Thursday, July 19, 2012

Ex-Chapter 7 Trustee Gets 18 Months For Ripping Off Bankruptcy Estates He Oversaw

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

  • David B. Fein, United States Attorney for the District of Connecticut, announced that Michael J. Daly, 55, of West Simsbury, was sentenced [] by Chief United States District Judge Alvin W. Thompson in Hartford to 18 months of imprisonment, followed by three years of supervised release, for stealing from several bankruptcy estates that he oversaw as a trustee. Daly also was fined $15,000.
  • On July 12, 2011, Daly pleaded guilty to one count of embezzlement by a court officer, a charge that stemmed from his embezzlement of $11,100 from the bankruptcy estate of Lehman Brothers Inc., a Connecticut-based print shop.

    According to court documents and statements made in court, on May 13, 2004, a voluntary Chapter 11 bankruptcy petition was filed on behalf of Lehman Brothers. On December 5, 2008, the Lehman Brothers bankruptcy was converted from a Chapter 11 to a Chapter 7 case, and the U.S. Bankruptcy Court for the District of Connecticut appointed Daly trustee of the estate. As trustee, Daly was responsible for closing the company’s “Debtor-in-Possession” account, or “DIP,” as soon as possible.

    Daly left Lehman Brothers’ DIP account open for more than six months, until June 29, 2009. During that period, the account received $11,584.31 in customer deposits for previously completed print jobs. Daly made a series of withdrawals from the account, totaling $11,100, which he deposited into his business account or converted to cash. Daly then transferred the stolen money to his private bank account and spent it on personal expenses.

    The FBI’s investigation of this matter further revealed that, while serving as a bankruptcy trustee, Daly embezzled $16,500 from two other estates, stole approximately $22,100 in jewelry from another estate, and attempted to submit approximately $73,650 in false time records in association with his work on behalf of another estate.

    Daly has surrendered his license to practice law and resigned as a panel trustee in the bankruptcy court.
(1) To the extent the any victims can't collect any money from this attorney, they might consider pursuing a claim with the Connecticut Client Security Fund, which is a fund established by the rules of the Connecticut Superior Court to provide reimbursement to individuals who have lost money or property as a result of the dishonest conduct of an attorney practicing law in the State of Connecticut, in the course of the attorney-client relationship. The fund provides a remedy for clients who are unable to obtain reimbursement for their loss from any other source. Go here to obtain a copy of form JD-GC-15 - "Application for Reimbursement - Client Security Fund" (PDF). rogue

For similar "attorney ripoff reimbursement funds" that 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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