Michael Berlon also faces suits by former clients. (CHARLOTTE B. TEAGLE/AJC)
A Gwinnett County lawyer who is the subject of a criminal investigation and claims for more than $1 million from past clients filed for bankruptcy protection this week.
Michael Berlon filed a petition for Chapter 7 bankruptcy on Tuesday in U.S. Bankruptcy Court for the Middle District of Georgia, in which he claimed to have less than $300,000 in assets and nearly $2 million in liabilities. Berlon could not be reached immediately for comment.
Besides mortgages on his Loganville home and credit card debt, Berlon faces a $1 million judgment in a case filed last year in Gwinnett County Superior Court by former clients who accused him of taking $960,000.
“We anticipated that a bankruptcy filing might be imminent to try and delay our post-judgment discovery and collection efforts,” said Gaslowitz Frankel lawyer Robert Port, one of the attorneys for plaintiffs Raymond and Craig Hines. “We will pursue the matter in bankruptcy court, objecting to the discharge of our clients’ debt.”
Berlon also faces a default judgment of $123,000 in another Gwinnett case brought by a former client, David Zelby, who sued him in 2011 for legal malpractice.
“Because of [Berlon's] breach of fiduciary duty and not showing up at hearings, my client lost his settlement position in an underlying case he was trying to resolve and ended up paying way more,” said Zelby’s lawyer, solo practitioner William Cromwell. Berlon has appealed the judgment at the state Court of Appeals.
Both Cromwell and Port said they are embroiled in post-judgment discovery battles with Berlon and have yet to collect what is owed to their clients.
“I think the best we can hope for with the bankruptcy filing is to collect about $37,000 in punitive damages [which was included in the $123,000 judgment],” Cromwell said.
A trial that was scheduled to begin Monday to determine damages in another case, in which former client David Wengryn sued Berlon for fraud, has been stayed because of Berlon’s bankruptcy filing. Wengryn’s attorney, Cohan Law Group partner Michael Dunham, told the Daily Report last week that his client has received a partial judgment in which Berlon admitted liability, which means that Berlon cannot discharge his debt through bankruptcy.
Gwinnett County District Attorney Danny Porter confirmed earlier this month that his office is investigating Berlon but would not disclose the allegations against Berlon. The State Bar of Georgia’s General Counsel Paula Frederick said the bar notified the district attorney’s office, per its ethics rules, after receiving a confidential complaint of attorney criminal misconduct.