Did a Florida lawyer use PPP loan money to help cover a $288,000 trust account shortage?

An Orlando attorney’s emergency suspension goes into effect Aug. 13 after a Florida Bar audit of 2018-2022 said he had a trust account shortage that reached $288,852.

Also, the Bar says money movement between accounts indicates Bradley Laurent used some of the COVID-19 Paycheck Protection Program loan money he received to shore up his trust account.

Laurent argued in a March application for disciplinary revocation, which he pulled in April, that “no client has complained or suffered any harm.”

The state Supreme Court’s emergency suspension, handed down July 14, prevents Laurent from taking on any more clients since that day. He has required to withdraw from representing clients and bring pending cases to a close by Aug. 13.

READ MORE: Accusations of stealing $65,000 and ghosting the Bar get South Florida lawyers suspended

Client money

Lawyers keep at least two accounts: operations accounts for handling business expenses (paying rent, staff, office supplies) and trust accounts for handling funds for clients and third parties. A settlement from a case, for example, goes to an attorney’s trust account. The attorney sends the money to the client, minus attorney’s fees and funds that need to be held back for one reason or another.

Wells Fargo told the Bar that the trust account for Haynes & Laurent, an account Laurent testified to the Bar that only he wrote checks or transferred money from, had an overdraft of $681.63 on Oct. 15, 2021. That triggered a Bar audit of Laurent’s business accounts from Jan. 1, 2018, through April 30, 2022, by certified public accountant Matthew Herdeker.

Laurent said the overdraft notice to his business in October 2021 was when he noticed there was a shortage. He said in his sworn statement and the disciplinary revocation application that health problems in 2018 and 2019 kept him out of the office and he “over-relied on firm staff to handle the office accounting with less than adequate supervision.”

In a sworn statement to the Florida Bar, Laurent said he continued to file civil complaints, handled about 20 depositions, 5 to 10 mediations and never needed another lawyer to cover for him.

Suring that statement, Bar attorney Daniel Quinn asked Laurent, “So even though you’re — and you may not be doing them every month, but even though you’re doing some ledgers, reconciliations, and so forth, and looking at the trust account between July of 2020 and October of 2021, you never noticed there was a shortage?”

Laurent: “No.”

But the Bar’s petition for emergency suspension also said, Laurent “began using client funds, to which he was not entitled, for his own benefit or the benefit of his firm, at least as early as March 2018, contrary to respondent’s testimony during his sworn statement.”

The petition pointed to a $25,000 insurance settlement check that hit the trust account on Feb. 26, 2018. Client “L.P.” was supposed to get $16,667.67 of that money. But on March 14, 2018, Laurent issued a check to the firm for $8,333.33, which dropped the trust account balance to $14,090.46.

The Bar’s petition also said, “There were several instances, however, as early as October2018, when [Laurent] immediately used one client’s settlement funds to pay another client due to repeated shortages in his trust account.”

The petition detailed the first of what it claimed were seven cases of this. A $20,000 settlement check for “N.W.” on Oct. 30, 2018 boosted the trust account balance to $27,025.52. The next day, an $18,190.49 settlement check went to “M.B.” from the trust account.

“Without client N.W.’s settlement, there were insufficient funds in the trust account to pay client M.B. his proceeds,” the petition said. “The shortage in respondent’s trust account on Oct. 30,2018, was at least $11,164.97 ($7,025.52 beginning bank balance minus the $18,190.49 required balance for client M.B.).”

PPP money

In March 2021, Laurent applied for a PPP loan through City National Bank. As the Bar’s petition notes, signing the application means Laurent said the money would be used to pay and maintain staff and pay business bills. And, if the money is used for anything else, the applicant agrees, “the federal government may hold me legally liable, such as charges of fraud.”

The firm got a $39,117.39 loan, which went into the operating account. The Bar said on March 26, 2021, $35,000 was transferred of the PPP funds to a payroll account. On April 6, 2021, Laurent transferred $12,000 from the payroll account back to the operating account, then to the trust account.

“The $12,000.00 transfer partially replenished the shortage in [Laurent’s] trust account,” the petition said. “Without the transfer, there would have been insufficient funds in the trust account to honor three checks respondent issued against his trust account that cleared beginning April 14, 2021.”

Laurent admitted in his sworn statement to putting almost a third of the PPP loan funds into the trust account.

Quinn question: “Is that a permissible purpose for PPP loan?

Laurent: “No, but it’s not really the loan money going into there because there is money going that’s being used for payroll throughout the year, so as long as that amount of money that’s being used for the payroll throughout the year is used for payroll, it can be still considered part of that PPP loan.”

Quinn: “But wasn’t this money put in trust, though? You don’t pay payroll out of trust, would you agree?”

Laurent: “Yeah.”

Quinn: “Was this money to cover a shortage?”

Laurent: “That money was used to cover a shortage. Yes. It was.”

Quinn: “Okay. So you — would you agree you used — I guess we’ll call it, “government money,” to cover a shortage in the trust account?”

Laurent: “I wouldn’t agree to that.”

Quinn: “You don’t agree to that at all?”

Laurent: No.

Quinn: “Even though we can show the money —”

Laurent: “You can track the money, but as long as that amount of money was used for the payroll, yeah.”

The auditor found, overall, Laurent “did not identify and correct other shortages in his trust account until the account over drafted in October 2021,” the petition said. “According to [Laurent’s] records, the shortage in his trust account was $278,449.58 as of April 30, 2021, and the shortage grew to $288,852.64 by Sept. 30, 2021.”