Co-Signing Corruption
Lori Deveny’s IOLTA and the Oregon State Bar
From the beginning, there were a lot of things wrong with Multnomah County Circuit Court case no. 18CV48680, the custodianship case filed by the Oregon State Bar (OSB) in October 2018 to take possession of disgraced attorney Lori Deveny’s law practice, including but not limited to her clients’ files and trust account.
At the time the OSB filed the case, Deveny was alleged to have stolen hundreds of thousands of dollars of insurance settlements belonging to her mostly cognitively impaired clients, by forging their signatures and depositing that money into the IOLTA account that she freely used as her own personal cashbox. Predictably, the amount of stolen funds would soon balloon into the millions.
Despite the unprecedented scale and complexity of the situation, the case was handled not by regular OSB disciplinary staff, but by ‘member volunteer’ Susan Alterman. On her firm’s website, Alterman does not list insurance or legal ethics or attorney dumpster fires among her practice areas. Rather, she specializes in commercial lending and transactions, creditors’ rights enforcement, and real estate.
The OSB certainly knew that Alterman appeared to have no clearly relevant experience in a matter involving the massive theft of insurance settlements. They could have accepted Alterman’s volunteerism elsewhere, and let their finest handle Deveny.
But they didn’t.
Alterman’s petition to the court to seize Deveny’s practice was generally weak and seemingly filed under an inapplicable statute.¹ Further, Alterman neglected to mention anywhere in the petition or its attached declaration that Deveny was accused of stealing clients’ funds or forging their signatures. Nor did Alterman tell the court that Deveny was apparently still practicing law despite forfeiting her license five months earlier.
Absolutely worst of all was the proposed order that Alterman wrote and filed asking that the OSB be added as a co-signer to Deveny’s bank accounts, instead of being allowed to seize them outright.
Read that again. Why would anyone think or ask to be added as a co-signer to the accounts of someone like Deveny, who would soon go on to face 116 state and federal criminal charges?
With her order, Alterman should have been trying to wrest Deveny’s checkbook away from her, not climb in and ride shotgun as Deveny tried to jump the Grand Canyon.
If she didn’t know what she was doing or didn’t understand ORS 9.710 et seq., Alterman certainly had documents from other custodianship cases available that she could have simply copied.
For instance, she could have lifted language from the proposed order that the OSB filed in the matter of Andrew Long, who, despite not being accused of any financial wrongdoing or theft at the time, was subjected to a raid on his office by OSB staff accompanied by armed sheriff’s deputies, i.e. exactly the treatment that Deveny should have gotten.
By copying the order in Long’s case, Alterman also could have avoided the very awkward position in which she placed the OSB.
The weak petition was granted and the weak order was signed, and, according to all available sources — including the OSB’s own records — even the weak things that should have happened next did not.
Instead of immediately going and taking possession of Deveny’s clients’ files, money, and other property, Alterman allowed Deveny to bring the files² to the OSB. Some were even brought by a third person.
Instead of the OSB contacting all of Deveny’s former clients to alert them about the situation, former clients evidently found out about Deveny’s disbarment through the media or from the Portland police.
Instead of being able to have confidence that the OSB had vacuumed up every scrap from Deveny’s collapsed firm as they were supposed to, law enforcement, including the feds, were forced to seek additional court orders to get Deveny to surrender all her files to the Bar.
Instead of running to the bank and serving them with a copy of the order, Alterman waited a week and mailed it to Wells Fargo.
In short, Susan Alterman and the Oregon State Bar allowed Lori Deveny — whose flaming descent has already left the biggest crater in OSB history — to retain client property and withhold the very evidence that prosecutors needed to convict her.
But wait: There’s also the matter of the money.
At a recent status conference³ in the custodianship case, Alterman stated that at the time the OSB overtook Deveny’s practice in late 2018, Deveny’s “operating account was overdrawn, and there was $3008.65 in her IOLTA account.” Alterman also claimed that “because the deposits were made by Ms. Deveny without indication of which client they were for,” the OSB didn’t “have any way to tell which clients that money came from.”
This was an interesting and bold claim to make. IOLTAs are pretty much like any other bank account in having records that are kept by the bank, including images of the checks that have been written and deposited. Additionally, Deveny’s settlement checks allegedly have the clients’ forged signatures on them. As Deveny’s co-signer, the OSB wouldn’t have even needed a subpoena to see the hot, steamy forgery and theft going on in their shared IOLTA.
At the time of Alterman’s statements, I was immersed in research for an article on a highly irregular estate case⁴ that Deveny had filed, and that had been hastily closed on May 13, 2019 — the very day the feds arrested her.
In that case, court documents filed by Deveny and her attorney, Tammi Caress, show that Deveny was allowed to withdraw at least $3538.16⁵ from her IOLTA in January 2019, over two months after the OSB was added as a co-signer to that account.
In other words, at a time when Susan Alterman claimed that the Oregon State Bar had no way of knowing whose $3008.65 remained in the IOLTA account they shared with Lori Deveny, the OSB allowed Deveny to withdraw over $3,500 from the account and reimburse herself with it.
Disturbingly, the OSB did this at the same time they were capping Deveny’s victims’ Client Security Fund claims at $50,000 and refusing to reimburse them for the 33% cut Deveny would have taken for her services, even in instances in which Deveny forged their signatures on fee agreements or checks.
Lori Deveny’s complete financial records are certainly available to the OSB.
But the Oregon State Bar doesn’t want to admit it, for some reason. They have willfully refused to comply with the court order⁶ that Susan Alterman herself wrote, for some reason. They want to quietly close the books on Lori Deveny and direct their licensees’ attention elsewhere, for some reason.
The public and Oregon attorneys deserve to know what that reason actually is, and deserve the protection and regulation that the Oregon State Bar is supposed to provide. That reason is the subject of the next article in this series.
¹ ORS 9.710 covers attorneys who have died, are disbarred or suspended, are incarcerated, or who have abandoned the practice. Deveny had done none of the above — Form B Resignation is not disbarment.
² Well into 2019, the OSB was still learning of client files that Deveny had not relinquished, and still asking Deveny politely for them. Some may even still be in Deveny’s possession.
³ September 12, 2019 in 18CV48680.
⁴ Multnomah County Circuit Court Case no. 17PB09149. A longer article about the matter — and the suspicious deaths related to it — will be forthcoming soon.
⁵ The accounting in the case is unclear, likely by design: an additional $5,468.55 in Deveny’s IOLTA (for a total of $8,747.71) is shown in one exhibit, but the funds are not mentioned anywhere in the filing.
⁶ I have filed motions to unseal records and to insure compliance in the case.
