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Law Funder LLC Case at the Fifth Circuit in a Veil of Secrecy as it Involves a Lawmaker, a Judge and Illegal Acts

04/03/2019 – ORAL ARGUMENT HEARD before Judges King, Smith, Willett. Arguing Person Information Updated for: John F. Carroll arguing for Appellants Sergio Munoz, Et Al; Arguing Person Information Updated for: Michael Jonathan Smikun arguing for Appellee Law Funder. [18-40320] (PFT) [Entered: 04/03/2019 09:13 AM]

The Sealed US District Court Case is also Sealed on Appeal, but not the Oral Arguments;

A South Texas lawmaker must pay nearly $3 million for not disclosing a significant conflict of interest in a divorce case in which he was an attorney, a federal district judge has ruled.

The hefty tab that state Rep. Sergio Muñoz Jr. must pay stems from a suit filed at Law Funder, a firm that helps clients fund lawsuits and provides clients cash advances in hopes for a payday in the courtroom.

Law Funder hired Muñoz, a Democrat from Palmview, to handle a divorce case in Hidalgo County, but Muñoz didn’t disclose to the company that he had a business relationship with the judge in the case, company officials said in the suit.

From the (McAllen) Monitor:

In July 2012, a hearing was heard before state senior District Judge Dick Alcala, of San Antonio, where the court ruled to disqualify Contreras from hearing the divorce case “because of the corporate association with defendant Sergio Muñoz Jr., that was in existence when they were lawyers together and continued through the time Muñoz appeared for Law Funder,” court documents further read.

Alcala also disqualified Contreras “because Judge Contreras arguably had an interest in the subject matter of the litigation and the court resolved that doubt in favor of disqualification,” according to court documents. Alcala then entered an order disqualifying Contreras.

Law Funder “sustained a significant amount of damages,” which eventually led to Law Funder retaining the representation of McAllen attorney Francisco Tinoco, who then filed suit in federal court against Muñoz and his law offices for legal malpractice, court documents read.

In all. Muñoz must pay $2.9 million.

From the Texas Tribune:

Muñoz denied committing malpractice, but a federal district judge ruled against him in February, saying any responsible person in Muñoz’s position “would know that failing to disclose or withdraw from the conflict in question could lead to disqualification of [the judge in the divorce case], nullification of his orders, and the consequent waste of [Law Funder’s] time and paid attorney’s fees.”

Federal District Judge Micaela Alvarez seemed to be frustrated with Muñoz in his ruling, citing his “refusal to cooperate in the discovery process” as a reason for delays in the federal case.

Muñoz gave conflicting answers about the suit when talking to reporters.

The state representative did not return multiple calls from the McAllen-based Monitor reporter. Instead, he went over the reporter’s head to the executive editor and called the suit a “private matter.”

Muñoz did speak to the Texas Tribune, where he told a reporter the case was “political” and that he plans to appeal.

18-40320 Law Funder, L.L.C. v. Sergio Munoz, Jr., et al

 

Associated Case Short Title Type Start End Status

 

Originating Case Lead Case Filed Execution Date Judgment NOA Originating Judge Court Reporter
7:14-CV-981 12/12/2014 04/06/2018 Jones, Candis Gail
7:14-CV-981 12/12/2014 04/06/2018 Rodriguez, Ricardo
7:14-CV-981 12/12/2014 04/06/2018 Alvarez, Micaela

 

Party Party Type Terminated from Case Attorney
Munoz, Sergio Jr. Defendant-Appellant Carroll,John F.
Rodriguez,Francisco Javier
Law Offices of Sergio Munoz, Jr. P.C. Defendant-Appellant Carroll,John F.
Rodriguez,Francisco Javier
Law Funder, L.L.C. Plaintiff-Appellee Tinoco,Juan Francisco
Smikun,Michael Jonathan

 

Attorney Party Type(s) Represented Representation End
Carroll, John F. Defendant-Appellant
Rodriguez, Francisco Javier Defendant-Appellant
Tinoco, Juan Francisco Plaintiff-Appellee
Smikun, Michael Jonathan Plaintiff-Appellee
General Docket
United States Court of Appeals for the Fifth Circuit
Court of Appeals Docket #: 18-40320 Docketed: 04/09/2018
Nature of Suit: 4190 Other Contract Actions
Law Funder, L.L.C. v. Sergio Munoz, Jr., et al
Appeal From: Southern District of Texas, McAllen
Fee Status: Fee Paid
Case Type Information:
     1) Private Civil Diversity
     2) Private
     3)
Originating Court Information:
     District: 0541-7 : 7:14-CV-981
     Court Reporter: Candis Gail Jones, Court Reporter
     Court Reporter: Ricardo Rodriguez, Court Reporter
     Originating Judge: Micaela Alvarez, U.S. District Judge
     Date Filed: 12/12/2014
     Date NOA Filed:      Date Rec’d COA:
     04/06/2018      04/09/2018

11/20/2018 Open Restricted Document PROPOSED SUFFICIENT BRIEF filed by Appellee Law Funder, L.L.C. in 18-40320 [8912554-2] Brief has been deemed insufficient. Corrections required: the citations to the record. Additional corrections required: The Name of this court should be corrected; “Table of Authorities” is misspelled. Instructions to Attorney: PLEASE READ THE ATTACHED NOTICE FOR INSTRUCTIONS ON HOW TO REMEDY THE DEFAULT. Sufficient Brief deadline satisfied. Sufficient Brief deadline updated to 11/30/2018 for Appellee Law Funder, L.L.C. [18-40320]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: PROPOSED SUFFICIENT BRIEF filed by Appellee Law Funder, L.L.C. [8912554-2] Date of service: 11/20/2018 via email – Attorney for Appellant: Carroll; Attorney for Appellees: Smikun, Tinoco; US mail – Attorney for Appellant: Rodriguez [18-40320] (Michael Jonathan Smikun ) [Entered: 11/20/2018 09:53 AM]
11/20/2018 Open Document SUFFICIENT RECORD EXCERPTS FILED. Sufficient Record Excerpts deadline satisfied. Paper Copies of Record Excerpts due on 12/04/2018 for Appellee Law Funder, L.L.C.. [18-40320]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: RECORD EXCERPTS FILED. Record Excerpts NOT Sufficient -Name of this court should be corrected; Caption has misspelled words; The Table of Contents is Misspelled; Record Citations are incorrect. Instructions to Attorney: PLEASE READ THE ATTACHED NOTICE FOR INSTRUCTIONS ON HOW TO REMEDY THE DEFAULT. # of Copies Provided: 0 Sufficient Record Excerpts due on 11/30/2018 for Appellee Law Funder, L.L.C. [18-40320] REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: RECORD EXCERPTS FILED by Appellee Law Funder, L.L.C.. Date of service: 11/20/2018 via email – Attorney for Appellant: Carroll; Attorney for Appellees: Smikun, Tinoco; US mail – Attorney for Appellant: Rodriguez [18-40320] (Michael Jonathan Smikun ) [Entered: 11/20/2018 09:55 AM]
11/26/2018 Paper copies of Appellant Reply Brief filed by Appellants Mr. Sergio Munoz, Jr. and Law Offices of Sergio Munoz, Jr. P.C. in 18-40320 received. Paper copies match electronic version of document? Yes # of Copies Provided: 7. Paper Copies of Brief due deadline satisfied. [18-40320] (SBS) [Entered: 11/28/2018 02:08 PM]
11/29/2018 Open Restricted Document PROPOSED SUFFICIENT BRIEF filed by Appellee Law Funder, L.L.C. [8912554-2] Date of service: 11/29/2018 via email – Attorney for Appellants: Carroll, Rodriguez; Attorney for Appellees: Smikun, Tinoco; US mail – Attorney for Appellant: Rodriguez [18-40320] (Michael Jonathan Smikun ) [Entered: 11/29/2018 12:31 PM]
11/29/2018 Open Restricted Document PROPOSED SUFFICIENT RECORD EXCERPTS filed by Appellee Law Funder, L.L.C. [8924093-2] Date of service: 11/29/2018 via email – Attorney for Appellants: Carroll, Rodriguez; Attorney for Appellees: Smikun, Tinoco; US mail – Attorney for Appellant: Rodriguez [18-40320] (Michael Jonathan Smikun ) [Entered: 11/29/2018 12:33 PM]
12/03/2018 Paper copies of Appellee Brief filed by Appellee Law Funder, L.L.C. in 18-40320 received. Paper copies match electronic version of document? Yes # of Copies Provided: 7. Paper Copies of Brief due deadline satisfied. [18-40320] (SBS) [Entered: 12/04/2018 08:11 AM]
12/03/2018 Paper copies of Record Excerpts filed by Appellee Law Funder, L.L.C. in 18-40320 received. Paper copies match electronic version of document? Yes # of Copies Provided: 4. Paper Copies of Record Excerpts due deadline satisfied. [18-40320] (SBS) [Entered: 12/04/2018 08:13 AM]
01/30/2019 Open Document CASE TENTATIVELY calendared for oral argument for the week of 04/01/2019. [18-40320] (GAM) [Entered: 01/30/2019 03:22 PM]
02/15/2019 CASE CALENDARED for oral argument on Wednesday, 04/03/2019 in New Orleans in the En Banc Courtroom — AM session. In accordance with our policy, lead counsel only will receive via email at a later date a copy of the court’s docket and an acknowledgment form. All other counsel of record should monitor the court’s website for the posting of the oral argument calendars.. [18-40320] (GAM) [Entered: 02/15/2019 12:32 PM]
04/03/2019 ORAL ARGUMENT HEARD before Judges King, Smith, Willett. Arguing Person Information Updated for: John F. Carroll arguing for Appellants Sergio Munoz, Et Al; Arguing Person Information Updated for: Michael Jonathan Smikun arguing for Appellee Law Funder. [18-40320] (PFT) [Entered: 04/03/2019 09:13 AM]

Meanwhile, in NYC, Law Funder had it’s own Partner issues and Kickbacks Galore…

Former Part-Owner Of Litigation Funding Company Admits Defrauding Business Partners In $869,492 Kickback Conspiracy

NEWARK, N.J. – The former part-owner and underwriter for New York-based litigation funding company The Law Funder LLC, admitted today in Newark federal court to participating in a secret kickback scheme that defrauded his former business partners of approximately $869,492, U.S. Attorney Paul J. Fishman announced.

Mathew Sheldon, 39, of New York, pleaded guilty today before U.S. District Judge Dennis M. Cavanaugh to a superseding information charging him with conspiracy to commit wire fraud through the deprivation of honest services.

According to documents filed in this case and statements in court:

The Law Funder, which extends loans to plaintiffs in pending civil litigation, did business with Montclair Funding Group LLC (“MFG”) – at one time headquartered in Union City, N.J. – and its owner Rory Donadio, 43, of New York. MFG was a broker between plaintiffs seeking advances against potential recoveries in pending litigation and private entities such as Law Funder. In exchange for a broker’s fee, MFG would, among other things, gather necessary information and documents in support of funding opportunities so Law Funder could evaluate whether to fund a case and for how much. Sheldon was a 25 percent owner in Law Funder and supervised the underwriting process for the company.

Sheldon admitted that from approximately February 2005 through July 2009, he conspired with Donadio to design and execute a secret kickback scheme. Sheldon would offer certain of Law Funder’s investment opportunities to MFG in exchange for personally receiving a portion of each broker’s commission Law Funder paid MFG. Sheldon and Donadio agreed to conceal their fee-splitting arrangement from Law Funder and Sheldon’s three partners. The kickback scheme resulted in approximately $869,492 in fraudulent payments to Sheldon, which were paid by wire transfer and other means.

Sheldon also admitted that he and Donadio concealed the scheme by, among other methods, using code such as “Giants” or the letter “G” in records referring to related transactions. He acknowledged he regularly communicated with Donadio to identify the coded transactions and calculate the amount payable to Sheldon pursuant to the kickback scheme.

The conspiracy count to which Sheldon pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross amount of pecuniary gain or loss resulting from the offense. Sentencing is scheduled for Oct. 7, 2013.

Donadio also has pleaded guilty in connection with the scheme and awaits sentencing.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and inspectors of the United States Postal Inspection Service, Newark Division, under the direction of Maria L. Kelokates, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky, Mala Ahuja Harker and Jenny Kramer of the U.S. Attorney’s Office Economic Crimes Unit, and Evan Weitz of the office’s Asset Forfeiture and Money Laundering Unit.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

13-251

Defense counsel: Assistant Federal Public Defender Patrick N. McMahon Esq.

Sheldon Superseding Information

$870K Kickback Scheme Gets NY Attorney Mathew Sheldon Disbarred

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  1. Pingback: Fifth Circuit Says No Texas Lawyer is Gonna Pay $3M as it Orders a New Trial in Hopes Law Funder LLC is Out of Cash | Laws In Texas

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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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