Lawyer accused of misappropriating up to $282M allegedly handed firm to disbarred attorney
A lawyer accused of misappropriating up to $282 million from as many as 60,000 debt-relief clients, either through intentional or “grossly negligent” conduct, had employed a disbarred lawyer alleged to be running the operation. (Image from Shutterstock)
A lawyer accused of misappropriating up to $282 million from as many as 60,000 debt-relief clients, either through intentional or “grossly negligent” conduct, had employed a disbarred lawyer alleged to be running the operation.
The lawyer accused in the Feb. 23 ethics complaint, Daniel Stephen March, was the sole shareholder and CEO of the Litigation Practice Group in Tustin, California. According to the complaint, advance fees were never deposited in a trust account or were deposited there for only a short time.
Many of March’s clients paid fees on a monthly basis by direct debit through an automatic clearing house provider owned and operated by his employee, disbarred employee Tony Diab, according to the ethics complaint.
The focus is on Diab in a June complaint filed by the Chapter 11 trustee in the bankruptcy of the Litigation Practice Group, according to an article by Forbes. That complaint alleges that Diab “basically used March as a front man,” in Forbes’ words, paying March $600,000 per year to essentially rent March’s law license.
March said in the bankruptcy proceedings that the Litigation Practice Group had taken in $282 million in advance fees between November 2019, when March purchased another attorney’s interest in the Litigation Practice Group, and March 20, 2023, when the Litigation Practice Group filed for bankruptcy. Yet current cash assets totaled only $4,500.
“No money, nothing was held on behalf of the client,” he said when testifying about his law firm’s usual practice.
The complaint by the Chapter 11 trustee alleged that Diab “controlled and operated” the Litigation Practice Group since its inception. Trying to keep his control of the firm a secret, Diab instructed employees to call him “Admin” and kept a nameplate on his desk reading “I don’t work here,” the lawsuit says.
To run the operation, the suit alleges that Diab regularly signed contracts in March’s name.
The Litigation Practice Group obtained clients from marketing affiliates, which were paid a percentage of the fees earned, the trustee’s suit says. The Litigation Practice Group also sold future cash flow to investors at a discounted rate. Often, the same ACH receivables were sold to multiple companies, allowing Diab and others to “to defraud creditors, pay prior creditors in a pyramid scheme and/or abscond with the proceeds of such fraudulent transfers,” the trustee’s suit says.
Diab was disbarred in Nevada in January 2019 for allegedly depositing a $375,000 settlement payment into his account and for forging a judge’s signature on a document to persuade a client in a criminal case that an arrest warrant was quashed, according to Forbes. The California Supreme Court imposed reciprocal discipline and disbarred Diab in December 2019.
The State Bar of California placed March on inactive status in a July 1 order after he failed to file a response to the ethics complaint. He has been licensed in California since December 1982.
The ethics complaint against March alleges that he misappropriated between $78 million and $282 million in client funds. The bar complaint cited March’s bankruptcy testimony, as well as financial information obtained through an analysis of trust account records. That analysis showed that March failed to maintain at least $78 million in client funds in trust during a year-and-a-half time period, the bar complaint says.
The ABA Journal placed a call to a number listed in bar records for March’s law office. A recording directed callers to instead call a different number that belongs to the Morning Law Group. A person who answered the phone for the Morning Law Group said she had no information on March, and she had no idea why callers were directed to call the Morning Law Group’s number.
A number listed for Diab by the State Bar of California was not in service. There was no immediate reply to an email request for comment sent to the email address on file for Diab.
