Monday, February 20, 2017

Company wants to void indicted lawyer Robert Graham’s malpractice insurance

Company wants to void indicted lawyer Robert Graham’s malpractice insurance


The company that issued a $2 million malpractice insurance policy to indicted probate lawyer Robert Graham wants to void the policy and not pay out hundreds of claims, U.S. Bankruptcy Court documents show.
Lawyers for the Virgina-based Markel Insurance Co. allege in the documents that Graham, 52, lied when he filled out an application for the policy in December 2015 saying he knew of no professional liability claims against him.
Since Graham abruptly shut down his Lawyers West office in Summerlin on Dec. 2, he has been charged with stealing $2.1 million from clients in three of his cases. An investigator with the Clark County district attorney’s office testified before the grand jury that indicted Graham that the thefts went back at least three years.
“The criminal indictment against Mr. Graham and other publicly available information indicate that Mr. Graham began misappropriating client funds long before Dec. 10, 2015, when Mr. Graham signed and submitted his application for the Jan. 1, 2016, MIC Lawyers Professional Liability Insurance Policy,” the lawyers wrote last week.
The company, which says roughly 390 parties have put in malpractice claims, wants permission from a bankruptcy judge to pursue legal action against Graham in state court to nullify the insurance policy. All civil litigation against Lawyers West was automatically put on hold when lawyers for former clients filed an involuntary bankruptcy petition against the firm in December.
A hearing on the insurance company’s request is set for March 14 in bankruptcy court.
In bankruptcy court last week, Lawyers West filed papers listing $8.7 million in liabilities and only $438,100 in assets, mostly unpaid bills the closed company no longer can collect.
The firm also acknowledged that it made a $2,500 contribution to the Boy Scouts of America, an unknown donation to Boys Town of Nevada and a $15,000 contribution to Colorado State University in 2016.
The Las Vegas Review-Journal reported last month that Graham had donated to Boys Town and the Colorado State athletic department.
Grand jury transcripts obtained by the Review-Journal also show that Graham’s firm made contributions to the Church of Jesus Christ of Latter-day Saints. Neither Boys Town nor Mormon church officials would disclose the amount of the donations.
Tim Schultz, a financial expert with the district attorney’s office, told the grand jury that Graham poured an average of $187,000 a month from his client trust fund into an operating account to run his law practice and pay personal bills.
Schultz testified that he believed Graham used his clients’ money as a “piggy bank.” Records showed he funneled money into the operating account to pay a $244,000 IRS debt and $700,000 to $800,000 a year on advertising, Schultz said.
In all, prosecutors have alleged in court that Graham may have stolen more than $15 million in client funds, and they expect to file additional criminal charges. He is in the Clark County Detention Center on $5 million bail.
Last week, his lawyer, Deputy Public Defender Bryan Cox, filed a motion to reduce his bail, arguing that it is excessive and that Graham is not a flight risk or danger to the community. Cox also filed court papers challenging the indictment against his client.
A hearing on the bail motion has been set for Feb. 28 before District Judge Kerry Earley.
Contact Jeff German at or 702-380-4564. Follow @JGermanRJ on Twitter.

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