts recovered by Respondents on behalf of AAM in the proceedings. Respondents agreed to send the remaining 70% of the amounts they recovered to AAM on a monthly basis…
On October 13, 2010, Judge Cox entered an order in the Menard matter confirming an August 10, 2010 Chapter 13 plan, as modified by an amendment filed on October 13, 2010. The confirmed plan provided for AAM to recover on its $110,177.26 claim, which would be paid through the bankruptcy estate.
The complaint alleges that the attorneys received 20 checks on behalf of the client, failed to advise the client that the checks had been received and converted the proceeds.
One is charged with false statements to the client
Respondent Rademacher periodically provided status reports to AAM that purported to report upon the collection matters that Respondents were handling. The reports identified the name of the account, the case number, the status of the matter, the next actions that Respondents planned to take, and the costs associated with each matter.
No earlier than August 29, 2012, Respondent Rademacher sent a status report to AAM that purported to report upon the status of the AAM matters. For the Menard matter, Respondent Rademacher reported as the status that “[w]e will receive a small percentage from the BK at some point,” and that the next step was to “[m]onitor BK payments.”
Respondent Rademacher’s statements in the report provided to AAM, that AAM would receive payments relating to the Menard bankruptcy at some point in the future and that the next action would be to monitor those payments, were false because, as of August 29, 2012, Respondents had already received 14 checks from the trustee in the Menard matter totaling $6,492.25.
A third count charges both attorneys with misconduct in securing a mutual release in a matter in which the firm and AAM were sued as co-dfendants by a debtor. (Mike Frisch)