Sunday, February 15, 2015

Iowa Attorney Allegedly Embezzles $7.8 Million From Clients; Commits Suicide

From the WCF Courier on 2/11/2015:

The future of a prominent Waterloo law firm is imperiled amid legal turmoil and malpractice accusations leveled at its former president.

“I think it is fair to say that lawyers who have been practicing at Gallagher, Langlas and Gallagher have departed the firm and are practicing elsewhere. And I think it’s fair to say that at some point in the future, there will be no lawyers practicing at the law firm,” said Greg Lederer, a Cedar Rapids attorney who is representing the firm.

He said Gallagher Langlas will continue to exist as a company while the legal claims and litigation play out.

The firm’s website,, which listed 10 attorneys in September, has been taken down, and a local credit union has asked the court to appoint a receiver to oversee the firm’s property after getting word it terminated its lease for office space.

The move comes months after clients began accusing former Gallagher Langlas president David Alan Roth of stealing settlement proceeds and insurance payouts and mishandling investments clients put up under a litigation investment scheme.

Roth, 51, took his own life in September, and former clients and creditors have since filed millions of dollars worth of claims against Roth’s estate alleging theft and unpaid debts.

In court records, representatives for Gallagher Langlas said the firm didn’t know about the thefts involving Roth. The firm said it didn’t offer investment opportunities or fund management services, and Roth had no authority to solicit or manage investments and wasn’t acting as an agent of the firm when he accepted the money.

Even so, Gallagher Langlas has been hit with malpractice and fraudulent misrepresentation lawsuits alleging the firm failed to supervise Roth.

The latest suits were filed Jan. 13. In one, relatives of Christopher Waller, who died in July 2013, said Roth had indicated he would set up conservatorships for Waller’s children using $374,452 from insurance policies. But after Roth’s death, the family contacted Gallagher Langlas and was told the firm didn’t have the funds, and Roth hadn’t set up the conservatorship, according to court records.

The family of Adam Schneider, who perished in a March 2013 grain bin accident in Waverly, filed a similar malpractice suit alleging similar circumstances with $64,164 in insurance proceeds. The Schneider family earlier filed a claim in Roth’s estate.

On Feb. 5, attorneys for Gallagher Langlas for the first time unveiled a list of 85 possible malpractice claims, some of which are already part of lawsuits or estate claims.

For 44 of the 85 claims, a dollar amount wasn’t listed or it wasn’t clear how much was sought.
Those with dollar amounts totaled $7.8 million. They ranged from $1.9 million for a woman who gave Roth money to invest down to $500 for a man who apparently didn’t like his name and paid Roth a retainer for a name change that was never filed.

In a step to conserve resources and time, the firm’s attorneys asked the court to combine all the claims, both those lodged against Roth’s estate and those against the firm.

“The only equitable and sensible remedy for this horrible circumstance is to bring all claimants” into one case and allow the claimants to determine how to divide the firm’s insurance proceeds “instead of litigating each claim in the normal course of civil litigation and depleting or exhausting the only asset worth pursuing,” the firm’s request states.

But first, there is the question of coverage.

According to court records, the insurance carrier for Gallagher Langlas, Minnesota Lawyers Mutual, is investigating the possibility of revoking its coverage because of false statements Roth allegedly made when he renewed the policy.

Lederer said MLM’s response wasn’t unusual for insurance companies faced with tort litigation.
On top of the malpractice suits, a local credit union has filed a suit seeking repayment of two business loans the firm took out in 2013.

Veridian Credit Union officials said in court records Gallagher Langlas owes $306,493 in principal with another $9,827 in interest and $18,075 in late fees. The two loans were due in full in June and October, and collateral included the firm’s equipment, accounts and letters of credit, court records state.

Court records show at the time of his death, Roth was buying the firm’s West Fifth Street office building and the adjacent former Carpenter’s Restaurant building from a trust run by the firm’s senior partner. The restaurant building was remodeled as a mediation center. Roth had obtained a $650,000 loan from Veridian Credit Union for the purchase, records show.


Read the whole story here.

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