Category Archives: Lawyer misappropriation

Illinois imposes one year suspension on (former) law firm partner who falsified and received $69,800.00 in client expense reimbursement

Hello everyone and welcome to this Ethics Alert which will discuss the recent Illinois Supreme Court Order which imposed a one year suspension on a law firm partner who falsified and received $69,800.00 in client expense reimbursement claims.  The case is In re: Lee Mark Smolen, Disciplinary Commission, M.R.27199, No. 2013PR00060 (March 12, 2015).  The summary disciplinary Order is here: http://www.state.il.us/court/SupremeCourt/Announce/2015/031215.pdf

As I reported in my January 12, 2015 Ethics Alert, a law firm audit found that the lawyer had submitted $69,800.00 in falsified taxi expenses and questioned an additional $379,000.00 reimbursed expenses.  The lawyer admitted that he “falsified and submitted for reimbursement more than 800 receipts for cab rides he did not take. He further admits he received reimbursement totaling $69,800 for the fabricated receipts.”

According to the Hearing Board Report, the expenses were charged to an unallocated client account which was “virtually unmonitored”.  The lawyer agreed that the law firm could withdraw $400,000.00 from his account to cover the expenses and the cost of the audit and he testified he used the cab money to pay for client entertainment, saving the time of making out expense reports.  He testified that he only slept three or four hours a night and typically spent 12 to 15 hours a day at work.

The Report further stated that the lawyer’s “mental health issues and his misconduct” were considered and one doctor opined there was a “loose association” between the lawyer’s personality disorder and his misconduct because the lawyer “was excessively devoted to work as a result of his obsessive-compulsive disorder.”  Another doctor stated that the lawyer’s depressive disorder and anxiety disorder led to “tremendous impairment of judgment” which led to the misconduct.  Both doctors found that the lawyer’s mental health played at least a minor role in his misconduct and gave it “some weight” as a mitigating factor.

 

According to the Report:  “We recognize that the amount of Respondent’s falsified expenses is greater than the amounts in the (cited) cases but in light of (the lawyer’s) significant mitigation we do not believe a suspension of more than one year is warranted.  We believe a one-year suspension addresses the severity of the misconduct and also takes into consideration the substantial mitigating factors.”

The Report recommended that (the lawyer) be suspended for one year and until he completed at least twelve months of continuous treatment with a psychiatrist. The lawyer’s suspension would terminate after one year if he “demonstrates his completion of treatment to the Administrator’s satisfaction.”  The Illinois Supreme Court adopted the Report and suspended the lawyer for one year with the recommended conditions.

Bottom line:  As I said previously, this lawyer admitted that he falsified and submitted for reimbursement more than 800 receipts for cab rides he did not take and received payment for nearly $70,000.00 from clients for the fabricated receipts.  An audit also questioned an additional $379,000.00 in reimbursed expenses.  In light of the large amount of the lawyer’s admitted misappropriation, it is surprising that the Board did not recommend disbarment for the misconduct and also that the Illinois Supreme Court approved the one year suspension recommendation.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Filed under Attorney discipline, Attorney Ethics, Attorney misrepresentation, deceit, dishonesty, joe corsmeier, Joseph Corsmeier, Lawyer conduct adversely affecting fitness to practice, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer expense reimbursement, Lawyer misappropriation, Lawyer misrepresentation, Lawyer misrepresentations to law firm re billings, Lawyer Professionalism, Lawyer sanctions

Illinois Disciplinary Board recommends one year suspension for partner who falsified and submitted $69,800.00 in client expense reimbursement claims

Hello everyone and welcome to this Ethics Alert which will discuss the recent Illinois Disciplinary Board Report which recommended a one year suspension for a law firm partner who falsified and submitted $69,800.00 in client expense reimbursement claims. The case is In re Lee Mark Smolen, Commission No. 2013PR00060 (1/7/14). The Board’s Report and Recommendation is here: http://www.iardc.org/HB_RB_Disp_Html.asp?id=11590

According to the Report and Recommendation, the lawyer (former Sidley Austin partner Lee Smolen) was employed in the firm real estate department since he was admitted to practice in 1987. He admitted that “he falsified and submitted for reimbursement more than 800 receipts for cab rides he did not take. He further admits he received reimbursement totaling $69,800 for the fabricated receipts.” He charged the expenses to an unallocated client account which was virtually unmonitored.

“In 2005, (the lawyer) billed 3,576 hours, which included time billed to clients and time spent on services to the firm. (The lawyer) billed 3,483 hours in 2006 and 3,332 hours in 2007. (citation omitted).” “(The lawyer) typically spent 12-15 hours per day at work and did additional work after he came home and on weekends. (citation omitted). He slept three or four hours per night. (citation omitted). (The lawyer’s) annual compensation at the time he left Sidley was $3.5 million. (citation omitted). He was one of the most highly compensated partners in the firm. (citation omitted).”

“(The lawyer’s) conduct was purposeful and intentional. We do not accept his explanation that he simply acted without thinking. (The lawyer) made conscious decisions and took conscious action each time he created and submitted a false receipt. He charged the cab rides to the Wells Fargo unallocated account, which he controlled. There was no reason for (the lawyer) to take the actions he took unless he intended to make the Sidley accounting department and management believe something that was not true, i.e., that he incurred valid cab ride expenses for which he was entitled to be reimbursed. (citation omitted).

“We do not find credible (the lawyer’s) assertion that he did not realize he was doing anything wrong. An attorney of any level of experience should recognize the wrongfulness of fabricating expenses. Given (the lawyer’s) substantial legal experience and accounting background, his professed lack of awareness is implausible.

“(The lawyer’s) purported use of the reimbursement funds for a legitimate purpose does not alter our finding of dishonesty. Other than (the lawyer’s) testimony, no evidence supports his claim that he used the funds for client development. (The lawyer’s) testimony on this issue was inconsistent and he has no records or receipts to corroborate his assertion. Respondent’s wife testified that she withdrew cash from their checking account and gave it to (the lawyer), but she had no knowledge how (the lawyer) spent the cash.

The lawyer is now employed with DLA Piper and two DLA partners testified at his hearing. According to that testimony, the lawyer appeared before DLA Piper’s executive committee and told them that he made a “horrible mistake” and the firm executive committee voted unanimously to recommend that he be employed by the firm. A partner testified that he monitors the lawyer’s billings and they are appropriate and he was initially concerned about the lawyer joining the firm, however, he is now “fully supportive” of the lawyer’s membership in the firm.

According to the Report, the lawyer’s “mental health issues and his misconduct” were also considered. One doctor opined there was a “loose association” between the lawyer’s personality disorder and his misconduct because the lawyer “was excessively devoted to work as a result of his obsessive-compulsive disorder.” Another doctor stated that the lawyer’s depressive disorder and anxiety disorder led to “tremendous impairment of judgment” which led to the misconduct. The opinions found that the lawyer’s mental health played at least a minor role in his misconduct and have it “some weight” as a mitigating factor.

“We recognize that the amount of Respondent’s falsified expenses is greater than the amounts in the (previously cited) cases but in light of (the lawyer’s) significant mitigation we do not believe a suspension of more than one year is warranted. We believe a one-year suspension addresses the severity of the misconduct and also takes into consideration the substantial mitigating factors.”

“Accordingly, we recommend that (the lawyer) be suspended for one year and until he completes at least twelve months of continuous treatment, from the date of the hearing, with Dr. Spira or another psychiatrist acceptable to the Administrator. The lawyer’s suspension will terminate after one year if he demonstrates his completion of treatment to the Administrator’s satisfaction.”

Bottom line: This lawyer admitted that “he falsified and submitted for reimbursement more than 800 receipts for cab rides he did not take” and received payment for a total of $69,800.00 from the clients for the fabricated receipts. In light of the large amount of the lawyer’s admitted misappropriation, it is surprising that the Board did not recommend disbarment for the misconduct. The Report and Recommendation will now be reviewed by the Illinois Supreme Court which will issue a final opinion.

Be careful out there.

Disclaimer: this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
jcorsmeier@jac-law.com
http://www.jac-law.com

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Filed under deceit, dishonesty, fraud, joe corsmeier, Joseph Corsmeier, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer false statements, Lawyer misappropriation, Lawyer misrepresentation, Lawyer misrepresentations to law firm re billings, Lawyer Professionalism, Lawyer sanctions

Illinois Hearing Review Board Report recommends 3 year suspension for lawyer who allegedly took $95,000.00 from his retired secretary

Hello everyone and welcome to this Ethics Alert which will discuss the recent Illinois Hearing Review Board Report which recommended a 3 year suspension for a lawyer who allegedly who allegedly took $95,000.00 from his retired secretary for his own personal use. The disciplinary matter is In re: Charles William Helmig, Commission No. 2013PR00019 (Ill. 11/25/14). The Report and Recommendation is here: http://www.iardc.org/HB_RB_Disp_Html.asp?id=11553.

According to the Report and Recommendation, the secretary worked for the lawyer from 1964 until 1984 when she retired. She never married and had few close relatives. In 2005, the former secretary was at least 83 years old and had been hospitalized. Eventually both of her legs were amputated, her condition deteriorated, and by 2009 she was not mentally competent. From 2005 until her death in March 2013, the secretary was either in the hospital or a nursing home.

While she was in the hospital in 2005, the former secretary asked the lawyer to prepare a Power of Attorney for Healthcare and a Power of Attorney for Property for her. There was a stipulation that the secretary was competent when she signed the documents; however, the lawyer testified he was concerned about her abilities at that time and he read and explained the documents to her before she signed them.

The lawyer then began to manage the former secretary’s business affairs and collected her assets and sold her home. The lawyer admitted that he charged the secretary over $27,000.00 in “legal fees” from 2005 through 2013. He also admitted that, beginning in 2009 and through 2012, the secretary was not mentally competent and was unable to recognize him. During that time, the lawyer took over $95,000.00 from the secretary’s assets and used the funds for his own personal and business expenses. He admitted that he did not ask have the secretary’s permission to take the money (nor did he ask for it) and that she was not competent to give her consent.

The lawyer also failed to timely pay the nursing home where the former secretary was living, which resulted in the nursing home involuntarily transferring her. In addition, acting as the secretary’s lawyer, he failed to appear at a status conference and failed to comply with an agreed order entered in the matter.

The lawyer stated that he was in a “very bad financial condition” when he took the money and that he had defaulted on loans of more than $1.2 million dollars and had federal tax liens for several hundred thousand dollars. The lawyer claimed the $95,000.00 were loans and provided, for the first time at his sworn statement, a series of promissory notes that the Hearing Board did not believe were executed at the time of the “loans”.

According to the Report and Recommendation, “(a) lesser sanction than disbarment was appropriate. While the lawyer’s conduct could support a sanction of disbarment, we agree with the Hearing Board’s recommendation that the lawyer’s misconduct warrants a three year suspension. However, we recommend that the suspension continue until further order of the Court. The lawyer’s failure to fully understand the impropriety of his acts, as evidenced by his continued insistence that the takings were loans and his poor financial condition, support the necessity of a future assessment before he resumes the practice of law.”

Bottom line: The Report and Recommendation found that this lawyer took over $95,000.00 from his retired secretary and paid his own personal and business expenses without her permission when she was not competent to give her consent. He also apparently provided fabricated promissory notes at his sworn statement to justify his actions. He failed to pay the nursing home which resulted in her involuntary transfer, failed to appear at a hearing on her behalf, and failed to comply with an agreed Order. Under these facts, it is very surprising that the discipline recommendation was not disbarment. The disciplinary matter and this Board’s recommendation will now be reviewed by the Illinois Supreme Court. We will see what that court decides.

Disclaimer: this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
jcorsmeier@jac-law.com
http://www.jac-law.com

Leave a comment

Filed under Attorney discipline, Attorney Ethics, dishonesty, fraud, joe corsmeier, Joseph Corsmeier, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer lack of diligence, Lawyer misappropriation, Lawyer misappropriation of trust funds, Lawyer misrepresentation, Lawyer sanctions