Ex-LeClairRyan general counsel gets prison time, while firm insurer agrees to pay $10M to bankruptcy trustee
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The former general counsel of the defunct law firm LeClairRyan was sentenced to 44 months in prison in Richmond, Virginia, on Monday for lying to the U.S. Trustee Program while trying to thwart an investigation into his embezzlement of more than $4 million.
Disbarred Richmond, Virginia, lawyer Bruce Matson, 64, was sentenced following his guilty plea to obstructing an official proceeding, report Law360 and the Richmond Times-Dispatch.
Matson misappropriated about $800,000 between 2015 and 2018 while serving as the court-appointed trustee in the bankruptcy of LandAmerica Financial Group Inc., according to a press release by the U.S. attorney for the Eastern District of Virginia. He also manipulated the budget for the post-bankruptcy wind-down to allow himself to pay $3.2 million in bonuses to himself and others, prosecutors say.
The investigation into the misconduct also found that Matson embezzled $23,000 in 2016 from the estate of Forefront Capital, a defunct futures broker for which Matson was a receiver and a debtor-designee, prosecutors say.
Matson has already made restitution.
U.S. District Judge John A. Gibney Jr. of the Eastern District of Virginia said during the sentencing he read several letters telling of Matson’s good work for his church and community and his praiseworthy family and professional life, according to the Richmond Times-Dispatch.
But the more than $4 million stolen was “a theft done by an officer of the court while acting as an officer of the court,” Gibney said. “People who steal need to take a lesson from this case.”
The sentencing happened days after LeClairRyan’s management liability insurer, the Columbia Casualty Co., agreed during a settlement conference to pay $9.475 million to settle claims by the bankruptcy trustee covered by the policy, as well as $525,000 to settle claim expenses.
Chapter 7 trustee Lynn Tavenner filed a motion Nov. 19 to approve the bankruptcy settlement.
The settlement resolves claims of conspiracy, breach of fiduciary duty and trade secrets against former high-level figures at LeClairRyan, according to Law.com. The settlement leaves outstanding “garden variety” bankruptcy claims against the defendants and claims against legal services provider UnitedLex, the article reports.
Tavenner had previously alleged that LeClairRyan’s operations had aspects of a Ponzi scheme.
“LeClairRyan funded payments to legacy shareholders with capital contributions from new lateral hires, even though the firm was insolvent at the time and slowly falling to its death. For those left unpaid when the music stopped, it was no different than a ‘money in, money out’ con game,” Tavenner wrote.
Tavenner has also alleged that LeClairRyan’s contract with UnitedLex “served to plunge LeClairRyan further into insolvency.”