BJay Pak, U.S. attorney for the Northern District of Georgia (Photo: John Disney/ALM)

A disbarred Georgia lawyer has been accused of using the identities of former clients to secure thousands of dollars in litigation advances, and pocketing the cash.

Chalmer “Chuck” Detling, II, 42, of Marietta, was arraigned before U.S. Magistrate Judge Catherine M. Salinas on seven counts of wire fraud and eight counts of aggravated identity theft on Friday, according to an announcement from U.S. Attorney for the Northern District of Georgia Byung J. “BJay” Pak. The indictment charges that Detling took names and Social Security numbers of 36 former clients and signed applications without their consent for 50 litigation funding advances totaling $383,000.

“Lawyers are supposed to assist their clients, not use their identities to commit fraud.” Pak said in a news release Monday. “Detling allegedly violated his ethical and fiduciary duties by using his clients' personal information to apply for litigation advances in their names. He then kept the money for himself.”

Detling could not be reached for comment. The FBI is investigating the case. Assistant U.S. Attorneys Alex R. Sistla and John S. Ghose are prosecuting it.

Litigation advances are made to cover nonlitigation-related living expenses for plaintiffs who have a pending personal injury or workers' compensation lawsuit. Typically, a plaintiff applies for litigation-advance financing by submitting a signed agreement that includes, among other things, the amount of money being advanced to the plaintiff and a repayment schedule. Although the financing agreement contemplates that a plaintiff will repay the litigation advances with interest, the litigation financing entities do not consider such financing to be “loans,” Pak said. Instead, they characterize the financing as “investments” or “advances” because a plaintiff who has no recovery would not be obligated to repay the litigation financing entity. The litigation advances typically range from several hundred to several thousand dollars, Pak said.

Prosecutors allege that, from October 2014 through April 2016, Detling devised a scheme to defraud several litigation financing entities by obtaining fraudulent litigation advances in the names of his law firm's clients, without the clients' knowledge or authorization. During this period, Detling allegedly obtained 50 fraudulent advances totaling more than $383,000 in the names of 36 clients. Detling applied for the fraudulent advances using personal identifying information of his clients, including their names and Social Security numbers, the indictment charges. Detling was able to secure these fraudulent litigation advances without his clients' knowledge in part because the litigation financing entities did not require the clients to be present when applying for the litigation advances or receiving the disbursements, according to Pak.

Prosecutors allege that, in order to conceal the scheme, Detling had the loan proceeds wired directly to his law firm's interest-bearing trust account (Interest on Lawyer Trust Account, or IOLTA), or personally picked up checks from the funder and deposited the funds into the IOLTA account. Prosecutors allege that he transferred the advances from the IOLTA account to Detling Law Group's operating accounts, or other Detling Law Group accounts. Detling also is accused of providing inaccurate contact information to the litigation funders.

The Supreme Court accepted Detling's petition for voluntary surrender of his license to practice law—tantamount to disbarment—in November 2016, in an unrelated matter. In his petition for voluntary surrender, Detling admitted that he settled a client's claim for damages arising out of a motor vehicle accident without first receiving the client's authorization to do so. Detling acknowledged that his conduct violated Georgia Rule of Professional Conduct 1.2. In mitigation, Detling noted that his daughter was diagnosed with, and was receiving treatment for, an inoperable brain tumor. As a result of his daughter's condition, Detling stated that he was unable to devote the necessary time to the client matter at issue. In response, the State Bar of Georgia noted that Detling was already under an emergency suspension, that he had three other matters pending before the Review Panel, and a special master recommended disbarment with respect to those matters.

In 2011, a divided Georgia Supreme Court accepted Detling's petition for voluntary discipline requesting a Review Panel reprimand based on his violation of Rule 1.1 of the Georgia Rules of Professional Conduct. In that matter, Detling admitted that he represented an LLC in 2006 in its attempt to finance the purchase of a second corporation, and in connection with that representation, he signed an opinion letter averring that he knew nothing that could materially affect the transaction. He also said he knew nothing that could affect the LLC's right to carry on business or its financial condition, despite the fact that he knew that the director and officer of the LLC's sole member was then facing federal criminal charges. The court noted in mitigation that Detling was inexperienced in the practice of law at the time, and the situation was an isolated incident, and was cooperative and remorseful.

Detling was admitted to the State Bar of Georgia in 2004, from the University of District of Columbia Law School.