Lawyer Complaints

Former Attorney Bruce Matson Criminally Indicted for Finchin’ Millions. Judge Promptly Seals Case.

Bruce Matson was charged via the criminal information process, which does not require a grand jury indictment.

Disbarred former LeClairRyan attorney Bruce Matson charged in criminal case

JUL 15, 2021 | REPUBLISHED BY LIT: JUL 17, 2021

Bruce Matson, a veteran Richmond attorney who was disbarred last year for his mishandling of millions of dollars in a major bankruptcy case, has been charged criminally by federal prosecutors.

The U.S. Attorney’s Office on Thursday hit Matson with one count of obstruction of an official proceeding related to his work as the trustee overseeing the bankruptcy of collapsed Henrico-based title insurance giant LandAmerica while he was employed at law firm LeClairRyan.

The brief two-page filing states that Matson “did corruptly influence, obstruct and impede, and endeavor to influence, obstruct and impede, the due and proper administration of the law under which a pending proceeding was being had before an agency of the United States, that is the United States Trustee Program.”

The U.S. Trustee Program is a component of the Department of Justice.

Matson was charged via the criminal information process, which does not require a grand jury indictment and typically involves cooperation from the defendant.

Matson was not arrested as part of the charges.

He remains free at least until his initial court appearance at 10:30 a.m. July 22 before Magistrate Judge Mark Colombell.

That proceeding will include a detention hearing.

He’ll then immediately go before Judge John Gibney for arraignment and a plea agreement hearing.

A summons issued in the case indicates that Matson intends to plead guilty.

Matson is represented in the criminal matter by McGuireWoods attorney Brandon Santos, who declined to comment.

The filing claims the alleged obstruction took place over the course of Aug. 25-Nov. 25, 2019, but no further detail of the offense is included.

The charge comes more than a year after it was brought to light in bankruptcy court that Matson wrongfully withdrew nearly $3 million from the LandAmerica wind-down account and deposited it into his personal bank accounts and that of an associate.

Matson, who spent much of his 40-year law career as a bankruptcy trustee, oversaw the complex LandAmerica case from the time of the Henrico-based title insurance giant’s collapse in 2008 until its seemingly successful conclusion in 2015.

But in August 2019, it was discovered that the wind-down fund had been emptied. Those funds were not to be disbursed until the wind-down period came to a close in 2021.

Matson eventually admitted to taking the money out of the trustee account and was removed as trustee from the LandAmerica case, despite his objections. He has since repaid the funds back to the estate and was also disbarred by the Virginia State Bar, effectively ending his career in law.

He also recently paid an additional $577,000 to the LandAmerica estate for reasons that were not explained in bankruptcy court filings.

The missing trust account funds were discovered by Protiviti, which works as a financial advisor on bankruptcy cases, including those of LandAmerica and, more recently, LeClairRyan.

The law firm for which Matson had worked for for many years fell into bankruptcy in September 2019. That case continues to play out, with the trustee going after many of the firm’s former attorneys, including Matson.

The trustee recently won a bid to keep the terms of a settlement reached with Matson confidential, despite objections of one of the biggest creditors in the case.

Disbarred former LeClairRyan attorney Bruce Matson shells out more money to LandAmerica bankruptcy estate

APR 27, 2021 | REPUBLISHED BY LIT: JUL 17, 2021

Six months after losing his law license for inappropriately pocketing seven figures’ worth of funds from the long-dormant LandAmerica bankruptcy estate, Bruce Matson has cut another sizable check related to the case.

The veteran Richmond attorney and longtime general counsel of now-bankrupt law firm LeClairRyan paid an additional $577,000 to the LandAmerica estate in March, according to federal court records.

That’s on top of the $2.8 million he repaid to a successor trustee in the case last year after it was brought to light that the funds had been withdrawn from the LandAmerica wind-down account and deposited into personal accounts of Matson and an associate.

While the court records do not explicitly name Matson in relation to the latest payment, they do state: “A check was received from the Former Trustee of the LFG Liquidation Trust in the amount of $577,610.00 and deposited in the SunTrust Account on March 2, 2021.”

Matson, who spent much of his 40-year law career as a bankruptcy trustee, oversaw the complex LandAmerica case from the time of the Henrico-based title insurance giant’s collapse in 2008 until its seemingly successful conclusion in 2015.

But in August 2019, it was brought to the bankruptcy court’s attention that LandAmerica’s $2.8 million wind-down fund had been emptied. Those funds were not to be disbursed until the wind-down period came to a close in 2021.

Matson eventually admitted that the funds were transferred to his and an associate’s accounts, before returning them. Matson was then removed as LandAmerica’s trustee, despite his objections, and then was disbarred by the Virginia State Bar in November because of his handling of the funds.

Matson conceded to the VSB that the allegations are true and that he could not successfully defend the claims. He ultimately consented to revocation of his license to practice in Virginia.

Veteran Richmond attorney Benjamin Ackerly, who is retired from Hunton Andrews Kurth, was appointed to replace Matson as trustee in the LandAmerica case. Ackerly’s camp continues to investigate the Matson matter.

An attorney representing Ackerly had no comment about the recent $577,000 payment.

Matson did not comment on the matter.

Matson also in recent weeks wriggled free of some of the tentacles of LeClairRyan’s ongoing bankruptcy case.

A brief court record file in that case this month shows that Matson reached a settlement for an undisclosed sum with LCR trustee Lynn Tavenner. The settlement was reached after a two-day mediation session held March 26-27.

Matson was represented in the mediation by McGuireWoods attorney Dion Hayes.

Tavenner has been in negotiations with dozens of LCR’s former attorneys to try to claw back funds they received from the firm leading up to its bankruptcy.

They’ve each received demand letters from the trustee to begin discussions and potential mediation. As is typical in such bankruptcies, if a resolution can’t be reached through mediation, the trustee may choose to formally file suit against the given attorney.

The LCR estate also continues its legal battle with legal services giant UnitedLex, which formed a controversial joint venture with the law firm leading up to its dissolution.

Tavenner filed suit last year seeking $128 million in damages, claiming UnitedLex kept the law firm alive longer than it should have in order to “improperly and unfairly extract millions of dollars from the estate, to the detriment of LeClairRyan’s creditors.”

UnitedLex has fired back in the case, arguing that the bulk of the case should be dismissed or at the very least transferred to a different court where it could have a chance to argue its case in front of a jury.

The case continues on in federal bankruptcy court.

LeClairRyan trustee wins bid to keep Matson settlement details sealed

JUN 1, 2021 | REPUBLISHED BY LIT: JUL 17, 2021

Details of a recent deal struck between the LeClairRyan bankruptcy estate and the collapsed law firm’s now-disbarred longtime general counsel will remain a mystery for the foreseeable future, despite objections from one of the biggest creditors in the case.

A judge ruled last week to seal all documents and hearings related to the trustee’s settlement with Bruce Matson.

That decision came much to the chagrin of UnitedLex, a legal services firm that is owed $8 million from LCR and is in the midst of litigation with LCR trustee Lynn Tavenner.

The company argued that to seal the details of the Matson matter harms its position as both a creditor and defendant in the LCR case.

UnitedLex, which formed a controversial joint venture with LCR shortly prior to the law firm’s dissolution in 2019, is facing a lawsuit filed by Tavenner accusing it of keeping LCR alive longer than it should have in order to “improperly and unfairly extract millions of dollars from the estate, to the detriment of LeClairRyan’s creditors.”

Tavenner is seeking up to $128 million in damages.

UnitedLex has described Tavenner’s case as “wildly aggressive,” and that keeping the documents out of sight gives the trustee an undue advantage.

“The trustee is seeking to litigate in secret and engage in trial by ambush. (UnitedLex has) … a fundamental right to discover and examine the information the trustee now seeks to cloak in secrecy,”

it argued in court filings.

During last week’s hearing, UnitedLex attorneys also remarked on the tricky nature of dealing with the bankruptcy of a law firm, pitting attorneys against attorneys in a close-knit legal community.

“This is a case where it’s lawyers dealing with lawyers. We all know people who used to be with LeClairRyan,”

said attorney Gregory Milmoe of law firm Greenberg Traurig.

He suggested concerns about how such relationships could seep into the LCR case and reminded the judge that Tavenner and her law partner Paula Beran both used to work at LCR.

“I think the best way to guard against any suggestion of impropriety is to protect transparency,”

he said.

Beran, who spoke on behalf of Tavenner during the hearing, did not take kindly to that assertion, calling it “nonsense” and “unconscionable.”

She reiterated arguments made in a court filing that keeping the settlement matter sealed helps maximize the value to the estate.

The trustee also previously argued in court filings that “If disclosed, the revelation of such information could be harmful to the estate and/or Mr. Matson in other ongoing proceedings…”

Judge Kevin Huennekens ultimately sided with the estate, ruling to keep sealed any documents related to the settlement as well as barring access to any related hearings and transcripts.

A judge ruled last week to seal all documents and hearings related to the trustee’s settlement with Bruce Matson.

The ruling comes as Matson has found himself embroiled in both the LCR bankruptcy and the recently revived bankruptcy of LandAmerica, a once-resolved case that was brought back from the dead after it was discovered Matson had wrongfully taken $3 million out of a wind-down account. Matson had served as trustee of the LandAmerica case during his decades-long tenure at LCR.

While Matson has since returned the missing money to the LandAmerica estate, his actions have triggered a domino effect that he is still facing.

That includes his disbarment in Virginia as well an ongoing investigation at the hands of Benjamin Ackerly, who was enlisted to replace Matson as trustee on the LandAmerica case after the missing money caused the case to be reopened.

Ackerly’s efforts have led to Matson recently repaying an additional $577,000 into the LandAmerica estate for undisclosed reasons.

Attorney Tyler Brown of Hunton Andrews Kurth, who is representing Ackerly, said during last week’s hearing that the scrutiny of Matson isn’t finished.

“Mr. Ackerly’s work continues,” Brown said.

Matson is represented in the settlement by McGuireWoods attorney Dion Hayes, who also stated that Matson still has additional unresolved claims with the LandAmerica estate.

Brown said one such ongoing demand is that Matson return certain past compensation into the LandAmerica trust.

Judge Huennekens also approved Tavenner’s plan to sell LCR’s book of accounts receivable to collections firm Atwell, Curtis & Brooks.

AC&B would make an initial payment to the estate of $35,000, while then keeping the first $35,000 it collects. After that, 60 percent of whatever is collected would go to the LCR estate and AC&B would keep the remaining 40 percent.

Court filings list around $2.5 million in remaining accounts receivable owed to LCR. The list includes more than 300 outstanding invoices owed to the firm, from as much as $122,000 to as little as $500.

Hon. Kevin R. Huennekens

U.S. Bankruptcy Court (E.D. Va.)

Richmond

Hon. Kevin R. Huennekens was appointed as a U.S. Bankruptcy Judge for the Eastern District of Virginia in Richmond on Sept. 11, 2006.

Prior to his appointment, Judge Huennekens was a partner with the firm of Kutak Rock LLP. He also served as a panel trustee for the U.S. Bankruptcy Court for the Eastern District of Virginia (1988-2006) and was co-editor of the Virginia CLE publication Bankruptcy Practice in Virginia (2004 and 2008).

Judge Huennekens is a Fellow in the American College of Bankruptcy and a member of the National Conference of Bankruptcy Judges and ABI. He was also recognized in Who’s Who Legal USA in Insolvency and Restructuring and The International Who’s Who of Insolvency and Restructuring in 2006, and was listed in the Best Lawyers in America from 1995-2006.

He is a planning committee member of the Annual Mid-Atlantic Institute on Bankruptcy and Reorganization Practice and has also been a speaker at Virginia CLE courses on basic and advanced bankruptcy.

He received his B.A. from the College of William & Mary and his J.D. from the Marshall-Wythe School of Law at the College of William & Mary, where he was a member of the Order of the Coif and its Law Review and has been an adjunct professor of law.

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Former Attorney Bruce Matson Criminally Indicted for Finchin’ Millions. Judge Promptly Seals Case.
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