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Drugs, Bribes & Thefts

Real estate attorneys accused

August 21, 2006


photo of Patrick Crowley
A real estate attorney who operated a Washington escrow company was apparently escrowing more than money, while two lawyers from a prominent California firm have denied charges they bribed a witness who was a mortgage broker.

But not all the news was bad for victims of bad attorneys.

The Client's Security Fund of Ohio was created in 1985 by the Ohio Supreme Court for the sole purpose of reimbursing victims of "attorney theft, embezzlement or misappropriation," according to a statement from the fund's board of commissioners.

During its most recent meeting in June, the fund awarded $326,688 to 24 "victims of theft," the commissioners said. "Eleven former or suspended Ohio attorneys were found to have misappropriated client funds."

Since its inception the fund has dispensed more than $10 million; the money comes from fees paid by every attorney licensed in Ohio.

The commission makes sure to mention in its public statements that of Ohio's 37,000 lawyers "less than one tenth of one percent of those attorneys in ... claims."

But it also sends out regular statements announcing the fines it has levied against lawyers.

For instance, clients of Perry R. Silverman, 55, a Columbus lawyer serving prison time for stealing more than $750,000 from his clients, have received $187,000 from the fund this year.

The latest disbursement was in June for $22,709. It was paid to a Silverman client who wasn't paid money owed from a real estate settlement.

In Los Angeles two lawyers charged in the Milberg Weiss Bershad & Schulman scandal said they did not make more than $11 million in alleged kickback payments to people paid to join lawsuits.

Partners David J. Bershad and Steven G. Schulman have pleaded not guilty to the charges, according to the U.S. Attorney's office in Los Angeles.

They were indicted in May for allegedly taking part in a scheme to pay millions of dollars in "secret kickbacks" to people who then agreed to be named as plaintiffs in more than 150 lawsuits.

The firm made more than $200 million on the scheme over the past 20 years, prosecutors said.

Howard Vogel, a retired mortgage broker from Florida, had earlier pleaded guilty to charges that he lied while under oath in court "to conceal the existence of the secret kickback arrangement."

Vogel had also admitted to taking $2.5 million in kickbacks from the firm in return for becoming a plaintiff in a class action lawsuit.

In Seattle, real estate lawyer Joel Manalang, 36, the operator of an escrow business, has pleaded guilty to money laundering and faces up to 20 years in prison and a fine of $250,000.

Federal prosecutors said in a statement that Manalang was involved in a Seattle drug ring that was moving marijuana and cocaine between the United States and Canada.

Manalang has admitted to keeping "several hundred thousands of dollars in cash" in shoe boxes and duffel bags. Manalang laundered the money, which came from the sale of drugs, by using it to buy real estate for other members of the drug ring, prosecutors said.

Manalang dealt with mortgage brokers in his transactions, according to federal court documents.

"His actions were intended to conceal the true nature of the funds and from whom they were obtained, and to evade currency reporting requirements imposed by law," prosecutors said.

Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: [email protected]

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