Former MMA Lawyer Suspended; Hedge Funds Win Injunction to Protect Funds Loaned to Firm

A former attorney for McClenny Moseley & Associates, who was accused of dishonesty while participating in his law firm’s filing of hundreds of hurricane-damage lawsuits, agreed last month to a nine-month suspension of his law license in a settlement with the Louisiana Office of Disciplinary Counsel.

In the meantime, a Texas judge approved a temporary restraining order against MMA that prohibits the law firm from spending or “wasting” funds that were pledged as collateral for a $30 million loan from a Florida hedge fund.

The Louisiana Supreme Court voted 4-3 to approve a “consent discipline” that the office negotiated with Snowden. Justice Scott J. Crichton dissented because he felt the discipline was too lenient. Justice Jefferson Hughes dissented, saying the sanction was too harsh and Justice Jay B. McCallum dissented without stating a reason.

Snowden admitted to violating Louisiana State Bar Rules of Professional Conduct that:

1. Require attorneys to be diligent.
2. Require attorneys to consult with clients and keep them reasonably informed.
3. Prohibit acts of dishonesty, fraud, deceit or misrepresentation.
4. Prohibit conduct that is prejudicial to the administration of justice.

The Office of Disciplinary Counsel has also indefinitely suspended the law license of Snowden’s former boss, R. William Huye, who was once the managing partner of MMA’s New Orleans office. The office’s investigation had not been completed as of Friday. The New Orleans office has been closed.

Insurance defense attorney Matthew Monson posted notice of both developments last week on his LinkedIn page, which has become the go-to source of information for anyone interested in the latest developments in the MMA saga. Monson’s wife has filed a lawsuit that alleges MMA improperly solicited clients by hiring a marketing firm to send mass emails and text messages — some which were sent to her cell phone. Monson said in his post about Snowden that he filed four complaints against MMA attorneys with the Office of Disciplinary Counsel on behalf of clients.

“I would like to congratulate Mr. Snowden for coming clean and taking responsibility and accepting the consequences of his actions,” Monson said. “He has previously done so on the record in open court and I wish him well in his future endeavors. He did not design the MMA scheme.”

The restraining order in Texas was requested by a pair of hedge funds:Equal Access to Justice and the EAJF ESQ Fund, which are both managed by B.E. Blank & Co. in West Palm Beach. Each of the funds loaned $15 million to MMA. The order says MMA pledged as collateral fees earned for legal actions involving Zantac, Tylenol, Necrotizing Enterocolitis, Roundup and weather damage.

Monson said in his LinkedIn post that the pledge of funds for lawsuits involving “weather damage” is interesting. In a previous interview with the Claims Journal, Monson said it is not appropriate for investors to loan money to law firms for the purpose of soliciting clients. He questioned whether MMA had used the hedge fund money to pay Velawcity, a marketing firm that managed its email and text message blasts to potential hurricane-damage clients.

“So does this mean that these two hedge funds judicially admit they invested in MMA’s weather damage schemes that are subject to serious scrutiny and have been reported on and investigated extensively?” Monson said on LinkedIn. “If so, does that open some other legal doors? That is not for me to decide.”

A hearing on the hedge funds’ request for a temporary injunction is scheduled for 1:30 p.m. on Jan. 8 in the Harris County District Court.