The Clients' Security Board has awarded $2.06 million this year
to compensate clients whose lawyers stole from them, according to
the annual report it filed recently with the Supreme Judicial
For fiscal 2011, which ran from Sept. 1, 2010 to Aug. 31, 2010,
three lawyers accounted for 50 percent of the total paid out to
clients, or $1.07 million.
Of the 63 claims awarded this year, trusts and estates cases
accounted for $891,000, or 43.3 percent of the total money paid to
clients, while real estate cases accounted for $629,000, or 30.5
percent. Unearned retainer claims accounted for the largest
category of cases -- 36 out of 63 awards resolved by the CSB this
year -- worth a total reimbursement of $125,685.
The CSB began reimbursing members of the public in 1975, at a
compensation rate of 100 percent of the stolen money. The funds
come solely from lawyers' annual registration fees, with 12.49
percent devoted to the CSB.
As in previous years, a few attorneys accounted for about half of
the total money awarded to clients. This year, the lawyers
responsible for the largest claims awarded were:
- Raymond J. Paczkowski, responsible for five real estate clients
being reimbursed a total of $509,392.16;
- Harley H. Anderson, responsible for one trusts and estates
client being reimbursed $253,279.64; and
- Harold Meizler, responsible for one trusts and estates client
being reimbursed $250,000.
Anderson's case illustrates the type of work the board does in
returning stolen funds and policing the profession, said CSB
Assistant Board Counsel Karen D. O'Toole. In 2008, a California
client of Anderson's was awarded $280,286 for the sale of her
mother's home. Anderson was trustee of the mother's realty trust
and stole the money. At the claimant's hearing, she presented the
CSB with a copy of a 1992 trust, but didn't know about any trust
The CSB used its subpoena power to obtain documents proving that
Anderson, again as the trustee, had stolen $253,279.64 from a
family trust between 1992 and 1998, explaining that the funds had
been used for the mother's care and nursing home expenses.
"I hope we've gotten all of his victims, but we don't know,"
The CSB does not have statute of limitations for filing a claim,
as long as they can prove they were not negligent in pursuing a
claim, O'Toole said. Applications on the CSB website are formatted
so that victims can file them without hiring a lawyer.
The board is seeing a disturbing increase, O'Toole said, in the
claims tied to bankruptcy filings, in which clients file for
Chapter 13 protection and pay an attorney to handle the paperwork.
The attorneys will deposit the money but never begin bankruptcy
proceedings for their clients, putting them at risk of harassment
by creditors and even foreclosure.
The amounts owed these victims may be relatively small compared to
a real estate or trust claim, O'Toole said, but "The harm that it
causes that victim is enormous because the victim doesn't have the
money to pay another lawyer." And the delay in filing for
protection for creditors puts them at enormous risk.
Though the cases the board reviews can be shocking in their impact
and duplicity, O'Toole notes that the percentage of lawyers guilty
of defalcation is tiny, and plenty of lawyers are interested in
righting those wrongs. She noted for example, that a number of
bankruptcy lawyers "have been very generous with their time and
agreed to represent these clients, often without a fee."
Despite the increase in bankruptcy-related claims, CSB Vice
Chairman John J. Egan, of Egan, Flanagan & Cohen in
Springfield, said the board hasn't seen a deluge of claims related
to national recession, like some other states have.
"I think most of the members of the board are concerned that that
might be coming. As economic pressures increase, temptation and
wrongdoing may increase," Egan said. "The board members always
worry about the future. We hold our breath when times like this
arrive. So far the other shoe hasn't dropped."
The CSB has roughly $5 million in a reserve fund to help offset
unusually large payouts, and board members have praised the SJC for
upholding its commitment to fund the CSB so that claims can be
fully reimbursed for theft from dishonest lawyers.
In this year's report to the SJC, outgoing CSB Chairman Charles W.
Goddard noted that "But for the Court's unwavering support for the
Board's mission … claimants would have little if any opportunity to
obtain meaningful reimbursement for their