Law Firm Faces Bar Probe For Allegedly Using Trust Funds To Advance Anticipated Proceeds From Check That Subsequently Bounced; Left Holding $285K+ Bag
In Orlando, Florida, the Orlando Sentinel reports:
- The Florida Bar is investigating practices by the KEL law firm that may have played a role in it being bilked out of more than $285,000 in a high-tech flim-flam, the Bar confirmed this week.
- Staff investigators are looking at whether the Orlando law firm violated the Bar's rules of financial conduct when it moved funds in and out of a trust account while becoming ensnared in the international scam, a spokeswoman said.
- In the latest incident, KEL finds itself both the victim of wrongdoing and the target of the complaint that accuses it of flouting Florida Bar rules. U.S. Attorney Robert E. O'Neill for the Middle District of Florida announced last week that KEL had been defrauded and that federal authorities have taken action to recover $285,833 stolen from the firm. The U.S. has filed a civil-forfeit lawsuit against JPMorgan Chase Bank as part of that effort, O'Neill said.
- According to a Secret Service investigator's affidavit, KEL was contacted by phone last summer by a prospective client named "David Benson," who claimed to be a business consultant. He wanted to sue a former boss, identified as "Fred Sanders," for wrongful termination. The sum in dispute: $90,000.
- After receiving a $500 retainer check, KEL took the case, contacted Sanders and obtained a settlement, the affidavit states. The firm later received a check in the mail for $285,833. It deposited the check in its business account and wired the money to Benson before the check cleared, apparently feeling "obligated" to get the money to him as soon as possible, according to the investigator.
- But KEL didn't have enough money in the business account to wire the full amount, so it transferred funds from its title-work subsidiary account, the federal affadavit states. When it wired the money to Benson at an account in Shinsei Bank in Japan, someone withdrew the entire amount.
- Later, both the retainer check and the settlement check were found to be counterfeit; and everything else about the people involved had been fabricated, according to the affadavit. KEL's money was gone, and the law firm had never met its client face-to-face.
For more, see Bilked by scam, KEL law firm draws Florida Bar scrutiny.