Federal prosecutors in Atlanta, Ga., say a former lawyer used the identities of three dozen former clients without their knowledge to apply for fraudulent litigation advances.
Prosecutors said in a news release Monday that Chalmer “Chuck” Detling II, was indicted last week on seven counts of wire fraud and eight counts of aggravated identity theft for using the identities of 36 former clients without their knowledge or authorization in order to apply for and obtain 50 fraudulent litigation advances, totaling hundreds of thousands dollars.
“Lawyers are supposed to assist their clients, not use their identities to commit fraud.” said U.S. Attorney Byung J. “BJay” Pak. “Detling allegedly violated his ethical and fiduciary duties by using his clients’ personal information to apply for litigation advances in their names. He then kept the money for himself.”
It wasn’t immediately clear whether he had an attorney who could comment.
Prosecutors say Detling practiced personal injury law in Marietta before voluntarily surrendering his law license in October 2016.
According to U.S. Attorney Pak, the charges, and other information presented in court: Detling was admitted to the State Bar of Georgia in 2004. In May 2012 through December 2016, Detling was the owner and operator of the Detling Law Group, a law firm based in Marietta, Georgia. Detling primarily engaged in personal injury law. On October 31, 2016, the Supreme Court of Georgia accepted Detling’s petition for voluntary surrender of his license. He is no longer licensed to practice law in the State of Georgia.
Various financing companies offer “litigation advances” to cover non-litigation related expenses (e.g., living and medical expenses) for plaintiffs who typically have a pending personal injury or worker’s compensation lawsuit. Typically, a plaintiff applies for litigation advance financing by submitting a signed financing agreement that includes, among other things, the amount of money being advanced to the plaintiff and a repayment schedule. Although the financing agreement contemplates that a plaintiff will repay the litigation advances with interest, the litigation financing entities do not consider such financing to be “loans.” Instead, they characterize the financing as “investments” or “advances” because a plaintiff who has no recovery would not be obligated to repay the litigation financing entity. The litigation advances typically range from several hundred to several thousand dollars.
From October 2014 through April 2016, Detling allegedly devised a scheme to defraud several litigation financing entities by obtaining fraudulent litigation advances in the names of his law firm’s clients without the clients’ knowledge or authorization. During this period, Detling allegedly obtained 50 fraudulent litigation advances totaling more than $383,000 in the names of 36 clients. Detling applied for the fraudulent litigation advances using personal identifying information of his clients, including their names and Social Security numbers. He allegedly submitted applications that were purportedly signed and executed by his respective clients, but Detling knew when he submitted the agreement paperwork that the clients had not actually executed the agreements. Detling was able to secure these fraudulent litigation advances without his clients’ knowledge in part because the litigation financing entities did not require the clients to be present when applying for the litigation advances or receiving the disbursements.
In order to further conceal that he applied for and received the fraudulent litigation advances, Detling allegedly had the loan proceeds wired directly to his law firm’s Interest on Lawyer Trust Account (IOLTA) or he personally picked up checks from the lending entity and deposited the funds into the IOLTA account. The fraudulently obtained litigation advances would then be transferred from the IOLTA account to Detling Law Group’s operating accounts or other Detling Law Group accounts. Detling allegedly further concealed that he applied for and received the fraudulent litigation advances in his clients’ names without their knowledge or authorization by often providing inaccurate contact information to the litigation financing entities for the clients who were purportedly seeking the litigation advances. This included providing fake phone numbers and/or email addresses in the financing applications.
Litigation advances are typically meant to cover non-litigation expenses for people with a pending personal injury or workers’ compensation lawsuit.
The case is being investigated by the Federal Bureau of Investigation with assistance from the State Bar of Georgia.
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