New Trend: Lawyers as White-Collar Defendants

businessman arrested

What’s with all the lawyers getting arrested these days, being charged with financial frauds, Ponzi schemes and the like?  Is this a new trend?  It sure seems like one.

The latest news is the announcement about an hour ago that the SDNY is charging one Kenneth Starr (no, not that one, this one), money manager for a bunch of celebrities, with yet another Ponzi scheme, funnelling $30 million of investors’ money into his own pockets.  He’s a lawyer in New York.  (You can read the complaint here.)

Then there’s the former law firm partner Michael Margulies, charged the other day with embezzling $2 million from his firm and clients in Minneapolis over the past 16 years.  Coincidentally-named lawyer James Margulies of Cleveland was charged the other day in a $60 million stock swindle.  A couple of weeks ago, two lawyers were charged with a mortgage-rescue fraud involving stripping $3 million in equity.   A lawyer went to prison a little before that for rigging tax-lien auctions.

That’s just a handful of headlines from this month alone.  But it’s been going on for several months now.  We’ve been noticing lawyers getting charged with increasing frequency ever since last July when Marc Dreier got sentenced to 20 years for hedge fund swindles totaling God knows how many hundreds of millions of dollars.  It really kicked into high gear, however, in December, after Scott Rothstein was arrested for a $1.2 billion Ponzi scheme.  And now there are several cases being announced every month.

What’s going on here?

Sure, these kinds of schemes tend to get noticed all at once, when the economy goes south, and the market’s gains no longer mask the fraud.  So we’re not wondering why all of a sudden there’s a bunch of financial-fraud arrests.  Our question is how come so many of these cases involve lawyers.

Has the profession changed?  Is it something new about how lawyers are getting more involved as investment managers and financial advisors?  Or is there a new focus by law enforcement?  We really don’t know.

But it sure looks like something’s going on out there.  What do you think?

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1 Comments

  1. Joseph Miller, August 6, 2015:

    I have loved being a lawyer for more than 18 years. No regrets, only life lessons. Not only am I paid to help people, but—as Rick Ball from Chicago above writes: “I get paid to read, think, write, talk and argue—all things I would do anyway.”

    And, once in a while, I get to flex my wings as the Angel of Justice.

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