Thursday, December 2, 2010

Bankruptcy trustee accuses Richard Schwartz and Vann Leonard of "misappropriating" hundreds of thousands of dollars

A bankruptcy trustee accused local attorneys Richard Schwartz and Vann Leonard of "misappropriating" a settlement of $500,000 in a complaint filed in bankruptcy court. Shirley Douglas was injured in an auto accident in June 2007. She retained Schwartz & Associates to recover damages from the other driver. Ms. Douglas filed a chapter 13 bankruptcy petition in July 2009. Schwartz obtained a $500,000 settlement for Ms. Douglas. She signed a standard contingency-fee agreement giving Schwartz a third of her settlement for his fee. Schwartz then hired attorney Vann Leonard to help obtain court approval of the settlement. The court approved the settlement and allowed Schwartz to collect $172,414 in attorney's fees. Mr. Leonard never tendered the remaining $327,585 to the court or Ms. Douglas.

The trustee states "Upon information and belief, the Trustee believes the settlement proceeds have been misappropriated by Defendants and converted to personal use. As such, Defendants have committed embezzlement against the bankruptcy estate under 18 USC Section 153 and theft of estate property." The trustee claims the last conversation with Mr. Leonard was on August 10, 2010 and the attorney said the "check is going out in the mail today." Ms. Douglas testified in an affidavit "Andy Kilpatrick, an attorney for Richard Schwartz, told me in a telephone conversation that Vann Leonard stole the settlement proceeds" and that no money from the settlement was paid to her or her estate.

Mr. Schwartz does not deny retaining Mr. Leonard or that Mr. Leonard misappropriated $327,585 but instead argues he is not responsible for Mr. Leonard's actions and the $172,414 was legally approved by the court and was for services rendered. It should be pointed out the settlement was more than enough to pay all of Ms. Douglas's debts and free her from Chapter 13. Unfortunately for Ms. Douglas, the bankruptcy court currently garnishes her wages to the tune of nearly $400 a month. Instead of gaining her freedom from chapter 13, the um, mishandling of the settlement has literally made her a wage slave.

The trustee and Ms. Douglas filed suit against Schwartz and Leonard. Philip Thomas, my blogging protege and editor of the blog Mississippi Litigation Review, represents Ms. Douglas. Mr. Thomas filed suit in circuit court against the two lawyers but the case has been removed to bankruptcy court. A motion for summary judgment filed by Mr. Thomas is currently pending against Mr. Schwartz and Mr. Leonard. Mr. Thomas claims in his filings Mr. Leonard is now the subject of a "criminal investigation" by the U.S. Attorney for the Northern District of Mississippi.

15 comments:

Anonymous said...

Why hasn't a criminal complaint been filed re: embezzlement?

Anonymous said...

Mr. Thomas contributed to Weill's recent campaign while touting him on his blog even the point of promoting Weill for the MS Supreme Court. But Thomas failed to his readers that he made the contribution.

Similar to the $900 the Weill campaign paid you in three installments for services rendered. You failed to disclose your employment while touting his campaign and savagely exposing his opponent's past.

Anonymous said...

Wouldn't the bankruptcy court have to be paid first and then if anything was left then it should go to Ms. Douglas? At least Schwartz has stopped those ads showing law enforcement and emergency personnel telling the injured to contact him. I would imagine that if they were caught doing that, they would lose their jobs. The worst one was when he appeared on the helicopter and was holding the patient's hand. I thought that ambulance chasing was against the law but it didn't seem to apply to him. Hope that the court and Ms.Douglas get their money.

Kingfish said...

He is being investigated. Just added a sentence to the end. Thanks.

Anonymous said...

That, and it was filed last month. Why is this the first the public has heard of it? I'm looking at you, CL.

Kingfish said...

awwww....poor little 9:37. Once again you can't even get your facts right. $950 for web work, $200 for advertising. And I have supported Mr. Weill in every electoral effort of his and told you guys from day one here I was supporting him for circuit judge. I don't see you whining about WLBT or WAPT producing ads for candidates. I didn't give money or time to Mr. Weill. What he paid for was actual work or services. His opponents could've obtained as well. Don't blame me because they choose not to do so. All they have to do is contact me. I'm going to sell ads on this site for next year and any democrat or republican can buy ad space on this site.

After reading this blog for four years, you think I wouldn't have posted Mr. Shamsid-Deen's columns? Damn right. I wouldn't have cared who he was facing, I would've had alot of fun with those no matter what.

Anonymous said...

Known Vann for many years- doesn't sound like we know all the facts- someone, just speculating, might have embezzled the money from him at his office- Would like to see the response or Answer filed by Schwartz and Leonard before jumping to any conclusions

Kingfish said...

Answer by RS is in this post and no explanation for Mr. Leonard's actions is offered.

Anonymous said...

Supported Weill w/ reportable $$$ + a vote & agree w/ 9:37. If U write bout a political race U need 2 fully disclose work 4 pay regardless. Not pay 4 ads cuz ads R obvious. Walk the walk. U'd hammer JFP if they did same.

Curt Crowley said...

Wasn't weill's banner ad displayed at the top of this site? If so, was that not a clue that Weill was paying for advertising?

And regardless, what does any of this have to do with the Schwartz and Leonard post?

Anonymous said...

And regardless, what does any of this have to do with the Schwartz and Leonard post?

Misdirection

KaptKangaroo said...

Yeah, what Curt said!

Anonymous said...

Agree with 1:09. 9:37 and 12:24--get a life. the only thing missing is you stomping your foot like a 5 year old. Post is about Schwartz and Leonard. Hope Ms. Doublas is successful.

Anonymous said...

Yawn.

Anonymous said...

To answer the second comment from the top.

When there is a Chapter 13, the debtor retains possession of any property that existed before the bankruptcy was filed. So, the debtor has a right to the money first. The debtor is required to make payments to the creditors as set forth in the Chapter 13 plan. But, if this were a Chapter 7, then the money would have been property of the bankrupt estate first and the creditors would be paid first.

I would have expected that the creditors would have filed a motion requesting that the Chapter 13 plan be amended due to the settlement, i.e., to increase any payments being made.



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