Bankruptcy proceeds are set up to pay Creditors. These bankruptcy proceeds are carefully reviewed and strictly administered by the Bankruptcy Courts.
However, in this case, an attorney thought that he could get away with using client’s bankruptcy funds to pay his own personal debts.
Attorney Broidy was hired to represent GRL-Mesa Investments LLC for Chapter 11 protection in Bankruptcy Court https://www.inforuptcy.com/browse-filings/california-central-bankruptcy-court/2:15-bk-29107/bankruptcy-case-grl-mesa-investments-llc.
The bankruptcy case was resolved and dismissed.
After the case, the Court directed Broidy to hold $2,469,926 funds. These funds were derived from the sale of assets. The funds were to be distributred to the client’s creditors and the balance paid to the Client. Instead, Mr. Brody transferred $1,937,400 funds to client’s creditors and stole the remaining $512,526 to pay his personal debts.
$100,000 of the Debtor’s proceeds were deposited in the attorney’s personal bank account. Shorty thereafter, he transferred $75,000 of that money to pay his own creditor.
I can only guess that Mr. Broidy thought the transfer would not be noticed and he could use the bankruptcy funds for his debts rather than his client’s debts.
The missing funds were audited. As a result, Attorney Broidy was disbarred. He faces a 10-year prison term when he is sentenced.
I am sure no one will feel “sorry” for Broidy.
I always inform my clients that Honesty is the only policy https://njbankruptcylawfirms.com/debtors-convicted-of-fraud-honesty-is-essential-in-bankruptcy/ .
However, attorneys should never have to be reminded they need to be honest.
It is clear that Bankruptcy funds are carefully monitored as they should be.