Tuesday, October 18, 2011

Real Estate Closing Attorney Gets 21 Months In $1M+ Escrow Ripoff; Pocketed Entrusted Cash While Failing To Apply Loot To Satisfy Existing Mortgages

From the Office of the U.S. Attorney (New Haven, Connecticut):

  • David B. Fein, United States Attorney for the District of Connecticut, announced that BRIAN P. McMANUS, 43, of Fairfield, was sentenced [] by Senior United States District Judge Ellen Bree Burns in New Haven to 21 months of imprisonment, followed by three years of supervised release, for misappropriating more than $1 million in funds during real estate transactions he handled.

  • According to court documents and statements made in court, McMANUS, who operated a law practice in New Haven, engaged in a series of fraudulent transactions in his capacity as the closing attorney on a number of real estate transactions. Specifically, McMANUS failed to pay off existing mortgages on the properties involved in the real estate transactions in a timely fashion and illegally used mortgage funds that had been deposited into his IOLTA account for other purposes.

  • On July 22, 2008, McMANUS handled a real estate closing involving the refinancing of a residential property located in Greenwich. At the time of the closing, there was an outstanding mortgage on the property in the amount of approximately $2 million that was to be paid off using funds being provided by a different lender as part of the refinancing transaction.

  • However, rather than paying off the existing mortgage on the Greenwich property, McMANUS used more than $1.45 million of the new mortgage monies that had been transferred to his IOLTA account to pay off outstanding mortgages from prior, unrelated real estate transactions he had handled, to make monthly payments on the outstanding Greenwich mortgage loan that was to have been paid off in full, and to pay personal and business expenses.

  • On June 24, 2011, McMANUS waived his right to indictment and pleaded guilty to one count of bank fraud. [...], Judge Burns ordered McMANUS to pay restitution in the amount of $2,041,417.41, of which approximately $568,000 has previously been deposited with the clerk of the court. U.S. Attorney Fein noted that McMANUS has withdrawn from the practice of law and the Connecticut Superior Court has appointed a trustee to oversee the closing of his practice.(1)

For the U.S. Attorney press release, see Attorney Who Mishandled Mortgage Funds Sentenced To 21 Months In Federal Prison.

(1) The State of Connecticut Judicial Branch's Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Connecticut-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

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