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10 Ways Lawyers Rip Off Clients
Business Insider
January. 10, 2016, 11:56 AM 46,288
Like a sick person, a company facing litigation is willing to spend big bucks to get out of a trouble. It's entirely justifiable, and lawyers are only too happy to oblige, billing clients for every minute worked, and then some. But is it possible to get sound counsel from someone who just pulled 52 all-nighters in a row? How about paying more than $1,000 for an hour of legal advice? And what about being charged for 26 hours in a single day? Like all consultants, some lawyers find questionable ways to squeeze money out of clients. Some are legal, some aren't, but all will make a CFO's blood boil. So review those invoices, make sure you know billing rates, and kindly remind Dewy, Cheatem and How LLP, that summer associates don't need to stay in VIP suites at the Four Seasons.
To remind you of the dangers, we've updated an article from our archives by Lawrence Delevingne and Gus Lubin.
Here's what to watch for:
Double billing Billing two clients for the same hour of work is dubious legally and ethically. That doesn't mean it's uncommon. More than one-third of American lawyers admitted to occasionally double-billing clients in a2007 survey from Samford University's Cumerland Law School. According to the study, the percentage of attorneys who believed that the practice was unethical fell from 64.7 percent in 1995-96 to only 51.8 percent in 2006-07, even though the practice has been condemned by the American Bar Association and most legal commentators. One egregious example is of a Long Island lawyer whose claims in government legal bills included working more than 1,200 days in a year and claiming to be a full-time employee of five different school districts, according to the ABA Journal.
Padding hours Padding hours is a basic building block of consulting billing excess. Work for ninety minutes? Call it two hours. Forget how long you worked? Call it five. Avery Tolar, Gene Hackman's character in The Firm, sure made it work. According to the Samford study, "a distressingly high percentage of attorneys believe that time-based billing results in bill padding and provides incentives for attorneys to perform unnecessary work." Two-thirds of the respondents stated that they had specific knowledge of bill padding. For example, an extensive Illinois hearing board investigation into the billing records of a lawyer at Mayer Brown found that he billed more than 150 hours during a two-week period in which he actually worked less than 50. The lawyer's routine was to arrive at the office around noon, stay until the other lawyers went home around 5, and then go home himself soon after — while claiming to stay at the office until late in the night. When he was in the office, investigators found, the lawyer made edits to documents at a rate somewhere in the range of one edit per hour. That's the more common version of over-billing, as opposed to the notorious 1990s example of an energetic Cravath attorney who billed 26 hours in a day, according to the Washington Monthly.
Overhead Are you paying for your lawyer's air conditioning? Michael Vick was. Faced with a $2.66 million fee for a bankruptcy case, Vick learned that his lawyers were charging for extensive overhead expenses. As Am Law Daily noted, these included the cost of running air conditioning during the weekend; taxi rides home for employees working late; and $1,200 for plane tickets from New York to Kansas. Cromwell & Moring also billed the quarterback for an incredible number of hours — 7,200 billable hours of work over ten months, equivalent to working 24 hours a day on the Vick case for 300 straight days. Vick's fee was subsequently reduced by a disapproving judge to $1.5 million.
Trivial tasks Sometimes, law firms use high billing rates to stick clients with unnecessarily expensive bills for research, secretarial work, and other low-level tasks. For example, a federal judge scolded Richards Kibbe & Orbe after a firm lawyer billed $325 an hour to review an estate landscaping plan and used a $190-an-hour paralegal to deliver a letter to court, according to the Bergen Record. Why not just use FedEx? the judge asked.
Expense accounts Expense reports can be great opportunities to practice greed — er, billing creativity. You might claim reimbursement for the cost of first-class tickets when actually you flew coach. Or you could claim reimbursement for plane tickets, hotels, and meals when actually you didn't travel at all. For example, a lawyer at Sullivan & Cromwell used these techniques and others to misappropriate over $500,000 before being disbarred in 2008, according to the Wall Street Journal. Besides outright false expenses, the lawyer admitted to improperly billing for personal "meals, travel and lodging" and first-class tickets on international flights, for which he paid for coach or business-class tickets, pocketing the difference. Also in 2008, a lawyer at Latham & Watkins pleaded guilty to one count of mail fraud for mischaracterizing more than $200,000 of expenses as reimbursable.
Exorbitant rates Although fair by the virtues of the free market, there is something wrong about four-figure hourly rates. According to last year's billing survey by The National Law Journal, the highest billing rate belonged to a partner at Locke Lord's Dallas office at $1,285 an hour. Meanwhile the highest associate billing rate was $760 an hour at DLA Piper's New York office. That counsel better be good.
Inefficiency High legal fees often seem like a rip-off, and once in awhile, a judge agrees. In one case of indisputable inefficiency, attorneys tasked with the recovery of billions of dollars lost in the R. Allen Stanford Ponzi scheme recovered only $81 million. According to the AP, the attorneys charged $27 million for three months of shoddy work. In other words, an unprecedented 34% of the recovered sum would be paid to legal fees. The situation was improved somewhat by a judge, who rejected and withheld about $7 million in fees.
Negligence Anytime you pay an upfront fee, you risk the lawyer not doing much or any work. This was a growing problem in the past year with a high number of foreclosure cases, which often involve initial payments. In a typical case last month, Gladis Heras paid a lawyer to arrange a modification of her mortgage. Months later, her bank had not been contacted about the mortgage, and the lawyer had done his best to disappear, according to the Daily Business Review. Thankfully, he was arrested after receiving dozens of complaints related to negligence and abandonment.
Training Sometimes, law firms charge clients for developing talent. Recently, Tuckerbrook Alternative Investments sued Bingham McCutchen, claiming the firm stacked a case with young associates who had “inadequate” experience. “The billing statements reflect that these junior lawyers in essence were enjoying the benefits of on-the-job-training at Tuckerbrook’s expense,” the complaint states, according to Above the Law.
Working while sleeping Even if clients believe the super-human hours lawyers sometimes bill, it's hard to believe any counsel coming from someone who hasn't slept in days is worth much. One extreme (if-dated) example was a partner at Chicago's Chapman & Cutler, James Spiotto, who charged clients for more than 5,471 hours in a single year – about 15 hours a day, every day. Called "possibly the hardest-working lawyer in America" by his colleagues, Spiotto claimed to have pulled 52 all-nighters in a row in 1993, working on bankruptcy matters, according to the Washington Post.
What is the best way to manage your lawyer so he doesn't rip you off?
What is the best way to manage your lawyer so he doesn't rip you off?
Jennifer Ellis, Legal Ethics Attorney in PA, USA (I am not your lawyer. Not legal advice.)
784 Views • Jennifer is a Most Viewed Writer in Attorneys with 920+ answers.
The first thing you need to do is find a lawyer who is not inclined to rip his clients off.
The best way to find a good lawyer is to:
I just wrote this post (literally 2 days ago) on finding the right lawyer.
How Do I Choose a Lawyer - Tips for Making the Right Choice
Fee Agreement
Once you think you have found a good lawyer, you need to get a fee agreement from that lawyer. Then you need to make sure you understand the fee agreement. Don't be afraid to ask questions. Do not hire a lawyer who will not give you a fee agreement. This is not negotiable.
If you are paying hourly, find out exactly what the lawyer charges and how he charges. Most lawyers charge for a minimum of 6 minutes every time you communicate with them. This means, you send an email, even if it takes 1 minute to respond, you will get charged for 6 minutes.
Make sure you understand exactly what you are agreeing to, how you will be billed, and how your retainer will work.
If you are paying a flat fee, find out exactly what it covers. For example, let's say you were charged with a DUI. The lawyer might charge you $2500 to show up to the initial court date. But that might be all it covers. Then you might pay another $5000 for the trial. (These are numbers I am making up, they do not reflect appropriate DUI lawyer fees.) The appeal will not be included. So make sure you understand what the lawyer will do for you.
If you are paying a contingency, be clear on the percentage and find out how expenses will be handled.
Expectations
Be clear on what you expect, what the lawyer can do for you, and what the lawyer thinks it will cost. Lawyers cannot give exact estimates, but they should be able to give you an idea. If they cannot give you an idea, they should have a reasonable explanation why. For example, in a divorce, it might normally cost 10k, but if the ex spouse plans on dragging things out, it could cost 30k. (Again, making up numbers.)
If you are talking about a very complicated case, i.e. Samsung and Apple, it would be pretty much impossible to estimate fees.
Look at your Bill
Review your bills closely. If you are concerned about something, ask. If you think something is too expensive, ask why it is the way it is. If you thought something was included, go back to my suggestion that you make sure you know what is included before you sign up. Then ask the lawyer to remind you what was included. Hopefully your fee agreement is specific so you don't have to ask (again.)
When you ask about your bill, be polite and not accusatory. You don't want to mess up the relationship.
People Run Up Their Bills
A lot of people run up their own bills because they forget they will be billed for all of the lawyer's time. These folks constantly call and email the lawyer. Then, they get charged 12 or more minutes for the lawyer to read the email and respond to it. Each time. They get charged for when the lawyer listens to the voice mail. And when the lawyer calls back and doesn't reach you. And when the lawyer sits on hold waiting to talk. And so on.
In family law, a lot of the time, the clients will want to vent to the lawyer. The lawyer will get paid for the two hours the client spends ripping on his ex. This is not the lawyer ripping off the client. This is the client wasting his own money.
Given this, one way to save yourself money is to control your own communications with the lawyer. Don't send a bunch of separate emails. Don't call a bunch of times. Have one call. Send one email. Only do so when it is necessary. When you meet with the lawyer, keep the meeting focused. Handle what needs to be handled as directly relates to your situation. Don't go off on tangents that will simply waste time and raise your bill.
These are just a few thoughts. Good luck.
Written 22 Oct 2014 • View Upvotes
If you require legal assistance, please contact a lawyer in yo... (more)
Related Questions
More Answers Below
Ashish Walia, Making legal simple for entrepreneurs at LawTrades.com #500Strong
772 Views • Upvoted by Cliff Gilley
The best way to make sure that you're not getting ripped off is to lay out your expectations before hand. Before he begins the work, you should know exactly how many hours it'll take the lawyer to complete the job. You should let him know that you're not going to pay above X to get the work done. You should be totally upfront and the lawyer should be transparent.
If you're worried about your lawyer running up a huge bill and you're not sure if he's actually working, then propose a flat fee. This way, he won't bill you by the hour, you can just pay one flat fee and get the job done with. Flat fee's are becoming the trend for this exact reason and you won't have to necessarily "manage" your lawyer.
Also, spend time finding the right lawyer. There are so many lawyers to choose from and the one that you select shouldn't be someone that you feel uncomfortable with. You should envision a long term relationship that can facilitate your ongoing business needs.
If you need any help finding the right lawyer that works at a budget that works for you, then check us out at LawTrades.
Written 22 Oct 2014 • View Upvotes
Michael Askew, awe someone™
227 Views
As with all business, develop a relationship that is long-lasting. This usually diffuses any nickel and diming. Law is a different language, don't pick a lawyer out of a hat, Id recommend going the referral route.
If you are getting ripped off, the laywer is the one thats managing...... to do so.
Written 21 Oct 2014 • View Upvotes
Christopher Esker
216 Views
(1) Retain the right lawyer. (2) Communicate honestly, freely, and comfortably within the confines of attorney-client privilege. (3) Realize that in securing legal counsel, you are not managing; you are the one being managed. (4) Be prepared to recognize that, typically, there can only be one captain on this ship - if you're not ready to cede that responsibility to your counsel and allow that lawyer to be captain, you're not prepared to retain a lawyer in the first place. All this leads to the first and most important of this list: (5) Retain the right lawyer.
Written 21 Oct 2014 • View Upvotes
Mehul Kamdar
213 Views
Get yourself a legal plan. These are inexpensive and help keep a lid on costs. There are also several websites which rate lawyers in different states. Check these out and pick the best you can decide upon. Good luck, and, I sincerely hope that you never really need a lawyer.
Written 21 Oct 2014
Related Questions
What is the best way to manage your lawyer so he doesn't rip you off?
Jennifer Ellis, Legal Ethics Attorney in PA, USA (I am not your lawyer. Not legal advice.)
784 Views • Jennifer is a Most Viewed Writer in Attorneys with 920+ answers.
The first thing you need to do is find a lawyer who is not inclined to rip his clients off.
The best way to find a good lawyer is to:
- Do a thorough search. Look online, check the disciplinary board's website, look everywhere you can.
- Ask for referrals
- Ask the right questions during your initial meeting
I just wrote this post (literally 2 days ago) on finding the right lawyer.
How Do I Choose a Lawyer - Tips for Making the Right Choice
Fee Agreement
Once you think you have found a good lawyer, you need to get a fee agreement from that lawyer. Then you need to make sure you understand the fee agreement. Don't be afraid to ask questions. Do not hire a lawyer who will not give you a fee agreement. This is not negotiable.
If you are paying hourly, find out exactly what the lawyer charges and how he charges. Most lawyers charge for a minimum of 6 minutes every time you communicate with them. This means, you send an email, even if it takes 1 minute to respond, you will get charged for 6 minutes.
Make sure you understand exactly what you are agreeing to, how you will be billed, and how your retainer will work.
If you are paying a flat fee, find out exactly what it covers. For example, let's say you were charged with a DUI. The lawyer might charge you $2500 to show up to the initial court date. But that might be all it covers. Then you might pay another $5000 for the trial. (These are numbers I am making up, they do not reflect appropriate DUI lawyer fees.) The appeal will not be included. So make sure you understand what the lawyer will do for you.
If you are paying a contingency, be clear on the percentage and find out how expenses will be handled.
Expectations
Be clear on what you expect, what the lawyer can do for you, and what the lawyer thinks it will cost. Lawyers cannot give exact estimates, but they should be able to give you an idea. If they cannot give you an idea, they should have a reasonable explanation why. For example, in a divorce, it might normally cost 10k, but if the ex spouse plans on dragging things out, it could cost 30k. (Again, making up numbers.)
If you are talking about a very complicated case, i.e. Samsung and Apple, it would be pretty much impossible to estimate fees.
Look at your Bill
Review your bills closely. If you are concerned about something, ask. If you think something is too expensive, ask why it is the way it is. If you thought something was included, go back to my suggestion that you make sure you know what is included before you sign up. Then ask the lawyer to remind you what was included. Hopefully your fee agreement is specific so you don't have to ask (again.)
When you ask about your bill, be polite and not accusatory. You don't want to mess up the relationship.
People Run Up Their Bills
A lot of people run up their own bills because they forget they will be billed for all of the lawyer's time. These folks constantly call and email the lawyer. Then, they get charged 12 or more minutes for the lawyer to read the email and respond to it. Each time. They get charged for when the lawyer listens to the voice mail. And when the lawyer calls back and doesn't reach you. And when the lawyer sits on hold waiting to talk. And so on.
In family law, a lot of the time, the clients will want to vent to the lawyer. The lawyer will get paid for the two hours the client spends ripping on his ex. This is not the lawyer ripping off the client. This is the client wasting his own money.
Given this, one way to save yourself money is to control your own communications with the lawyer. Don't send a bunch of separate emails. Don't call a bunch of times. Have one call. Send one email. Only do so when it is necessary. When you meet with the lawyer, keep the meeting focused. Handle what needs to be handled as directly relates to your situation. Don't go off on tangents that will simply waste time and raise your bill.
These are just a few thoughts. Good luck.
Written 22 Oct 2014 • View Upvotes
If you require legal assistance, please contact a lawyer in yo... (more)
Related Questions
More Answers Below
- What is the best way to hire a lawyer?
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Ashish Walia, Making legal simple for entrepreneurs at LawTrades.com #500Strong
772 Views • Upvoted by Cliff Gilley
The best way to make sure that you're not getting ripped off is to lay out your expectations before hand. Before he begins the work, you should know exactly how many hours it'll take the lawyer to complete the job. You should let him know that you're not going to pay above X to get the work done. You should be totally upfront and the lawyer should be transparent.
If you're worried about your lawyer running up a huge bill and you're not sure if he's actually working, then propose a flat fee. This way, he won't bill you by the hour, you can just pay one flat fee and get the job done with. Flat fee's are becoming the trend for this exact reason and you won't have to necessarily "manage" your lawyer.
Also, spend time finding the right lawyer. There are so many lawyers to choose from and the one that you select shouldn't be someone that you feel uncomfortable with. You should envision a long term relationship that can facilitate your ongoing business needs.
If you need any help finding the right lawyer that works at a budget that works for you, then check us out at LawTrades.
Written 22 Oct 2014 • View Upvotes
Michael Askew, awe someone™
227 Views
As with all business, develop a relationship that is long-lasting. This usually diffuses any nickel and diming. Law is a different language, don't pick a lawyer out of a hat, Id recommend going the referral route.
If you are getting ripped off, the laywer is the one thats managing...... to do so.
Written 21 Oct 2014 • View Upvotes
Christopher Esker
216 Views
(1) Retain the right lawyer. (2) Communicate honestly, freely, and comfortably within the confines of attorney-client privilege. (3) Realize that in securing legal counsel, you are not managing; you are the one being managed. (4) Be prepared to recognize that, typically, there can only be one captain on this ship - if you're not ready to cede that responsibility to your counsel and allow that lawyer to be captain, you're not prepared to retain a lawyer in the first place. All this leads to the first and most important of this list: (5) Retain the right lawyer.
Written 21 Oct 2014 • View Upvotes
Mehul Kamdar
213 Views
Get yourself a legal plan. These are inexpensive and help keep a lid on costs. There are also several websites which rate lawyers in different states. Check these out and pick the best you can decide upon. Good luck, and, I sincerely hope that you never really need a lawyer.
Written 21 Oct 2014
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Lawyer Receives 10 Year Sentence for Mortgage Fraud
December 22, 2015 — Leave a comment
Michelle V. Mallard, 47, Charlotte, North Carolina, was sentenced by Chief U.S. District Judge Frank D. Whitney to serve ten years in prison followed by two years of supervised release on mortgage fraud and related charges. Mallard was one of 91 defendants charged in Operation Wax House.
Mallard’s conviction is the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, eighty-nine defendants have either pleaded guilty or
have been convicted following trial. The two remaining defendants are international fugitives.
Mallard, a/k/a Michelle Crawford, pleaded guilty mid-trial in July 2013 to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute.
According to court documents, Mallard served as a closing attorney for the mortgage fraud conspiracy, agreeing to use her law license to close fraudulent mortgage transactions for the conspiracy operating primarily in South Charlotte and Waxhaw, N.C. According to evidence introduced at Mallard’s trial, the conspirators purchased houses at inflated prices in exchange for large kickbacks and the defendant accepted bogus checks to make it appear as though buyers had provided money when they had not and agreed to pay kickbacks to other members of the conspiracy.
Evidence further showed that Mallard was stealing money from her trust account when she began participating in the mortgage fraud, and, as a result of that embezzlement, was unable to pay off a client’s prior mortgage, leaving the unknowing victim with a house that the victim no longer owned but upon which the victim was still required to make mortgage payments.
Prior to imposing the 10 year sentence, Chief Judge Whitney found that Mallard had committed perjury and attempted to obstruct justice, finding that Mallard’s testimony during a hearing in which she attempted to withdraw her guilty plea was“brimming with inconsistences and verbal gymnastics.” The Court also found that evidence introduced during the hearing on the withdrawal of plea was “indicative of a motive to thwart the judicial process.”
Mallard was remanded into custody following the sentencing hearing to immediately begin serving her sentence.
Mallard was one of six defendants charged in Wax House Case No. 3:11cr374, and the last of those defendants to be sentenced. In prior hearings, the Court imposed the following
sentences on those charged with Mallard:
Christopher Belin, 35, who served the mortgage fraud conspiracy as a real estate agent, was sentenced to 33 months in prison;
James E. Fink, 44, (also charged in Case No. 3:12cr239), who served the mortgage fraud conspiracy as a builder/seller and mortgage broker, was sentenced to 46 months
in prison;
Jimmy Hitchcock, 44, who served the conspiracy as a buyer and promoter, was sentenced to 46 months in prison;
Mitzi Jackson, 41, who served the conspiracy as a bank insider, was sentenced a split sentence of 18 months, with 9 months in prison; and
Coley Scagliarini, 44, who served the conspiracy as a mortgage broker, was sentenced to 46 months in prison.
The U.S. Attorney’s Office for the Western District of North Carolina. John A. Strong announced the sentence, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), join the U.S. Attorney’s Office in making the announcement.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Mallard prosecution and sentencing for the government was handled by Assistant United States Attorney Maria K. Vento.
Michelle V. Mallard, 47, Charlotte, North Carolina, was sentenced by Chief U.S. District Judge Frank D. Whitney to serve ten years in prison followed by two years of supervised release on mortgage fraud and related charges. Mallard was one of 91 defendants charged in Operation Wax House.
Mallard’s conviction is the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, eighty-nine defendants have either pleaded guilty or
have been convicted following trial. The two remaining defendants are international fugitives.
Mallard, a/k/a Michelle Crawford, pleaded guilty mid-trial in July 2013 to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute.
According to court documents, Mallard served as a closing attorney for the mortgage fraud conspiracy, agreeing to use her law license to close fraudulent mortgage transactions for the conspiracy operating primarily in South Charlotte and Waxhaw, N.C. According to evidence introduced at Mallard’s trial, the conspirators purchased houses at inflated prices in exchange for large kickbacks and the defendant accepted bogus checks to make it appear as though buyers had provided money when they had not and agreed to pay kickbacks to other members of the conspiracy.
Evidence further showed that Mallard was stealing money from her trust account when she began participating in the mortgage fraud, and, as a result of that embezzlement, was unable to pay off a client’s prior mortgage, leaving the unknowing victim with a house that the victim no longer owned but upon which the victim was still required to make mortgage payments.
Prior to imposing the 10 year sentence, Chief Judge Whitney found that Mallard had committed perjury and attempted to obstruct justice, finding that Mallard’s testimony during a hearing in which she attempted to withdraw her guilty plea was“brimming with inconsistences and verbal gymnastics.” The Court also found that evidence introduced during the hearing on the withdrawal of plea was “indicative of a motive to thwart the judicial process.”
Mallard was remanded into custody following the sentencing hearing to immediately begin serving her sentence.
Mallard was one of six defendants charged in Wax House Case No. 3:11cr374, and the last of those defendants to be sentenced. In prior hearings, the Court imposed the following
sentences on those charged with Mallard:
Christopher Belin, 35, who served the mortgage fraud conspiracy as a real estate agent, was sentenced to 33 months in prison;
James E. Fink, 44, (also charged in Case No. 3:12cr239), who served the mortgage fraud conspiracy as a builder/seller and mortgage broker, was sentenced to 46 months
in prison;
Jimmy Hitchcock, 44, who served the conspiracy as a buyer and promoter, was sentenced to 46 months in prison;
Mitzi Jackson, 41, who served the conspiracy as a bank insider, was sentenced a split sentence of 18 months, with 9 months in prison; and
Coley Scagliarini, 44, who served the conspiracy as a mortgage broker, was sentenced to 46 months in prison.
The U.S. Attorney’s Office for the Western District of North Carolina. John A. Strong announced the sentence, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), join the U.S. Attorney’s Office in making the announcement.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Mallard prosecution and sentencing for the government was handled by Assistant United States Attorney Maria K. Vento.
Attorney Sentenced for Running $20M Investment Scam
December 22, 2015 — Leave a comment
Kevin Sniffen, 53, Phoenix, Maryland, an attorney licensed in Maryland, was sentenced by U.S. District Judge J. Frederick Motz sentenced to three years in prison, followed by three years of supervised release, for conspiring to commit wire fraud arising from an investment fraud scheme. Sean Krondak, 44, Irvine California, was sentenced to six months of home detention as part of three years’ probation for obstructing justice.
Judge Motz also ordered Sniffen to pay restitution of $15.85 million.
According to their plea agreements and court documents, Sniffen and Krondakwere part of a fraudulent scheme carried out by Patrick Belzner and Brian McCloskey. McCloskey owned a real estate development business known as the McCloskey Group, LLC. Belzner, a home builder, began working withMcCloskey in late 2008 or early 2009. Krondak was employed as the Vice President – Loan Officer & Underwriting at IAG Underwriters, LLC, (IAGU) run by Mervyn Phelan. IAGU, which maintained an office in Newport Beach, California, was in the business of underwriting loan applications submitted by real estate developers and then locating project financing from banks and other financial entities. Gregory Grantham, an attorney, held the position of IAGU’s general counsel on a part-time basis as a contract employee. IAGU began working with the McCloskey Group trying to locate sources of financing for its projects in about 2009.
Beginning in 2009 and continuing through June 2011, Belzner and McCloskeypersuaded a number of private lenders to loan funds to the McCloskey Group to establish that it had cash reserves or “liquidity” in connection with its efforts to secure funding for real estate development projects through IAGU. Belzner andMcCloskey falsely represented that the funds would be maintained in an escrow account under the control of Kevin Sniffen, a licensed attorney and escrow agent in Baltimore County; that the funds would not be used for any other purpose; and that the money would be returned to the lender, either upon the funding of the loan or after a specified period of time. In return for this temporary use of the lender’s funds, Belzner and McCloskey promised to pay substantial rates of interest.
Beginning in about the late summer of 2010, Phelan and Grantham cooperated with Belzner and McCloskey in their scheme to defraud by (1) making false representations to help persuade lenders to make loans to the McCloskey Groupin order to establish “liquidity”; (2) telling the lenders that the funds had to be placed in an escrow account controlled by Kevin Sniffen; and by (3) making false representations to dissuade previous escrow account lenders from demanding the return of their funds when the original time period established for the loan expired without the McCloskey Group obtaining financing for the project in question. In particular, Phelan and Grantham repeatedly advised escrow account lenders that funding for a particular project was imminent when they knew this was not the case, and in one case falsely represented that they were holding millions of dollars in escrow funds tendered by one group of lenders. Krondakknowingly participated in the scheme by sending e-mails and other communications that he knew contained false information to victim lenders directly, or to Belzner, McCloskey and Sniffen for them to use in their contacts with the victim lenders.
Once the lenders transferred their funds into the escrow accounts, Belznerdirected McCloskey, Sniffen, and other conspirators to remove those funds from the escrow accounts without the knowledge of the lenders. Belzner andMcCloskey then used the stolen funds to repay earlier loans to the McCloskey Group and to Belzner personally; to meet ongoing business expenses of theMcCloskey Group; and to support Belzner’s life-style. The total losses resulting from the scheme were approximately $20 million.
After the scheme was exposed, Krondak assisted Phelan and Grantham in withholding and destroying relevant e-mails in response to federal grand jury subpoenas issued to IAGU and to Phelan and Grantham personally.
Patrick J. Belzner, a/k/a Patrick McCloskey, 45, Selbyville, Delaware, was sentenced to 15 years in prison for wire fraud conspiracy, wire fraud and tax evasion, and was ordered to pay $19.805 million in restitution. Brian McCloskey, 42, Baltimore, and Mervyn A. Phelan, Sr., 74, Newport Beach, California, each pleaded guilty to his role in the conspiracy and are both scheduled to be sentenced on December 23, 2014. Gregory E. Grantham, 57, Oceanside, California, was sentenced to five years in prison and ordered to forfeit and pay restitution of $17.4 million.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service—Criminal Investigation, Washington, D.C. Field Office.
United States Attorney Rod J. Rosenstein thanked the FBI and IRS – Criminal Investigation for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Jefferson M. Gray and Kathleen Gavin, who prosecuted the case.
Kevin Sniffen, 53, Phoenix, Maryland, an attorney licensed in Maryland, was sentenced by U.S. District Judge J. Frederick Motz sentenced to three years in prison, followed by three years of supervised release, for conspiring to commit wire fraud arising from an investment fraud scheme. Sean Krondak, 44, Irvine California, was sentenced to six months of home detention as part of three years’ probation for obstructing justice.
Judge Motz also ordered Sniffen to pay restitution of $15.85 million.
According to their plea agreements and court documents, Sniffen and Krondakwere part of a fraudulent scheme carried out by Patrick Belzner and Brian McCloskey. McCloskey owned a real estate development business known as the McCloskey Group, LLC. Belzner, a home builder, began working withMcCloskey in late 2008 or early 2009. Krondak was employed as the Vice President – Loan Officer & Underwriting at IAG Underwriters, LLC, (IAGU) run by Mervyn Phelan. IAGU, which maintained an office in Newport Beach, California, was in the business of underwriting loan applications submitted by real estate developers and then locating project financing from banks and other financial entities. Gregory Grantham, an attorney, held the position of IAGU’s general counsel on a part-time basis as a contract employee. IAGU began working with the McCloskey Group trying to locate sources of financing for its projects in about 2009.
Beginning in 2009 and continuing through June 2011, Belzner and McCloskeypersuaded a number of private lenders to loan funds to the McCloskey Group to establish that it had cash reserves or “liquidity” in connection with its efforts to secure funding for real estate development projects through IAGU. Belzner andMcCloskey falsely represented that the funds would be maintained in an escrow account under the control of Kevin Sniffen, a licensed attorney and escrow agent in Baltimore County; that the funds would not be used for any other purpose; and that the money would be returned to the lender, either upon the funding of the loan or after a specified period of time. In return for this temporary use of the lender’s funds, Belzner and McCloskey promised to pay substantial rates of interest.
Beginning in about the late summer of 2010, Phelan and Grantham cooperated with Belzner and McCloskey in their scheme to defraud by (1) making false representations to help persuade lenders to make loans to the McCloskey Groupin order to establish “liquidity”; (2) telling the lenders that the funds had to be placed in an escrow account controlled by Kevin Sniffen; and by (3) making false representations to dissuade previous escrow account lenders from demanding the return of their funds when the original time period established for the loan expired without the McCloskey Group obtaining financing for the project in question. In particular, Phelan and Grantham repeatedly advised escrow account lenders that funding for a particular project was imminent when they knew this was not the case, and in one case falsely represented that they were holding millions of dollars in escrow funds tendered by one group of lenders. Krondakknowingly participated in the scheme by sending e-mails and other communications that he knew contained false information to victim lenders directly, or to Belzner, McCloskey and Sniffen for them to use in their contacts with the victim lenders.
Once the lenders transferred their funds into the escrow accounts, Belznerdirected McCloskey, Sniffen, and other conspirators to remove those funds from the escrow accounts without the knowledge of the lenders. Belzner andMcCloskey then used the stolen funds to repay earlier loans to the McCloskey Group and to Belzner personally; to meet ongoing business expenses of theMcCloskey Group; and to support Belzner’s life-style. The total losses resulting from the scheme were approximately $20 million.
After the scheme was exposed, Krondak assisted Phelan and Grantham in withholding and destroying relevant e-mails in response to federal grand jury subpoenas issued to IAGU and to Phelan and Grantham personally.
Patrick J. Belzner, a/k/a Patrick McCloskey, 45, Selbyville, Delaware, was sentenced to 15 years in prison for wire fraud conspiracy, wire fraud and tax evasion, and was ordered to pay $19.805 million in restitution. Brian McCloskey, 42, Baltimore, and Mervyn A. Phelan, Sr., 74, Newport Beach, California, each pleaded guilty to his role in the conspiracy and are both scheduled to be sentenced on December 23, 2014. Gregory E. Grantham, 57, Oceanside, California, was sentenced to five years in prison and ordered to forfeit and pay restitution of $17.4 million.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service—Criminal Investigation, Washington, D.C. Field Office.
United States Attorney Rod J. Rosenstein thanked the FBI and IRS – Criminal Investigation for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Jefferson M. Gray and Kathleen Gavin, who prosecuted the case.
Stamford, CT - Attorney Convicted of Fraud
Link to story - http://www.justice.gov/usao/ct/Press2014/20140214.html
December 22nd, 2015
"Stop Attorney Abuse, Stop Attorney Fraud..."
A Stamford attorney has pleaded guilty in mortgage fraud case that drained $7 million from various lending institutions, according to the Connecticut United States Attorney.
The U.S. Attorney's office announced Friday that on Feb. 12, Christopher Brecciano, 35, of Stamford, waived his right to indictment and pleaded guilty in Bridgeport federal court to conspiring to defraud financial institutions through an extensive mortgage fraud scheme that involved dozens of properties in Fairfield County.
According to court documents and statements made in court, between 2006 and 2010, Brecciano, while working as an associate at a Stamford law firm, participated in mortgage fraud conspiracy that involved the purchase of numerous single and multi-family properties, primarily in Bridgeport, Norwalk and Stamford.
Brecciano acted as a closing attorney for at least 50 mortgage loan transactions in which materially false information was provided to mortgage lenders by Brecciano or his co-conspirators. The fraudulent information included false verifications of down payments for real estate transactions, false deeds, and false HUD-1 Forms.
In many of the transactions, Brecciano knew that the borrower was a “straw buyer,” and that other individuals intended to control the property and collect rent from the property. In many transactions, Brecciano distributed mortgage loan funds to the straw buyer and other co-conspirators at the closing.Many of these properties ended up in foreclosure, or in short sale transactions.
In pleading guilty, Brecciano admitted that he was also involved in many short sale transactions in which he knew that the buyer and seller were working together to retain control of the property while representing to the lender that the sale was an arm’s length transaction.Through this scheme, lenders suffered losses of more than $7 million.
Brecciano pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud. He is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on May 7, and faces a maximum term of imprisonment of 30 years.
The ongoing investigation is being conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Ann M. Nevins and Special Assistant U.S. Attorney John McReynolds.
"Stop Attorney Abuse, Stop Attorney Fraud..."
Ma'ayergi & Associates, LLC
Attorney Christopher Michael Brecciano
Christopher Michael Brecciano Attorney Brecciano has been a member of the Connecticut Bar and 2nd Circuit Federal Bar for the past two years. He joined the firm of Ma'ayergi and Associates in the summer of 2005 as a part of the growth and expansion of its real estate division into the tri-state metropolitan area. Prior to this, he worked as a real estate attorney for Riefberg, Smart, Donohue and NeJame in Fairfield County conducting closings for Cendant Mobility, the country's largest provider of employee relocation services to the private and public sectors. Attorney Brecciano received his law degree from Quinnipiac University School of Law, where he was one of only three students honored at graduation for their excellence in clinical work. Attorney Brecciano received his undergraduate degree from the University of Connecticut and has been a resident of the State for the past ten years.
Contact: cmbrecciano@maesquire.com
December 22nd, 2015
"Stop Attorney Abuse, Stop Attorney Fraud..."
A Stamford attorney has pleaded guilty in mortgage fraud case that drained $7 million from various lending institutions, according to the Connecticut United States Attorney.
The U.S. Attorney's office announced Friday that on Feb. 12, Christopher Brecciano, 35, of Stamford, waived his right to indictment and pleaded guilty in Bridgeport federal court to conspiring to defraud financial institutions through an extensive mortgage fraud scheme that involved dozens of properties in Fairfield County.
According to court documents and statements made in court, between 2006 and 2010, Brecciano, while working as an associate at a Stamford law firm, participated in mortgage fraud conspiracy that involved the purchase of numerous single and multi-family properties, primarily in Bridgeport, Norwalk and Stamford.
Brecciano acted as a closing attorney for at least 50 mortgage loan transactions in which materially false information was provided to mortgage lenders by Brecciano or his co-conspirators. The fraudulent information included false verifications of down payments for real estate transactions, false deeds, and false HUD-1 Forms.
In many of the transactions, Brecciano knew that the borrower was a “straw buyer,” and that other individuals intended to control the property and collect rent from the property. In many transactions, Brecciano distributed mortgage loan funds to the straw buyer and other co-conspirators at the closing.Many of these properties ended up in foreclosure, or in short sale transactions.
In pleading guilty, Brecciano admitted that he was also involved in many short sale transactions in which he knew that the buyer and seller were working together to retain control of the property while representing to the lender that the sale was an arm’s length transaction.Through this scheme, lenders suffered losses of more than $7 million.
Brecciano pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud. He is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on May 7, and faces a maximum term of imprisonment of 30 years.
The ongoing investigation is being conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Ann M. Nevins and Special Assistant U.S. Attorney John McReynolds.
"Stop Attorney Abuse, Stop Attorney Fraud..."
Ma'ayergi & Associates, LLC
Attorney Christopher Michael Brecciano
Christopher Michael Brecciano Attorney Brecciano has been a member of the Connecticut Bar and 2nd Circuit Federal Bar for the past two years. He joined the firm of Ma'ayergi and Associates in the summer of 2005 as a part of the growth and expansion of its real estate division into the tri-state metropolitan area. Prior to this, he worked as a real estate attorney for Riefberg, Smart, Donohue and NeJame in Fairfield County conducting closings for Cendant Mobility, the country's largest provider of employee relocation services to the private and public sectors. Attorney Brecciano received his law degree from Quinnipiac University School of Law, where he was one of only three students honored at graduation for their excellence in clinical work. Attorney Brecciano received his undergraduate degree from the University of Connecticut and has been a resident of the State for the past ten years.
Contact: cmbrecciano@maesquire.com
Guilty Pleas of Dewey Staff Law Firm Detailed the Alleged Fraud Against Clients
Updated March 28, 2015 6:41 p.m. ET
Lawyer Arrested for Allegedly Submitting False Loan Application and ID Theft
Lawyer charges $900 for sex with client
Attorney practice suspended for billing client for sex...
March 12, 2015
Welcome to the Jungle of Shipman & Goodwin...
