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Pa. Supreme Court adopts stricter standards for lawyers investing money for clients

Jason Cato

Before he retires and spends more time in Florida, outgoing Pennsylvania Supreme Court Justice Ronald Castille wanted to make life harder for lawyers who cheat clients out of their money — sometimes significant amounts of it.

The state high court Tuesday announced greater scrutiny and stricter standards for lawyers who invest money for clients. Wayward lawyers who break the law face swifter punishment, including disbarments and criminal prosecution, under new rules that take effect in 60 days.

“My hope is this eliminates the problem altogether,” Castille told the Tribune-Review. “But human beings being what they are, somebody may try to ignore the new rules or get around the rules. If they do, we hope to catch them faster.”

Castille’s term ends next week because he has reached the mandatory judicial retirement age of 70. He said the new lawyer rules “serve as a reminder that attorneys are obligated to live up to the trust people put in them by working diligently and honestly, or face serious consequences.”

A working group of the Disciplinary Board of the Supreme Court helped establish the rule amendments, which include a professional conduct rule that requires lawyers to be licensed before they can broker, sell or offer to make an investment for a client. Such transactions are prohibited if an attorney has a disqualifying financial interest.

Financial records will be more accessible to attorney disciplinary bodies that examine alleged misappropriation of trust accounts, and investigative procedures will be streamlined.

The amended rules are intended to quickly stop lawyers from practicing law if they’re suspended or disbarred for stealing money.

High-profile incidents across the state prompted the changes, including cases in which clients lost millions of dollars that their attorneys invested. Castille cited several high-dollar-loss cases involving Pennsylvania attorneys that led to the rule changes. Among them:

• Anthony Lupas, 80, a Wilkes-Barre attorney prosecutors accused of bilking more than $6 million from clients over 18 years in a Ponzi scheme that promised returns of 5 percent. A federal judge this year ruled Lupas not mentally competent to stand trial.

• Jeffrey Mottern, 62, a lawyer in Hummelstown, Dauphin County, accused of losing between $15 million and $20 million in client funds. Mottern committed suicide in March while under investigation.

• Wendy Weikal-Beauchat, 47, a former lawyer in Gettysburg who defrauded more than $6 million from estate planning and long-term care planning clients. She is appealing a 15-year federal prison sentence imposed Dec. 16.

Since Jan. 1, 2012, the state disciplinary board has taken action in 17 cases regarding attorneys accused of misappropriating client funds. Four of those involved attorneys in Western Pennsylvania, including the reinstatement of a lawyer who was disbarred for misappropriating money from 1999 to 2002.

Pittsburgh attorney Jason J. Mazzei was suspended by the state Supreme Court in November for three years because it was determined he improperly managed his clients’ money.

In 2012, the court penalized two attorneys in Washington and Westmoreland counties for misappropriating client funds.

The rules exist to suspend or disbar attorneys who misappropriate client funds. Many clients do not fully recover their losses, the court noted. Victims can file claims through the Pennsylvania Lawyers Fund for Client Security for reimbursable losses from dishonest attorneys. Payouts are capped at $100,000.

“That is extremely disheartening to me,” Castille said of the cap.

Pennsylvania has more than 65,000 licensed attorneys. Less than 1 percent are involved in misconduct investment claims, the court said.

Jason Cato is a Trib Total Media staff writer. Reach him at 412-320-7936 or [email protected].


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