Did a Florida lawyer use money from a PPP loan to help cover a $288,000 shortage in a trust account?

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An Orlando attorney’s emergency suspension takes effect Aug. 13 after a Florida bar audit from 2018 to 2022 found he had a trust account shortage reaching $288,852.

Additionally, the law society says the movement of money between accounts indicates that Bradley Laurent used some of the COVID-19 Paycheck Protection Program loan money he received to shore up his account in trust.

Laurent argued in a disciplinary revocation request in March, which he withdrew in April, that “no client complained or suffered harm.”

The state Supreme Court’s emergency stay, issued on July 14, has prevented Laurent from taking on more clients since that day. He demanded to step down from representing clients and close pending cases by August 13.

READ MORE: $65,000 robbery and ghosting the bar charges lead to suspension of South Florida lawyers

Customers’ money

Lawyers maintain at least two accounts: operating accounts for managing professional expenses (payment of rent, staff, office supplies) and trust accounts for managing funds for clients and third parties. A settlement of a case, for example, goes to a lawyer’s trust account. The lawyer sends the money to the client, minus the attorney’s fees and any funds that must be withheld for one reason or another.

Wells Fargo told the Law Society that Haynes & Laurent’s trust account, an account that Laurent testified to the Law Society was the only one who wrote checks or from which he transferred money, was overdrawn. of $681.63 on October 15, 2021. This triggered an audit of Laurent’s Bar. company accounts from January 1, 2018 to April 30, 2022, by chartered accountant Matthew Herdeker.

Laurent said the overdraft notice to his business in October 2021 was when he noticed there was a shortage. He said in his affidavit and disciplinary revocation request that health issues in 2018 and 2019 kept him out of the office and that he “relyed too heavily on firm staff to manage office accounting with less than adequate supervision”.

In an affidavit to the Florida Bar, Laurent said he continues to file civil complaints, has handled approximately 20 depositions, 5-10 mediations, and has never needed another lawyer to cover it.

On that statement, bar attorney Daniel Quinn asked Laurent, “So even if you are – and you might not do them every month, but even if you do books, reconciliations, etc. , and you look at the trust account between July 2020 and October 2021, did you ever notice that there was a shortage?”

Lawrence: “No.

But the bar’s emergency stay motion also says Laurent “began using client funds, to which he was not entitled, for his own benefit or for the benefit of his firm, at least as early as March 2018, contrary to the respondent’s testimony when he was sworn”. statement.”

The petition pointed to a $25,000 insurance paycheck that hit the trust account on February 26, 2018. Client “LP” was supposed to receive $16,667.67 of that money. But on March 14, 2018, Laurent issued a check for $8,333.33 to the company, which caused the balance in the trust account to drop to $14,090.46.

Bradley Lawrence

The bar petition also stated: “There have been several instances, however, as early as October 2018, when [Laurent] immediately used one client’s settlement funds to pay another client due to repeated shortages in his trust account.

The petition detailed the first of what it claimed were seven cases. A $20,000 settlement check for “NW” on October 30, 2018 brought the trust account balance to $27,025.52. The next day, a paycheck for $18,190.49 went to “MB” from the trust account.

“Without Client NW’s settlement, there were insufficient funds in the trust account to pay for Client MB’s proceeds,” the petition states. “The shortfall in the Respondent’s trust account as of October 30, 2018 was at least $11,164.97 (initial bank balance of $7,025.52 minus required balance of $18,190.49 for client MB). »

APP money

In March 2021, Laurent applied for a PPP loan from City National Bank. As the Law Society’s petition notes, signing the request means Laurent said the money would be used to pay and maintain staff and pay business bills. And, if the money is used for something else, the plaintiff agrees, “the feds can hold me legally liable, like fraud charges.”

The company obtained a loan of $39,117.39, which was paid into the operating account. The law society said on March 26, 2021 that $35,000 had been transferred from PPP funds to a payroll account. On April 6, 2021, Laurent transferred $12,000 from the payroll account to the operating account and then to the trust account.

“The transfer of $12,000.00 partially filled the shortage in [Laurent’s] trust account,” the petition reads. “Without the transfer, there would not have been sufficient funds in the trust account to honor three checks that the respondent wrote to his trust account which cleared from April 14, 2021.”

Laurent admitted in his affidavit to placing almost a third of the PPP loan funds in the trust account.

Question from Quinn: “Is this an allowable objective for a PPP loan?”

Laurent: “No, but it’s not really the money from the loan that is paid into it, because there is money that is used for payroll throughout the year, so as long as this sum of money that is used for payroll throughout the year is used for payroll, it can still be considered part of this PPP loan.

Quinn: “But wasn’t that money put in trust, though?” You don’t pay payroll out of trust, do you agree? »

Lawrence: “Yeah.

Quinn: “Was this money intended to cover a shortage?

Laurent: “This money was used to cover a shortfall. Yes. It was.”

Quinn: “Okay. So you – would you agree that you used – I guess we’ll call it ‘government money’ to cover a shortage in the trust account?”

Laurent: “I wouldn’t agree with that.

Quinn: “You don’t agree with that at all?”

Lawrence: No.

Quinn: “Even if we can show the money…”

Laurent: “You can track the money, but as long as that amount of money has been used for payroll, yes.”

The auditor found, overall, that Laurent “did not identify and correct any further shortages in his trust account until the account was written up in October 2021,” the petition states. “According [Laurent’s] records, the shortage in his trust account was $278,449.58 as of April 30, 2021, and the shortage increased to $288,852.64 as of September 30, 2021.”

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