U.S. v. Conour - The Indiana Law Blog

Case 1:12-mj-00288-DML Document 1 Filed 04/27/12 Page 1 of 9 PagelD #: 1
ORIGINAL
1\091 (Ra 11/11) Cnmtnal Comp1aual
UNITED STATES DISTRICT COURT
for the
Southern District of Indiana
United States of America
)
)
)
)
)
)
)
v.
WILLIAM F. Co.NOUR
Case No.
1:12-mj-0288
Dcfondant(s}
CRIMINAL COMPLAINT
I, the complainant in this case, state that the following is true to the best of my knowledge and belief.
On or about the date(s) of _ fromalleast
Southem
District of ___
Cod. Sectioll
18 U.S.C. § 1343
1~/2000
Hamilton and Marion
to 3/2012_ in the county of
~n.<liana
in the
, the defendan\(s) violated:
OffellSe Description
The defendant devised a scheme to defraud, and to obtain money by means
of materially false statements and fraudulent pretenses from, clients of his
legal practica and others, and on October 6, 2011 for the purpose of
executing the scheme, the defendant caused to be transmitted by means of
wire communication in interstate commerce a faCSimile transmission from
Indianapolis, Indiana to Zurich American Insuranca in the State of New
Jersey.
This criminal complaint is based on these facts:
See attached affidavit.
~ Continued on the attached sheet.
£2
_ ___~4 _f-/y-'
_o~~~~~ _ ~ _____._._
('(lmpfainant '.r signature
_ _ Dou9i11s E. Kaspel',Special.ll9_el1t. FBI
Printed name and litI~
Sworn to before me and signed in my presence.
Date:
City and state:
---~~------
04127/2012
Indianapolis. IN
Debra McVicker Lynch, U.S. Magistrate Judge
.-
-- ""j,':'~':(inamr and t/1lt:
- -... .. -
Case 1:12-mj-002BB-DML Document 1 Filed 04/27/12 Page 2 of 9 PagelD #: 2
AFFIDAVIT
I, Douglas E. Kasper, being duly sworn on oath, state as follows:
1.
I am a Special Agent with the Federal Bureau of Investigation, and have
been so employed for four years. I am currently assigned to the Indianapolis Division
of the FBI.
2.
This affidavit is made in support of the issuance of a criminal complaint
and arrest warrant for William F. Conour, date of birth 6/21/1947. Based on the
information submitted in this affidavit, I believe there is probable cause to believe that
Conour has committed the crime of wire fraud, in violation of 18 U.s.C. § 1343. This
affidavit is based on personal knowledge and reports made to me by and conversations
with my FBI agents and employees.
3.
According to the "Super Lawyers" internet website
(www.superlawyers.com). Conour is an Indiana lawyer who "focuses on serious
injuries and death caused by construction site accidents, auto/ trucking collisions,
recreational and water sports, premises liability and any accident resulting in traumatic
brain injury." Conour was admitted to practice law in Indiana in 1974 and has
continuously done so since that time. According to Indiana Secretary of State records,
Conour registered the "Conour Law Firm, LLC" as a domestic limited liability company
in 2003. Since that time, I know that he has practiced law under that firm name, as well
as others including, "Conour Daly," Conour Devereux," and "Con our Devereux
Hammond."
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4.
In July 2011, I received information alleging that Conour was
misappropriating client funds through the creation of "trust" accounts with an Ohio
financial institution, State Bank & Trust, dba Reliance Financial Services (Reliance),
located in Defiance, Ohio. According to the allegation, Conour, through the use of the
"trusts," was keeping for his own use a majority of a client's settlement proceeds by not
depositing the full amount of the settlement into the "trust" account at the Ohio bank.
S.
Indiana law requires lawyers to properly maintain client funds in a trust
account separate from the lawyer's funds. The Rules of Professional Conduct also
require a lawyer to "promptly notify the client" when the lawyer receives funds in
which the client has an interest and to "promptly deliver to the client" any funds the
client is entitled to receive.
6.
I obtained records from Reliance, including bank account records,
correspondence, and copies of trust agreements prepared by Conour and provided to
Reliance. Based on my review of these records, Conour currently maintains at least 14
such "trusts" and has established others since at least 1999. In each of these" trusts,"
Conour established a "trust" for a client who had received a settlement through
Conour's services. Reliance acts as the "trustee." Generally, the trust agreements
provide that the client will receive monthly payments for a specified period of time.
Although Reliance is the" trustee," Conour does not deposit all the settlement funds
with Reliance. Instead, Conour funds the trusts on a yearly basis with funds only
sufficient to enable Reliance to issue monthly checks to the client for a year. Conour
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illegally retains the bulk of the settlements for his own purposes.
7.
For example, based on my review of records obtained during the
investigation, "Oient I" employed Conour's legal services after Oient 1 was injured in
an accident. Conour eventually obtained a gross settlement of $900,000 (exclusive of a
worker's compensation lien) for Oient 1 and deposited the settlement check into a
client trust account he maintained at Stock Yards Bank on September 29, 2008. Conour
prepared a settlement statement, dated and signed by Oient 1 on December 10, 2008,
setting forth the receipt and distribution of the settlement funds. According to the
statement, among other things, $193, 543.73 was to be distributed to Conour for his fees
and expenses, $183,702.90 to another lawyer for that lawyer's fees and expenses, and
$205,000 was to be distributed to "Reliance Financial (Annuity Cost)," presumably for
Client l's benefit.
8.
Ostensibly to implement the $205,000 annuity, in December 2008 Conour
apparently prepared a trust agreement with Reliance as the "trustee" and Conour as the
"settlor." Under the terms of that agreement, Reliance was to pay Client 1 $1200 per
month for a specified period of time. To enable Reliance to make the specified
payments, Conour opened an account with Reliance and provided it with a check
drawn on his law firm's Stock Yards Bank IOLTA Trust Account for $15,400
($1200/mth. for 12 mths.
= $14,400, plus $1000 bank fees).
The check was deposited and
the account opened by Reliance on February 20, 2009. The balance of the $205,000
earmarked as an "annuity" was kept by Conour. Reliance made the initial payment of
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$1200 to Client 1 on March 6, 2009 and continued to do so for the next several months.
9.
By a trust document dated July 28, 2009, Conour and Client 1 cancelled
the earlier trust agreement and replaced it with a new one. Under the terms of the new
agreement, Reliance as trustee was required to pay Client 1 "a cash payment of $25,000·
within 30 days of the date of the agreement. Additionally, beginning on September 15,
2009, the trust was to pay Client 1 $1200 per month for "60 consecutive months." On
August 12,2009, Conour wired Reliance $25,000 from his Stock Yards Bank Reserve
Trust account to fund the $25,000 payment required by the new agreement. The
following day, Reliance disbursed the $25,000 to Oient 1. Reliance continued making
the required monthly payments for the rest of 2009.
10.
On December 21, 2009, Conour provided Reliance with a check in the
amount of $14,950 ($14,400 plus $550 bank fees) drawn on the Stock Yards Bank Reserve
Trust account to enable Reliance to make the required monthly payments to Client 1 for
2010. On January 4, 2011, Conour provided Reliance with a check in the amount of
$14,950 ($14,400 plus $550 bank fees) dra"wn on the Stock Yards Bank 10LTA Trust
account to enable Reliance to make the required monthly payments to Client 1 for 2011.
As far as I can determine, Reliance has only been able to make the required monthly
payments to Client 1 to date solely through Conour's funding of the "trust account" on
a yearly basis with funds that Conour receives from other client's settlements. I also
note that under the terms of the July trust agreement, Client 1 will receive far less (only
$104,200) than the original $205,000 earmarked for Client 1's annuity. [$25,000 one-time
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payment plus March - August 2009 monthly payments ($7200) plus $1200 x 60 months =
$104,2(0)
11.
On or about December 28, 2011, Conour wrote a check to Reliance in the
amount of $114,058 drawn on the Stock Yards Bank IOLTA Trust account to enable
Reliance to make the required monthly payments to Oient 1 and to some of the other
clients with similar trust agreements for 2012. In analyzing the records of this IOLTA
account, I found that between December 16 - 22, 2011 Conour received and deposited
into the account three settlement checks totaling $685,000 for three different clients.
These deposits accounted for almost the entire balance in the account at that time.
Thereafter, Conour made payments from the account of more than $475,000 to various
law firms, including his own, and for the benefit of clients other than the three for
which he had received the recent settlement checks. When the $114,058 check to
Reliance cleared the IOLTA account on January 3, 2012, the account had a negative
balance of more than $39,000. Based on an examination of Conour's bank records
through March 2012, I have not discovered any checks or payments to the three clients
referred to above on whose behalf Conour received settlement checks in December
2011.
12.
Based on an analysis of the records from Reliance Financial and other
sources concerning the 14 current trusts, Conour has misappropriated more than $2.5
million in client funds by failing to fully fund those trusts and retaining the bulk of the
settlement proceeds for his own use and benefit.
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13.
In addition to his fraudulent usc of these so-called "trust~," Conour has
simply unlawfully converted client funds by receiving and converting to his own use
those funds. For example, in July 2010 "Client 2" was severely injured in a construction
site accident. Client 2 was subsequently referred to Conour's law firm and signed a
retainer agreement with Conour's firm. In September 2011, Client 2 received a
telephone call from Conour. Conour asked Client 2 how a net settlement of $250,000
sounded to him. Client 2 told Conour that until his medical prognosis was finally
determined he was not interested in settling his case. On October 6, 2011, at
approximately 8:59 a.m., Client 2 received a voicemail from Conour. Conour said that
he believed a settlement of $250,000 was a fair amount and that U Conour could
negotiate such an amount Conour would accept it on Client 2'5 behalf. Conour said
that if such a settlement was a problem, Oient 2 should call him back. Client 2 called
back a few days later and again said he was not then interested in settling his case.
14.
However, unbeknownst to Oient 2, at 12:20 p.m. on October 6, 2011,
Conour faxed a release and indemnification agreement from his office in Indianapolis to
Zurich American Insurance Company in New Jersey to settle Client 2'5 claim.
According to Oient 2, he did not sign the release or authorize Conour to execute it on
his behalf. On October 10, 2011, Conour deposited a $450,000 settlement check from
Zurich American, payable to Oient 2 and Conour, into Conour's dient trust account at
Stock Yards Bank. Although the back of the check bore Client 2's purported
endorsement, Client 2 said he did not endorse or even know of the check.
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15.
Based on my review of subpoenaed bank records, at the time Con our
deposited Oient 2's check into the Stock Yards trust account, that account had a balance
of only approximately $3640. Within the next eight days, Conour withdrew more than
$438,000 of the proceeds from the check. Conour transferred $168,000 to his law firm's
operating account in four separate transfers. From there, Conour made 4 electronic
payments to American Express totaling in excess of $138,000 for personal and business
expenditures. Conour wrote a check for more than $44,000 from the account to a law
firm for fees associated with another case, that of client "JB." Conour also wrote a
check in the amount of $115,785.75 from the account to "JB" for "final settlement
distribution." Finally, Conour wrote a check for $110,000 to another client trust account
he maintained at Salin Bank. From that account, Conour then issued a check for more
than $116,000 to another client, "GW," for "settlement distribution." To date, Client 2
has not received any money from the settlement check issued on his behalf from Zurich
American Insurance. Although Conour received this check in October 2011, Conour
has yet to provide Client 2 with any of the proceeds of the settlement or to acknowledge
that he settled Client 2'5 case. In short, Conour unlawfully converted Client 2'5 funds to
his own use and benefit and fraudulently deprived Client 2 of his rightful funds. The
facts set forth in this and the two preceding paragraphs provide another example of
how Conour uses newly obtained settlement funds to pay old settlements and debts. I
believe this conduct is akin to a Ponzi scheme because Conour's scheme to defraud is
dependent on new settlement funds to provide funds for clients whose cases were
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previously settled and whose money was unlawfully converted by Conour to his own
use and benefit.
Further affiant sayeth not.
Douglas E. Kasper
Special Agent, Federal Bureau of Investigation
Subscribed and sworn to before me this 27th day of April, 2012.
@A4~~ __
Debra McVicker Lynch
United Stales Magistrate Judge
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