Financial Opinion and Insights

Local Attorney Faces 5 Years In Prison

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

That’s the headline I saw in my local paper a few days ago; and, I have to admit I was surprised.

I didn’t know him, but he was half of a well-respected law partnership that has been in the area for (I think) over two decades.   Now he’s convicted of 34 felony counts and faces up to five years in prison for swindling the estate of an elderly client – in this case, a deceased client – for more than $500,000.

How did this happen?  According to the article, the attorney was executor for the estate and failed to initiate probate for a year after his client’s death and, in the meantime, systematically embezzled the money from his client’s accounts while concealing those assets from the probate court and subsequently filed false statements with the court.

What makes the case interesting is that the attorney had repaid everything he took prior to the filing; but, that didn’t matter, as it shouldn’t.

How do avoid this from happening to you?

Almost all embezzlement scams – Bernie Madoff comes to mind – usually have one thing in common:  The lack of an independent third-party cusotodial firm.  Now, in the Madoff case, checks were made out to Madoff and Madoff supplied all the reporting.

In this case, I don’t know if the investment accounts resided at an independent custodian firm or not.  The attorney may have had control over the accounts, for all I know; but, if there was an independent custodial firm, where was the ‘checks-and-balances’?

Was there a Registered Investment Advisor on the account who would have been receiving independent reporting directly from the custodian, which would have been made directly available to the deceased’s heirs?   Those withdrawals would have shown-up there, no matter what the attorney gave the court… and both the advisor and heirs would have been asking questions immediately – though, presumably, the attorney would have been smart enough not to attempt an embezzlement in the first place, knowing there are other people receiving true reporting.

My guess, and it’s only a guess, is there was likely no independent entity providing the reporting to anyone that could have provided a checks-and-balances. 

There’s a lesson there for all of us.



Jim Lorenzen is a Certified Financial Planner® and an Accredited Investment Fiduciary® in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG provides investment and fiduciary consulting to retirement plan sponsors and selected individual investors. Plan sponsors can sign-up for Retirement Plan Insights here.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.