Tuesday, December 9, 2003
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Appeals Court Upholds Ex-Lawyer’s Conviction for Bilking Clients
By KENNETH OFGANG, Staff Writer/Appellate Courts
The conviction of a once-prominent personal injury lawyer from Los Angeles, sentenced to 12 years in prison for stealing more than $2.5 million from his clients, was affirmed yesterday by this district’s Court of Appeal.
James Herman Davis diverted his clients’ settlements into his own investments and took advantage of their lack of sophistication by telling them the money would be paid out over time without obtaining their informed consent, Justice J. Gary Hastings wrote in an unpublished opinion for Div. Four.
Davis, who was 71 years old when Los Angeles Superior Court Judge Robert Perry sentenced him in June 2001, engaged in “an ongoing scheme to wrongfully utilize proceeds from judgments and settlements owed to clients who were expecting to receive future periodic payments,” the justice wrote.
Davis practiced for 42 years before resigning from the State Bar in 1997, shortly after being charged.
Former Employee
Clients testified that the attorney loaned them money to tide them over until their lawsuit settlement checks came in, but that they learned years later that checks had come, and that Davis banked the money without telling them. A former Davis employee, alarmed when the attorney started laying off employees and withholding paychecks, turned thousands of copies of documents over to the State Bar and testified that Davis or his wife had on several occasions instructed her to sign client’s names to checks.
Gilda Davis was charged with four counts of grand theft, but the charges were dismissed during the trial.
More than three dozen of his clients complained to the State Bar, which notified the District Attorney’s Office. He was ultimately convicted on 13 counts of grand theft.
Hastings described a series of transactions in which clients initially received funds in periodic payments from a company called Settlement Coordinators, which diverted funds to another company, which used the money to operate an oil business owned by Davis. A letter introduced in evidence described a scheme in which the client funds were used to fund oil production investments, which turned out to be worthless.
Zero Balance
A district attorney’s investigative auditor said the balance in Davis’ trust account had dwindled to zero.
Davis contended that there was no intent to embezzle, but Hastings said there was substantial evidence to support the verdict.
The justice explained:
“Ample evidence established the elements of conversion. Each of the 13 victims testified that they did not receive all the money to which they were entitled. There was not enough money in appellant’s accounts to pay off all the awards; nor was there any documentation explaining how each client’s settlement funds were invested and how the returns were calculated. Pacific [Assurance], which was administering the checks sent to clients, did not receive adequate funds from appellant, nor did appellant segregate the funds by client. The inference that appellant took the missing funds is further supported by evidence that he was investing in oil production ventures and that he and his wife were shredding documents. Evidence of appellant’s financial troubles also supported the inference that he had misused client funds. By trying to talk each client into receiving periodic payments, and his prompt deposit of their settlement checks into accounts which were not segregated, it was clear that appellant’s intent from the outset was to misuse client funds.”
Davis, who went bankrupt around the time of the investigation, was represented on appeal by Los Angeles attorney Lisa M. Bassis, who was appointed by the court. Deputy Attorneys General Margaret E. Maxwell and John Yang argued for the prosecution.
The case is People v. Davis, B151024.
Copyright 2003, Metropolitan News Company