Case Study: Fraud Investigation at Law Firm

Case Study: Fraud Investigation at Law Firm
July 26, 2019 Diana Dettwyler

Case Study: Fraud Investigation at Law Firm

Issue:

As a Law Firm upgraded its accounting system, the firm’s Office Manager noticed unusual payments made from client trust accounts. Since the In-Charge Attorney on the client cases in question was on vacation at the time, the Office Manager began investigating the payments on her own. The Office Manager discovered that payments had been made to a vendor that provided services inconsistent with the types of services typically paid through a client trust account. Further, the identity of the vendor was obscured in the client trust account ledgers, making the payments appear to be for the benefit of the clients. Upon discovery of the true payee, the Office Manager recognized that the In-Charge Attorney had hired the vendor to work on a project at their personal residence. The Office Manager discovered a significant number of additional suspicious payments, causing the Law Firm to engage Morones Analytics to conduct a formal fraud investigation.

Assignment:

Jennifer Murphy conducted a fraud investigation involving approximately six years of activity in client trust accounts managed by this In-Charge Attorney. Ms. Murphy ultimately identified over 100 payments totaling over $700,000 that were made for the personal benefit of the In-Charge Attorney and not for the benefit of the Law Firm clients.

Resolution:

The Law Firm relied on Ms. Murphy’s report to facilitate reimbursing clients impacted by the In-Charge Attorney’s scheme. In addition, the Law Firm pressed charges against the In-Charge Attorney and provided Ms. Murphy’s report to law enforcement to assist them in getting started on their case. The In-Charge Attorney ultimately reached a plea agreement with federal and state prosecutors to serve almost 4 years in federal prison and pay restitution.

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