The State Bar of California announced that a Tustin attorney is facing disbarment for allegedly embezzling around $282 million from approximately 60,000 clients seeking debt relief. Daniel Stephen March did not contest the 27 ethics charges, including moral turpitude, misappropriation, and failure to maintain client funds in a trust account, brought against him in May by the State Bar Court, which oversees attorney discipline cases independently. Chief Trial Counsel George Cardona described March's actions as egregious, stating that he had severely violated his duties as a lawyer and his commitment to his clients and the legal profession. Considering the extent of his wrongdoing, the appropriate resolution in this matter is disbarment.
By Thomas Tramaglini, Chief Operations Officer
Partner, The Center for MCA Research
Case Overview
March was the operator of a Tustin-based business named Litigation Practice Group, which provided debt relief services to clients for a fixed fee paid in monthly installments, with a money-back guarantee if services were not delivered. The business filed for bankruptcy in March 2023.
However, bankruptcy documents revealed that March had collected up to $282 million in advance fee revenue from around 60,000 clients between November 2019 and March 2023, but a significant portion of this amount was missing. Only $1,500 was found in a JPMorgan Chase trust account, with a Union Bank trust account showing a negative balance of approximately $1,000. Lawyers are mandated to safeguard client fees in trust accounts until services are provided, failing which could lead to disciplinary action or disbarment.
The bankruptcy filings for Litigation Practice Group indicated that March had deposited clients' monthly fees into a trust account between March 2020 and September 2021, but subsequently withdrew $78 million of these fees during that period. The State Bar mentioned in a statement that these fees, part of the $282 million total, were either never placed in a trust account or were transferred to a personal account within a day.
During the bankruptcy process, March appeared to acknowledge mishandling clients' funds, stating, "no money, nothing was held on behalf of the client," as per the State Bar Court complaint.
Despite the ongoing bankruptcy proceedings, the Litigation Practice Group website still assures clients, "You are in the right hands in your journey to resolve your debt." Google has listed the business as permanently closed.
Another complaint from the State Bar Court alleged that March failed to distribute nearly $1.4 million in settlement funds to a client and allowed his employee Tony Diab, a disbarred attorney, to oversee the client funds. Diab had been disbarred in 2019 for deceiving a client about various aspects of a criminal case and diverting $375,000 meant for the client's settlement into his personal bank account. Diab did not attend his trial, was declared in default, and subsequently disbarred.
An investor in the Litigation Practice Group filed a federal case, claiming that the business suddenly stopped making payments in June 2022 and that Diab, despite losing his own license, continued to practice law under the guise of March.
In 2008, March had his law license suspended for 90 days. Following allegations that he failed to pay a client's medical bills with settlement funds as agreed, and subsequently lied about it to the client. He offered to settle the outstanding bills on the condition that the client refrained from reporting him to the State Bar. As part of his probation, he was required to submit quarterly reports, attend ethics school, and pass a professional responsibility exam.
Source: LA Times: https://www.latimes.com/california/story/2024-07-17/tustin-lawyer-misappropriated-up-to-282-million-from-clients-looking-for-debt-relief-state-bar-says
Dr. Thomas Tramaglini is the Director of Operations and Negotiation for Beacon Client Solutions, a company that supports small businesses on a host of fronts, especially MCA debt. Thomas has been a small business owner for many years, as well as held leadership positions in several organizations and companies. Thomas holds a B.A. in History, as well as Masters and Doctorates in Organizational Leadership from Rutgers University, The State University of New Jersey.
Disclaimer: Beacon Client Solutions is not an accountancy, or a law firm. We are business consultants. While Beacon works with outstanding attorneys and accountants, we cannot and do not provide legal or tax advice. All of our work is connected to those who are legally certified to give such advice. Beacon does have a longstanding body of work in MCA resolution and understands what small business owners deal with, specific to MCA. Beacon Client Solutions serves clients in all 50 states, Puerto Rico, Mexico, and Canada.
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