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Florida Bar has money-back guarantee for clients of thieving lawyers, but collecting isn’t easy

By Noreen Marcus, FloridaBulldog.org 

The Florida Bar has a pot of money available for swindled law clients.

But getting some isn’t easy. For starters, you have to document exactly what your thieving lawyer extracted during your attorney-client relationship. The breakup must have been painful.

After the Florida Supreme Court disciplines an attorney, P.J. Osborne swings into action. Osborne, who runs the Bar’s 50-year-old Clients’ Security Fund, wants to reimburse the bad lawyer’s client. Or clients, as there’s often more than one.

“It’s what I eat, live and breathe,” said Osborne, who has worked with the fund for a decade. By all accounts, she’s not exaggerating.

Osborne coordinates with one assistant in her Tallahassee office and two-dozen volunteer lawyers to vet every claim–there were 329 in the 2015-2016 fiscal year–and makes recommendations to the Florida Bar’s Board of Governors, the final arbiter of payments.

A few headline-making cases produce big numbers. Bar leaders were concerned that the many victims of notorious ex-Fort Lauderdale lawyer Scott Rothstein’s $1.2-billion Ponzi scheme would strain fund resources. Fortunately that didn’t happen.

“Most of the victims didn’t want to admit publicly that they fell for that cock-and-bull story,” said S. Grier Wells of Gray Robinson in Jacksonville. From 2004 to 2014, Wells served as liaison between the Bar committee that oversees the fund and the Board of Governors.

Rothstein wannabes

Still, Rothstein wannabes pop up occasionally. The numerous paid claims for disbarred Coconut Creek lawyer Nicholas Steffens, now serving a 10-year prison term for stealing from foreclosed homeowners all over the state, totaled $731,976.11.

P.J. Osborne, who runs The Florida Bars Clients’ Security Fund

“You need a few bad apples stealing a lot of money and the fund gets creamed,” said David Schulson, the Broward assistant state attorney who prosecuted Steffens. He works closely with Osborne to locate victims in Bar-generated public corruption cases.

In theory, any shortfall is temporary because the convicted lawyer must eventually repay the fund the amount it pays out in claims. In practice, the ex-con likely has a hard time making restitution–though there’s always the chance of a lottery win, Schulson offered hopefully.

Lori Holcomb, director of the Florida Bar division that runs the Clients’ Security Fund, said, “Yes, we do get restitution. Do we ever recoup 100 percent? No.” As part of the rehabilitation required for a disbarred lawyer to be readmitted to practice, the Clients’ Security Fund bill must be paid in full.

Most claims are under $10,000, Osborne said. And it should be noted that crooks like Steffens comprise a tiny percentage of licensed Florida attorneys: 0.1 percent, according to the Bar.

The other 99.9 percent are the fund’s involuntary underwriters. Out of every $265 Bar dues paid, $25 goes there. That’s roughly $2.5 million a year from the Bar’s just over 100,000 members. The fund is supplemented by the $250 fee that every out-of-state lawyer pays to appear in a Florida court for a single matter.

The Florida fund and others like it in virtually every state perform a public–and public relations–service for the legal profession. The fund is not well publicized outside the circle of people whose lawyers clearly victimized them. There’s a reason for that.

“It wouldn’t make much sense to say file a claim if you’re not eligible, because that will cause more bad feelings toward the Bar,” Holcomb said.

Don’t wait too long

The fund most often turns away people who wait too long to file, complain about a theft that didn’t happen within an attorney-client relationship, or fail to provide “some sort of proof” of payment, she said. There’s a two-year window for claims following the lawyer’s death or discipline, which stretches to four years for good cause such as the lawyer’s successfully hiding the scam.

If defrauded clients fill out the fund’s paperwork correctly and wait patiently for disciplinary actions and Bar procedures to play out over two to three years, they can be handsomely rewarded and come away with warm feelings toward the Florida Bar.

“We were absolutely thrilled to death … and everybody was so great to work with,” said Pam Kuklinski of Ingleside, Illinois. She and her husband Wayne, both retirees, recouped the entire $3,000 they thought they were spending on a loan modification after a Florida lawyer named Sarah Pashaee convinced them she could reduce their mortgage payments.

Pashaee, who claimed an affiliation with an Orlando law firm, actually represented a California boiler room-type operation that did no mortgage loan modifications. In Florida she was suspended twice before her 2015 disbarment.

The Kuklinskis said they were one of the first to file a complaint against Pashaee. Spotting a list of 50 victims, they feared they would never see their money again. “For us, living on pensions and Social Security, we were frightened,” said Pam Kuklinski, a retired financial officer. Wayne Kuklinski was a teacher and coach.

Similarly, oncology nurse Ellen Atas of Palm Beach Gardens did well with the fund, retrieving 100 percent of her family’s $150,000 loss to Julie Kronhaus. The disbarred Winter Park lawyer was criminally prosecuted for a wide-ranging scheme and is serving a 10-year sentence in federal prison.

Kronhaus was supposed to handle money from the sale of the house Atas’s late parents left to her and her two siblings. When Kronhaus dragged her feet about distributing the money, Atas’s brother, a Maryland lawyer, started hounding her, and she finally sent the checks.

They bounced, and the siblings had a problem. “Our parents worked very hard and we knew they would be thrilled to leave us the inheritance and when the money was stolen, we took it very personally,” Atas said. They also took it to the police, who brought in the FBI.

Even bigger losses

Several former Kronhaus clients suffered even bigger losses, sued her and won judgments they may never collect. She’s on the hook for $2.7 million in restitution.

Karma favored Atas and her siblings.

“We chose to go through the fund rather than sue for practicality reasons,” Atas explained. “There was a lot going on and we didn’t have near as much money stolen as the others did. I felt we had a better chance to get something through the fund.”

They were also lucky that Kronhaus’s other victims didn’t file claims with the fund because all successful claimants in a given year are paid at once on a pro rata basis. If the fund holds $2.5 million and claims total $2 million, for instance, everybody gets 100 percent; if claims amount to more than $2.5 million, everybody takes a proportionate cut.

Of course, the fund can’t please all cheated clients all the time. Victims of malpractice or outrageous fees must look elsewhere for justice. A conniving lawyer can perform the bare minimum to avoid detection and punishment.

Yet the client gets burned. The duped payer may be an innocent relative of a criminal defendant or inmate who loses not only money, but the opportunity to save or improve a cherished life.

Lawyers who deal with the attorney disciplinary system describe the client security fund as imperfect but worthy. “Obviously it’s a fund of last resort, a safety net,” said Andrew S. Berman, a Miami attorney who has represented lawyers in disciplinary actions. “We take responsibility for the bad apples as a group, but we don’t have the wherewithal to act like an insurance company and write somebody a check.”

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Latest comments

  • My brother and his wife were victims of Kronhaus to the tune of $1 million. The Bar abritarily chose to deny their claim even though other victims of Kronhaus experienced the exact circumstances of theft. Kronhaus is serving a 10 year sentence, my brother has a civil judgement but will probably never see a nickel of it. The Bar has performed shamefully in their denial.

  • What about your attorneys that made about $100K to steal a farm that was completely fraud from the beginning from a single old lady who had to fight them pro se because they had drained all her assets? Complete Rico and fraud on the court….

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