Two former law partners have each been sentenced to a year in federal prison for defrauding their Kansas City, Missouri-based health system client of more than $1.2 million.
One of the partners, Mark J. Schultz, also was ordered to pay more than $400,000 in restitution when he was sentenced earlier this month in federal court after pleading guilty to wire fraud and mail fraud conspiracy. He had faced a maximum sentence of five years. His former partner, Alan B. Gallas, pleaded guilty to federal charges of mail fraud in U.S. district court in Kansas City last year and was sentenced in February. His restitution amount tops $1.2 million. The two men were partners in the law firm of Gallas & Schultz, also in Kansas City.
According to court documents, the lawyers, who represented Saint Luke's Health System, were retained to collect larger outstanding patient accounts and deposit those payments into a collection trust account. From 2009 to 2015, however, about $1.25 million in payments due the hospital were either improperly retained by Gallas & Schultz or transferred from the trust account to the firm's operating accounts.
Gallas has been disbarred in both Kansas and Missouri. In 2012, he served as president of the Kansas City (Missouri) Metropolitan Bar Association, according to the group's website. Schultz has been disbarred in Kansas and suspended in Missouri, with the matter pending in the state Supreme Court.
Disciplinary boards find instances where lawyers mishandle client funds to be particularly disturbing, and that is why it is one of the main issues the bodies focus on,according to attorneys who handle disciplinary matters.
They agree that the rules regarding client trust funds clearly indicate that clients' funds and the lawyer's funds should never be held in the same account. Whether an attorney faces criminal, in addition to disciplinary, charges for such conduct generally depends on the amount of money at issue and whether the attorney agrees to provide restitution.