Billing Fraud Draws Proposed Suspension

An Illinois Hearing Board has recommended a 20-month suspension for billing fraud

Respondent was a shareholder at Vedder Price, P.C. Typically, the accounting department prepared and sent invoices to clients, based on time and expense reports approved by the attorney responsible for that client. Respondent’s clients included Fortress Investment Group and GA Tellesis. Fortress provides finance and leasing services to airlines. Under its contracts with its customers, Fortress could pass its expenses, including legal services, onto its customers. (Ans. at par. 1; Tr. 26, 30-31, 34-35, 37).

Between January 2018 and September 2019, Respondent created and sent nine invoices to Fortress customers. As Respondent knew, those invoices sought payment for services for which Fortress had been billed and had paid Vedder Price. Based on those invoices, Fortress customers remitted a total of $108,674 to Vedder Price. Those funds belonged to Fortress. (Ans. at pars. 3, 6; Tr. 33-36, 49).

Respondent also instructed the accounting department to reactivate a dormant account, which had been assigned to Respondent’s former client, the L. Martinez Construction Company. When Vedder Price received payment on the first false invoice, Respondent told the accounting department to credit that payment to the Martinez Construction account. Respondent placed the Martinez Construction account on the subsequent fraudulent invoices he created. As a result, payments made on those invoices were credited to the Martinez Construction account. (Ans. at pars. 2, 3, 4, 6; Tr. 28-31, 38-42, 46-51, 56, 64-69; Adm. Exs. 3-4, 6, 8-9, 11, 14-15, 17-19).

During the same time period, Respondent also prepared a false invoice directed to GA Tellesis, for $7,488, using the Martinez Construction account number. This caused the payment on that invoice to be credited to the Martinez Construction account. (Tr. 37, 43; Adm. Ex. 2).

In the meantime, in 2018 and 2019, Respondent sent requests to the accounting department, seeking payment from the Martinez Construction account, purportedly to reimburse him for expenses. Those requests were fraudulent. Respondent knew he was not authorized to use these funds for himself, and the purported expenses included items such as travel expenses for trips Respondent never took. Based on those requests, Respondent received at least $79,790.43. (Ans. at par. 8; Tr. 41-42, 45-47, 50-51, 57-60, 62-66, 71-73, 76-80; Adm. Exs. 5, 7, 10, 12-13, 16, 21-25).

The attorney had acknowledged the misconduct and presented favorable character testimony

Discipline imposed for fraudulent billing varies significantly, obviously depending on the facts of the specific case. There are cases with facts generally comparable to those here which could support a three-year suspension, as the Administrator suggests, (e.g. In re Nadell, 96 CH 348, M.R. 12524 (May 28, 1996)), a one-year suspension, as Respondent suggests, (e.g. In re Alpert, 01 CH 13, M.R. 17749 (Nov. 28, 2001)), or a two-year suspension. E.g. In re Smith, 04 CH 84, M.R. 23347 (Nov. 17, 2009); see also In re Butler, 09 CH 93, M.R. 23783 (May 18, 2010). Each of these cases present some facts which are similar to those here and others which are distinguishable. Thus, the case law reflects the range of discipline which is appropriate for this case, rather than pointing a clear bright line to a specific term.

After considering the circumstances of this case and the relevant precedent, we recommend a suspension for twenty months and until Respondent successfully completes the ARDC Professionalism Seminar.

(Mike Frisch)