Laura Ernde, Staff Writer
The State Bar's Office of Chief Trial Counsel has noticed a possible uptick in prosecutions involving attorneys mishandling money they agreed to hold in escrow, in some cases siphoning hundreds of thousands of dollars for their, or another's, personal benefit.
This trend, along with a recent high-profile money laundering case that ensnared a California lawyer, is prompting a reminder to attorneys of their ethical responsibilities, particularly when dealing with large sums of money.
Attorneys should use caution when holding money for clients or third parties and be aware of the ethical rules as well as some common red flags. Releasing escrow funds contrary to escrow instructions, even if it is not for the personal benefit of the attorney/escrow agent, may constitute a breach of fiduciary duty and misappropriation of entrusted funds.
Here are five recent examples of prosecutions involving escrow accounts: ? Bruce Haglund, [bar #92683]. The 65-year-old Irvine attorney agreed to serve as an escrow attorney for a trust account used in a prime bank investment scheme. In that capacity, he accepted $6.3 million in investments from 24 investors and disbursed it almost immediately after deposit. Of that amount, Haglund disbursed $472,500 to himself. His disbarment is awaiting a final order from the California Supreme Court.
? Thomas Osmonde Russell III [bar #107800]. The 67-year-old Huntington Beach attorney agreed to act as an escrow agent in a transaction to sell shares of a company. After collecting $31,500, he immediately began paying out the funds to various individuals, including himself. The State Bar Court Hearing Department recommended disbarment in January.
? Ronald Lee Bartholomew [bar #47428]. The 85-year-old Newport Beach attorney with one prior record of discipline agreed to act as an escrow agent in a transaction to sell shares of a company. He collected $100,000 from two individuals and deposited them in his client trust account. Over the next 30 days he withdrew all but $102...