Legal Ethics

$200K sanction could close my law firm, lawyer tells court

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A Minneapolis lawyer is facing a double hit in a civil suit accusing his client of defrauding auto buyers in the former Soviet Union.

Minneapolis lawyer Boris Parker says the client, Sergey Kapustin, owes him $125,000 in unpaid fees. Now Parker is fighting a potential $200,000 sanction for negotiating a consent decree on Kapustin’s behalf when funds were not available to pay, the New Jersey Law Journal (sub. req.) reports.

In a May 18 brief, Parker said that if he has to pay the sanction, he may have to shutter his four-lawyer law firm or he may be forced to lay off three support staffers.

U.S. District Judge Noel Hillman of Camden, New Jersey, ruled Parker was subject to sanctions because he didn’t verify his client had funds to pay a promised $400,000 in a consent order, according to the account by the New Jersey Law Journal. Hillman said a check of Kapustin’s finances would have shown the client emptied his bank accounts after the suit was filed and transferred assets overseas.

The $200,000 represents additional attorney fees incurred by lawyers for the plaintiffs in connection with the consent order.

Hillman’s court filing says he had reason to believe his client had assets to cover the consent order.

Updated at 9:22 p.m. to clarify the auto buyers were in the former Soviet Union.

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