Trauner, Cohen & Thomas, a Sandy Springs, Ga., collections firm that operated for more than 30 years, has dissolved amid a whirlpool of litigation from former clients claiming that the firm failed to file suits on their behalf and used funds for those suits to pay its own expenses.
The State Bar of Georgia's Web site shows that partner Robert Trauner has left for a solo practice, while Michael J. Cohen has relocated to the Peachtree Law Center in Atlanta, and former managing partner Russell S. Thomas is with the Creditors Law Group in Norcross, Ga.
The firm changed its name to Thomas & Cohen earlier this year, wrote Kim M. Jackson of Hawkins & Parnell, who is representing the firm in the Georgia cases, in an e-mail response to inquiries.
"At that time, Mr. Trauner was no longer affiliated with the firm," Jackson wrote. "The firm's operations are limited to winding up its affairs."
A telephone number on the Web site for Trauner, Cohen & Thomas, which is still online, is answered by an automatic message for Creditors Law Group and includes an extension for Thomas.
Jackson said the Web site is "outdated."
Trauner's legal woes began in July, when a suit filed in U.S. District Court for the Northern District of Georgia said NCO Financial Systems gave the firm more than $1.3 million to reimburse filing fees and other expenses relating to more than 15,000 lawsuits the firm was to handle on NCO's behalf. Instead, the suit says, Trauner Cohen used the money for its own operating expenses, and inflated its reimbursement requests beyond the costs of actual filing fees.
On Sept. 3, a suit was filed by Midland Credit Management in California's San Diego County Superior Court seeking $1.7 million plus interest, punitive damages, restitution and legal fees relating to "30 boxes of files for which Trauner had submitted requests for reimbursement for court costs for lawsuits that had never been filed," which were discovered during a May audit.
The suit, filed by Kirk A. Pasich of Los Angeles' Dickstein Shapiro, accuses Trauner Cohen of breach of contract, negligence, legal malpractice and fraud, among other charges, and notes that many of the non-filed suits have languished beyond the relevant statutes of limitations.
That case has since been transferred to federal court in California's Southern District.
And on Oct. 2, a suit filed in federal court in Nashville, Tenn., accuses the firm of defaulting on a 2006 loan of almost $1.5 million, and includes separate charges that an affiliated company, National Asset Recovery Inc., defaulted on a $249,084 loan made at the same time. Thomas is listed as NAR's chief executive officer on the Georgia secretary of state's Web site, while Cohen is listed as chief financial officer and secretary; both are named individually as co-defendants, as well.
The suit, filed in Tennessee's Middle District by Roger G. Jones and Austin L. McMullen of Nashville's Bradley Arant Boult Cummings on behalf of plaintiff ACF 2006 Corp., accuses the defendants of breach of contract and conversion and says the loans were secured by collateral including all of the accounts and intangibles belonging to the firm and collection agency.
In a new suit filed Sept. 18 in Fulton County Superior Court, Zenith Acquisition Corp. and Northstar Capital Acquisition claim the firm failed to pay $124,005 in court filing fees for the companies' collection actions, including $64,490 that plaintiffs say they had already paid the firm.
The new complaint also says an unspecified number of "bad checks Zenith had purchased" were turned over to the firm for collection, but "upon information and belief, the bad checks were never even loaded into [Trauner's] system."
Jackson, the Hawkins & Parnell partner representing the remnants of the Trauner firm, wrote in his e-mail, "The firm no longer does business with the parties to these lawsuits."
"The firm has cooperated fully with all of its clients and former clients, and continues to cooperate fully with them," he added.
As to Robert Trauner, he said, "Mr. Trauner had nothing to do with any of the issues raised in the lawsuits and is no longer associated with the firm."
Bryan Cave-Powell Goldstein partner W. Scott Sorrels, who filed the Fulton County suit on behalf of Zenith, said his client did not wish to comment.
Stephen E. Baskin, managing partner of Kilpatrick Stockton's Washington office, who is leading that firm's team for plaintiff NCO, earlier declined to comment on that case; and the attorneys for the plaintiffs in the California and Tennessee cases did not respond to requests for comment.
Another Hawkins attorney, K. Lynn Finateri Silbiger of the firm's Los Angeles office, is representing Trauner in the California case.
The cases are: in Fulton County Superior Court, Zenith Acquisition Corp. v. Trauner Cohen & Thomas, No. 2009CV175307; in U.S District Court for Georgia's Northern District, NCO Financial Systems v. Trauner Cohen & Thomas, No. 1:09-cv-01787; in U.S District Court for the Southern District of California, Midland Credit Management v. Trauner Cohen & Thomas, No. 3:09-cv-02187; and in U.S District Court for the Middle District of Tennessee, ACF 2006 Corp. v. Trauner Cohen & Thomas, No. 3:09-cv-00928.