Mismanagement of a Guardianship Morphed into a Crime

November 17, 2015 § 1 Comment

Attorney Michael J. Brown mismanaged and embezzled more than $1.2 million of guardianship funds. It’s a sordid tale that you can review at this post, which includes links to several others. Brown’s conduct also attracted an indictment in Rankin County Circuit Court.

On November 12, 2015, the MSSC in Brown v. State affirmed his convictions, but reversed as to restitution:

¶61. Brown’s convictions were supported by sufficient evidence and were not against the great weight of the evidence. Ample evidence existed to show that the $550,000 in loans came out of guardianship funds, and the trial court applied the law correctly with regard to the “own use” element of the statute. Brown waived any objection to Rule 404(b) evidence being admitted at trial, and he waived any objection to the language in the jury instructions by failing to raise the issue in his post-trial motion. Regardless, both arguments are without merit. Thus, Brown’s convictions and sentence to a term of years are affirmed. However, the trial court exceeded its sentencing authority in sentencing Brown to pay $1.2 million in restitution; thus, this Court vacates the restitution portion of Brown’s sentence and remands the case for resentencing, in other words, for again determining restitution, consistent with this opinion.

Brown has already been disbarred. He leaves in his wreckage the ward, whose assets will probably never be recovered, his career, his family, and his reputation.

I doubt most of you will ever fall into such an abyss. But if you find yourself close, step back and think of how Mr. Brown’s misadventure turned out.

An Attorney Gets What He Deserves

September 12, 2013 § 3 Comments

I posted here before about the reprehensible conduct of attorney — that’s former attorney — Michael J. Brown, who was jailed for embezzling money — a lot of money — from a guardianship account. Now Brown has been sentenced to prison for his misdeeds. Here’s how the Clarion-Ledger reported it:

A former Flowood attorney has been sentenced to 40 years in prison for embezzling more than $1.2 million from the guardianship account of the grandson of the late civil rights leader Aaron Henry.

Michael J. Brown, 56, was convicted of two counts of embezzlement in Rankin County Circuit Court. He was sentenced to 40 years in prison, with 10 of those years suspended.

A Rankin County grand jury indicted Brown after Hinds County Chancery Judge Dewayne Thomas asked the district attorney’s office to look into the case. Last year, Thomas ordered Brown jailed for contempt for allegedly mishandling the $3 million inheritance of De Mon McClinton.

McClinton couldn’t be reached for comment Thursday.

Thomas said Brown used McClinton’s inheritance money as his own. “He misappropriated $1.2 million, and it looks like he embezzled at least $240,000,” Thomas said.

Thomas ordered Brown to repay the $1.2 million and to repay $398,000 in attorney fees he received from the account.

“There is no greater trust than that between a lawyer and his client,” said Michael Guest, district attorney for Madison and Rankin counties. “Brown was an officer of the court, whose sole purpose was to protect the interest of the minor child.”

Brown, who practiced law since 1994, has been disbarred. He testified he cashed some of the checks, but said the money was given to McClinton’s guardian or to benefit the then-minor. But Brown admitted he had no court order to take money out of the account. No money was supposed to be taken from the account other than $3,000 a month for the guardianship of McClinton at the time.

The McClinton case began on June 16, 2000, when a petition was filed in Chancery Court for Thomas McClinton Jr. of Jackson to become guardian of his son, then-16-year-old De Mon McClinton. De Mon McClinton had lived with his mother, Rebecca Henry, who was Aaron Henry’s daughter, in Clarksdale until her death. Once she died, more than $6 million was split between her two sons.

The guardianship case was closed in 2005, but in 2009 De Mon McClinton, then an adult, asked that the case be reopened.

No further comment necessary other than to point out as I have before that it is cases like this that have chancellors across the state being quite vigilant over accountings,

CAREER ON THE ROCKS

October 11, 2012 § 2 Comments

The saga of Hinds County attorney Michael J. Brown, addressed here in a prior post, reached its latest, most forecastable milestone last week with the order for his disbarment by the MSSC on October 4, 2012, in the case of Mississippi Bar v. Michael J. Brown.

Brown’s multiple transgressions in the handling of the Demon B. McClinton guardianship were brought to light in the Chancery Court of Hinds County where Judge Dewayne Thomas demanded that Brown produce an accounting, which Brown claimed he was unable to do due to destruction of records by water damage. Thomas appointed a guardian ad litem, who executed a search warrant on Brown’s residence and located the records that Brown claimed had been destroyed. At hearing the proof established that:

  • Brown had caused $550,000 of the minor’s funds to be loaned to one Linus Shackelford. Other than the loan in question, Shackelford’s relationship to Brown or McClinton is not revealed in the record.
  • Brown personally had signed a promissory note indicating that he personally had borrowed $507,745.81 from the minor McClinton.
  • Brown had forged two checks from Regions Bank in the sum of $205,020.81 and $32,725, respectively.
  • Brown caused the court on September 7, 2001, to approve a fee of $398,000, which the chancellor determined to be outrageous and unreasonable, and which fee was approved based upon Brown’s commission of a fraud upon the Court. To compound the malfeasance, Brown had plagiarized an opinion letter justifying the fee, which was the fraudulent act.
  • Brown perjured himself by claiming under oath that the records had been destroyed.
  • Brown cashed and deposited into his escrow account, rather than the guardianship account, life insurance proceeds paid on the death of the ward’s mother.

When Brown finally produced an accounting, it showed that he had disbursed $1,295,783.81 of guardianship funds, all from his escrow account and not from any approved guardianship account. None of the disbursements were authorized by the court. $235,000 in checks were made out to cash or to Brown, or were endorsed by Brown. The loan to Shackleford was never approved by the court.

So, based on his outrageous and entirely unjustifiable conduct, the MSSC disbarred him.

The next development is in the hands of the District Attorney for Hinds and Rankin Counties, who has been provided with the chancery court judgment and likely the file. 

You may be sitting there smugly thinking “Well, I will never do anything like that,” so that you can skim past this. But here’s the deal: even if you never engage in this kind of outright contempt, fraud, embezzlement, perjury and breach of fiduciary duty, if you handle the fiduciary matters entrusted to you in a sloppy fashion your good intentions and lack of criminal intent will not be enough to shield you from contempt, possible bar disciplinary action, money damages, and destruction of your reputation and standing with the court. Think about it: if you can’t account properly and in full for money entrusted to you, it doesn’t really matter if you weren’t acting criminally.

AN OBJECT LESSON IN HOW NOT TO HANDLE A GUARDIANSHIP

March 26, 2012 § 6 Comments

I try not to comment on pending litigation, but the ongoing saga of attorney (for the moment) Michael J. Brown of Jackson bears mentioning here as an object lesson for all of you who handle guardianship — and any other fiduciary — matters.

To catch you up … Mr. Brown opened a guardianship for Demon McClinton, a child who had inherited $3 million from his mother, Rebecca Henry. Ms. Henry was the daughter of late Mississippi civil rights icon Aaron Henry. Attorney Brown never opened a guardianship account, depositing the funds instead in his trust account. To make a long, sordid story short, the funds were bled dry by unauthorized disbursements, extremely questionable “investments,” so-called “loans” — including “loans to himself — and outragous attorney’s fees. You can read a recap of the special master’s report here.

Brown’s misconduct drew the attention of Chancellor Dewayne Thomas. Brown at first claimed that the file, which he had checked out of the clerk’s office, had been destroyed when a pipe burst at his office. This proved to be a perjurious lie when the Special Master, acting pursuant to a search warrant, found the file in the attic of Brown’s home in a box marked “McClinton.”

At a show-cause hearing, Brown tried to assert that his schemes had been approved verbally by a preceding chancellor. Of course, Chancellor Thomas rejected that claim and ordered Brown to limit himself to to what was of record, which clearly established that none of Brown’s many transactions had been approved by any chancellor. Brown testified that there were no funds actually missing because he had accounted for every unauthorized expenditure, “loan,” “investment” and other impropriety. In other words, they aren’t missing because we know their whereabouts.

Chancellor Thomas has ordered the soon-to-be erstwhile lawyer jailed, subject to $250,000 bond, until he restores the missing funds. You can read more about Mr. Brown’s epic mishandling of this case on Philip Thomas’s blog, which includes links to other articles on the subject. An article that includes Judge Thomas’s order is here.

Several years ago I ordered a lawyer and guardian to show cause why they should not be sanctioned for mishandling guardianship funds to the tune of $45,000. The lawyer had handed the settlement check to the guardian, allowed the guardian to go by himself to open a restricted guardianship account, but the guardian deposited the funds instead in his own credit union account. No accountings were filed for several years, even after my predecessor, and then I, ordered that they be done. The lawyer at the hearing disclaimed any responsibility, shucking all the blame off on the guardian. I did not buy it. UCCR 6.01 and 6.02, and MCA § 93-7-253, along with practically all of the Rules of Professional Responsibility, persuade me to the contrary. The lawyer has a duty to the court to ensure that the fiduciary is faithful in carrying out his responsibilities.

Let me restate that: The lawyer has an ethical and professional duty to the court to ensure that the fiduciary is faithful in carrying out his responsibilities.

As the chancellor is the superior guardian of the ward, the lawyer is the arm and officer of the court, charged with the professional responsibility to act as the court’s agent to make sure that the fiduciary is acting solely in the best interest of and for benefit of the ward.

For the umpteenth time, I urge you to pull every fiduciary file you have right now and start poring through them to make sure that every detail is in order. There should be no discrepancies, no questionable transactions, no unapproved withdrawals. Your accountings should be annual, with proper vouchers. If Mr. Brown’s experience still does not shake you out of your lethargy, re-read this post about the hair-raising Matthews v. Williams case. If you’re not willing to strap on the high level of responsibility and vigilance required in fiduciary matters, defer the case to an attorney who will.

As Phillip Thomas so eloquently put it on his blog:

“Any lawyer who has ever walked past the chancery courthouse knows that Brown’s story is complete and total B.S. Chancellors are sticklers for the rules and they want guardianship funds locked up tight. The suggestion that any chancellor would verbally approve bogus sounding investments and loans is preposterous, as is every other detail of Brown’s story. It is beyond preposterous.” [Emphasis in italics added by me]

If you’re not the altruistic type, or you don’t buy into the idealistic concepts of professional responsibility, then look to your own self interest and tighten up your fiduciary practice. It could save you a load of money — and possibly your license to practice law.

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