Biglaw

Former Biglaw General Counsel Disbarred Amid Allegations He Misappropriated $2.5 Million

He called the money 'discretionary bonuses.'

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Former general counsel of the now-defunct LeClairRyan firm is no longer a licensed attorney after allegations that he misappropriated $2.5 million in funds, according to an announcement from the Virginia State Bar Disciplinary Board.

Bruce Matson had previously served as trustee for the bankruptcy of LandAmerica Financial Group (LFG), and when the Chapter 11 closed in 2015, he was selected as the court-appointed trust fiduciary to oversee the wind-down. As part of those responsibilities, he was prohibited from making any distributions to himself until 2021, when wind-down would be complete. However, as reported by Law360, Matson has now admitted to transferring $1 million to himself, $1.5 million to attorney Robert Smith, and an additional $341,000 to an escrow account in his name. He described those million-dollar payments as “discretionary bonuses.”

Matson and Smith later told U.S. Bankruptcy Judge Kevin R. Huennekens that the trust had wound up with far more money than expected, a windfall Matson attributed to “cost savings and unexpected recoveries[.]”

Smith also said he was holding $1.5 million, separate from the funds held by Matson, “to decrease the concentration risk in any one person or bank.” At one point, Matson asked to donate the $2.8 million to charity, saying the money likely wouldn’t be needed by the LFG trust going forward.

At an Oct. 16, 2019, hearing, Matson admitted that all of the money had been deposited in personal accounts controlled by himself, Smith and their wives, according to a transcript obtained by local business journal Richmond BizSense.

When asked why he had pulled out the funds, Matson said he had a lot going on “personally and professionally” in late 2018 and wanted to “simplify the situation.”

The disbursements were discovered in 2019, when LFG’s financial adviser found the trust’s funds were gone. Matson has said the money he disbursed to himself and Smith has now been returned. The consent disbarment was signed on November 13th.

headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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