RR Phantom
Location : Wasted Space
Job/hobbies : Cayman Islands Actuary
 |  Subject: OZschwitz solicitors in Bankruptcy: case of how many tricks you know  Fri Aug 17, 2012 3:40 am | |
| In classical theory it is dishonest to send out a bill for work you haven't done. If someone pays the bill then that is obtaining money by false pretences, or fraud. Judges have even said as much.
Normal people seem to come in for a terrible time when they take money that doesn't belong to them - jail for falsely claiming social security benefits or understating your taxable income or diddling your boss.
Coles supermarket was even heavily fined for selling underweight pre-packed meat trays, in some instances amounting to customers being overcharged three to six cents.
But when it comes to industrial-scale overcharging by lawyers, none of these penalties apply. Certainly no one is talking about fraud or jail time in connection with the plunder of clients by the Keddies personal injury partnership.
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As the lawyer and commentator who writes under the name ''Tulkinghorn'' has observed, ''overcharging morphs into perfectly proper professional conduct''.
The High Court has said that a solicitor can hardly be guilty of a crime ''in respect of conduct which is recognised by the law as perfectly proper professional conduct''.
This is another way of saying everyone does it, so it's OK.
In one case in Queensland where a practitioner charged $620,000 instead of a maximum allowable of $240,000, the Chief Justice said the solicitor was ''a person of integrity and honesty''.
The NSW Legal Services Commissioner (a sort of legal profession watchdog without much bite) has declared: ''If I think of a matter as theft, I have to refer it to the police, who would then refer it back to me as overcharging.'' And as we know, there's no disciplinary problem with overcharging. It's only when it becomes ''gross'' that there is a chance of something, maybe, happening.
The NSW Bar Association says legal profession disciplinary proceedings are so special they are neither criminal nor civil. It's some sort of inquiry.
By this pathway we come now to the spoils of overcharging in the instance of the three former Keddies partners: Russell Keddie, Tony Barakat and Scott Roulstone.
All three have declared themselves bankrupt, unable to pay their creditors - most notably about $15 million in judgment debts owing to former clients who have succeeded in overcharging cases against the firm and its partners (that is, non-fraud).
The bankruptcy trustees for Russell Keddie and Tony Barakat have issued reports to creditors. A report from Roulstone's trustee may come down today.
What we can discover so far is the squirrelling of large amounts of money into trusts and superannuation funds, out of reach of the bankruptcy trustees and the creditors.
So, in Barakat's case he has assets with an estimated recovery value of $3.4 million, liabilities of $17.2 million, leaving a deficiency of $13.8 million. Yet he has about $13 million in discretionary and unit trusts and superannuation. If he wanted to, he could dip into that lolly jar and almost pay out the judgment creditors himself.
The old trick is the hurried last-minute plunge into superannuation. Roulstone ploughed $500,000 into his fund this year, when he would most likely have been aware that he might be looking a bit insolvent. Barakat did the same a few months ago, topping up his fund by $500,000 when his annual contribution was usually between $22,000 and $50,000. Russell Keddie put $450,000 into his $5 million superannuation fund last year.
The trustee has to work out whether these payments were reasonable, in view of impending retirement, or whether they were designed to diddle creditors.
In one Keddie family trust alone there is a $7 million nest egg. Two Keddie farms in the Scone area are owned by trusts - all untouchable.
The clumsy $1 transfers of Russell Keddie's half share in the family's Double Bay and Bungan Beach properties, with a total estimated value of $6.4 million, can be clawed back.
Still, there are plenty more properties with the spouses' names snugly on the title deeds. Mrs Karen Barakat has interests in another $7.8 million worth of property, independently of her husband.
The Roulstone family home in Woollahra was in the name of Mrs Roulstone and it sold recently for $9 million.
Collectively the three former partners could muster enough assets to cover their debts. They just choose not to. All of them will be living very comfortably, which cannot be said of all their former clients, who they've ratted on.
As it is, Max Donnelly, Russell Keddie's bankruptcy trustee, estimated in a recent report to creditors a dividend of between 22 and 29 cents in the dollar.
What the Law Society proposes to do remains unknown. A statement this week said: ''As to specific matters we cannot comment at this stage.''
I was going to say that I'd run naked up Phillip Street if anything much happened at all, but then that could raise public health and safety issues.
Olympic swimmer Nick D'Arcy conveniently put a judgment debt of $180,000 into limbo when he declared bankruptcy last year. No doubt there were other debts, but the main one was the judgment in favour of Simon Cowley, whom D'Arcy violently assaulted and injured. At the time, Cowley's lawyer, Sam Macedone, said it might have been ''decent'' of D'Arcy to negotiate a settlement.
The most puzzling recent piece of magic was this month's meeting of Moses Obeid's creditors, who voted to accept one cent in the dollar and thereby get Eddie's treasured son off paying a judgment debt of $16.6 million to the City of Sydney council.
Why anyone would accept one cent on the dollar in these circumstances is a riddle wrapped in a mystery inside an enigma. To get there you need a numerical majority of creditors and 75 per cent of the value of the debts.
Max Donnelly says he's seen creditors vote for 0.007 cents in the dollar - which he describes as the James Bond settlement.
Like Mr Bond, if you know enough tricks, you can get away with anything, and still keep the girl.
Read more: http://www.smh.com.au/opinion/politics/bankruptcy-case-of-how-many-tricks-you-know-20120816-24bk4.html#ixzz23mr3av1v
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