An Arkansas lawyer who rose to prominence in lucrative securities fraud class-action litigation pleaded guilty on Monday to charges of stealing more than $9 million of client money.
Lawyer Steven Eugene Cauley told U.S. District Judge Paul Crotty at a plea hearing in Manhattan federal court that he had suffered a “severe depressive episode” but that was not an excuse for his felonies.
“I always made a good deal of money in my law practice and knowing I had some additional money coming in, I took a short cut,” said Cauley, 41, who in 2005 was named one of the top young lawyers in the United States by the National Law Journal.
U.S. prosecutors charged Cauley with wire fraud and criminal contempt in April when a judge in New York realized that the lawyer could not account for $9.3 million that was to be distributed in a 2007 settlement of a case against Bisys Group Inc. insurance services firm for $65.8 million.
Cauley, partner in Little Rock, Arkansas, law firm Cauley Bowman Carney & Williams LLC, controlled an escrow account for the settlement money. During 2007 he periodically transferred amounts totaling at least $9.3 million to pay business expenses from various ventures or for his personal investments, according to court documents.
Cauley attempted to conceal his misappropriation of the money, telling a partner in his law firm that it was invested in Treasury bonds and that it would be wired after liquidation of the bonds, but he failed to do so.
The judge approved $5 million bail for Cauley and scheduled sentencing for September 10. Cauley faces up to eight years imprisonment and fines of up to $125,000.
The case is in re BISYS Securities Litigation 04-3840 in U.S. District Court for the Southern District of New York (Manhattan).
(Reporting by Grant McCool; Editing by Steve Orlofsky
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