Lawyer gets prison time for using trust accounts to transfer $12 million in client cash
A San Diego lawyer has been sentenced to five years in prison after pleading guilty last year to using lawyer trust accounts to hide the source of $12 million later sent to international destinations.
Lawyer Richard Medina Jr., 40, was sentenced on Tuesday, report the San Diego Union-Tribune and the Times of San Diego. In addition to serving time in prison, Medina will have to forfeit $12 million and serve three years of supervised release.
Medina pleaded guilty in September 2015 to operating an unlicensed money transmitting business, according to a press release. His plea agreement acknowledged he knew or had reason to know that the cash transactions were proceeds of unlawful activity, or were intended to promoted unlawful activity.
Medina received a commission for using his law firm’s trust accounts to hold and transmit the money, prosecutors said. The transactions avoided bank reporting requirements on currency transactions of more than $10,000.
Medina’s license has been placed on interim suspension, according to a state bar website. His sentence comes amid increasing scrutiny on the potential use of Interest on Lawyers’ Trust Accounts to launder money, Law.com reports. At least two other lawyers in the last five years have been charged with using IOLTA accounts to launder money. One of them won his appeal in the St. Louis-based 8th U.S. Circuit Court of Appeals, but his lawyer is nonetheless sounding a note of caution.
Lawyers “need to be damned careful what they do with their trust accounts,” defense lawyer David Matthews told Law.com. He represented Arkansas lawyer K. Vaughn Knight, who was accused of using an IOLTA account to hide more than $1 million from creditors in bankruptcy. The 8th Circuit said Knight’s use of the account wasn’t illegal absent additional evidence that he knowingly helped his client hide money.
Texas A&M University law professor William Byrnes told Law.com that IOLTA accounts “are tempting vehicles for money laundering.” Many lawyers are unaware of the laws and risks associated with money laundering, he said. “An attorney’s IOLTA account may be the weak link in a money laundering chain, and may lead to reputational damage and regulatory sanctions,” he warned.