misappropriation, Claremont lawyer agrees to disbarment
An attorney who
pleaded guilty last year to wire fraud in connection with a foreign investment
scheme that bilked millions of dollars from his victims was disbarred after
admitting misconduct that included misappropriating almost $400,000 from
several clients. GERALD MICHAEL SHAW [#60001], 63, of Claremont stipulated
to disbarment July 8, 2011, and was ordered to make restitution and comply with
rule 9.20 of the California Rules of Court.
He had faced
possible summary disbarment after the wire fraud conviction and had been on
interim suspension since October 2010. That matter became moot once the
disbarment took effect. Shaw, formerly of Newport Beach, also tried to resign
from the bar in 2008, after he was indicted by a federal grand jury, but the
Supreme Court did not accept his resignation.
In the four
matters that led to the disbarment, Shaw stipulated to 11 counts of misconduct ―
he misappropriated $391,857 from several clients, committing acts of moral
turpitude, did not deposit client funds in a trust account, represented clients
with potentially conflicting interests, and he failed to perform legal services
more than $90,000 in settlement funds on behalf of a client, but didn’t
inform the client and deposited the money in his business account rather than
his trust account. He then spent all the money. Although a bankruptcy judge
eventually permitted Shaw to collect $82,326 in fees and $67,489 for costs, he
had spent the settlement before obtaining the court order. The client sued him
for malpractice and won $356,000 to resolve his claims against Shaw. He also
did not serve a summons or a complaint in a matter he handled for the same
client and stipulated that he failed to perform legal services competently.
In a second
matter, he represented the estates of a couple killed in an automobile
accident, receiving two $100,000 settlement checks on behalf of their estates.
He didn’t deposit either check in his trust account, and although he was
entitled to 20 percent of each settlement, which he took, he spent the
remaining funds ― $80,000 from each settlement.
later, he wrote a check to the representatives of the husband’s estate
for $43,000 but it bounced. More than another year passed before he paid that
amount with a cashier’s check.
estate obtained three more settlement checks totaling $200,000, and although
Shaw had been substituted out, he believed he had done some work on those
matters and was entitled to attorney’s fees of $40,000. He therefore
wrote a check for $40,000 (the difference between what was supposed to be held
in trust and what he believed was his fee) and stated in the memo section that
it was for “full and final settlement of attorney’s fees.”
However, the new lawyer didn’t cash the check. Shaw eventually sent a
cashier’s check for $40,000.
Shaw did not
inform the representatives of either estate of a potential conflict of interest
or obtain their written consent to his dual representation.
paid Shaw $154,872 to handle a disability lawsuit. She eventually settled for
$776,179, an amount Shaw deposited in his personal or office checking account
rather than a client trust account. After giving the client more than
$607,000, Shaw should have maintained $169,000 for the client, but he kept the
guilty to wire fraud in 2010 in connection with a high-yield investment program
in which he and an employee, Gregory De Lavalette, solicited investments from
victims ― some who were his clients ― by falsely stating that the
money would be used to trade European bank instruments. According to the FBI,
the men said the money was safe, would be refunded within 30 days of a request
and claimed to trade AA-rated securities and bonds. In some cases, federal law
enforcement said, Shaw and De Lavalette promised between 30 percent to 40
percent weekly returns.
guilty to one count connected to the transfer of $300,000 from a victim to
Shaw’s bank account. The victim believed the funds would be used for
foreign security investments. Investigators and prosecutors believe, however,
that Shaw defrauded at least 10 victims of $4.5 million.
had no proof the wire fraud was related to the misconduct charges it filed
believe De Lavalette, who also pleaded guilty to one count of wire fraud, stole
Shaw was going through a divorce during the time covered by the stipulation and
he learned that an employee had embezzled $225,645 in client funds by forging
his signature on 154 law firm checks.