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Anthony Cappetta’s crimes illustrate the injustices that can occur when a client protection fund has to limit the money it pays to clients who are victims of lawyer-thieves. An undertaker-lawyer in a working-class west Chicago neighborhood, Cappetta stole between $10 million and $12 million from 140 people. Because of Illinois’ program caps, victims will be reimbursed only pennies on their stolen dollars. Many of Cappetta’s victims were elderly and lost their retirement savings. Several have since died. His thefts were discovered after he died unexpectedly, at age 60, in January 1997. Cappetta stole in several ways. Sometimes he simply raided his client trust account or forged clients’ names on checks intended for them. For example, when Michael Kasprzycki, who had worked his way up from meter reader to supervisor for a gas company, died in 1996, he left his $710,000 estate to his three sisters. They learned after Cappetta’s death that Cappetta had stolen the whole amount by forging their names on checks. The Illinois fund has informed the three sisters that they’ll receive the fund maximum for any claim — $10,000 total on the estate. The youngest of Kasprzycki’s sisters, Theresa Mudjer, 65, points out that not only did she and her sisters lose the whole of their inheritance, but they also have had to pay the Internal Revenue Service $93,000 each, a sum they can’t recoup until all legal hope of recovering the money is over. The theft left Mudjer with nothing to retire on. “I had planned on cutting back, but I have no retirement plans at this point,” says Mudjer, who works 62 hours a week at the auto parts store she owns. “I’m just going to keep working.” Sometimes Cappetta took money and pretended to invest it. He met many of his law clients through his funeral business, then turned them into investment clients. They, in turn, often persuaded other family members to invest their retirement savings with him. For example, Cappetta stole about $200,000 from Celeste and Thomas Reet, who had invested their retirement funds with him. The couple, in their early 50s, lost their life savings. They trusted Cappetta because Mr. Reet’s mother, Marjorie Haag, a retired office manager for an electrical contractor, had used his services. She lost $100,000, after selling her house and investing the money with Cappetta. The interest from the sale price was helping to cover her high medical expenses. “She’s 76, elderly, and sickly,” Ms. Reet says. “She spends approximately $6,000 a year on prescription medicine. Now she is just barely keeping her head above water.” According to a letter from the fund program, the Reets will receive $3,600 on the loss; Haag will get about half that. Mr. Reet says of their plans for the money, “Maybe it will go back toward retirement, but it will probably end up going for attorney’s fees.” These victims are lucky in one respect. Officially, no other state’s fund considers reimbursing for losses stemming from a lawyer-controlled investment scheme. A lawyer-client relationship is always a prerequisite, although most funds’ rules give board members some discretionary powers. “We decided to be more expansive because the situation was so egregious” in the Cappetta case, said Eileen Donahue, the Illinois client protection counsel. THEIR ONLY HOPE In June 1999, the cheated clients, as a class, wrested $1.7 million from a $3.5 million insurance policy paid to Cappetta’s widow. The court-approved settlement came after a protracted, tangled probate proceeding. Costs had eaten into the money, however, and the claimants would have collected about 14 cents on the dollar. But appeals of the settlement mean that the litigation will continue, and the court-appointed administrator’s attorney, Jack Joseph, has suggested in a letter to the victims that appellate reversal will mean the victims will never collect anyway. “Whatever nominal assets are on hand and/or may hereafter [be] likely to be collected,” he wrote, “are insufficient to pay the costs of administration, all of which must be paid before creditors can receive any distribution.” That leaves the Illinois client protection fund. According to Grogan, chief counsel for the state Attorney Registration and Disciplinary Commission, the program notified all of the people who had filed a claim with the probate court about the fund’s existence. It then closed the period for accepting applications from those victimized by Cappetta. Few funds initiate contact with victims. Illinois did so only because of the special circumstances of this case. Even so, only 75 people responded, ensuring that many would fall through the cracks. The most that Illinois’ fund pays for misdeeds of any single attorney is $100,000. With 75 victims splitting that sum, the compensation will not be very meaningful. Still, because the majority of Illinois’ claims are small and fall under the $10,000 cap, the program claims to have paid in full 81 percent of the claims between 1995 and 1999, according to Illinois’ program spokesman James Grogan. That’s scant consolation, of course, to the victims whose losses were higher — and sometimes devastating. Magdalen Beseman, a retired homemaker, is a 94-year-old widow without a family. When she was in her 80s, she gave Cappetta, whom she had known for years through the local civic association, her power of attorney should she become ill. After a hospital visit due to a fall, Beseman went into an assisted-living home to recover. According to Paul DeLeonardis, a neighbor whom she has known for 40 years and who now has her power of attorney, Cappetta began raiding her bank account shortly thereafter. According to court records, he took $84,520 from Beseman. That wasn’t discovered until after his death. Beseman, who has since moved into a nursing home, never became well enough to leave the assisted-care facility. The $14,000 of her savings that remained, and the $75,000 from the sale of her house, have now been used up to pay her medical bills. The nursing home has permitted her to stay for now, although she is unable to pay even half of the monthly bill. As a private facility, it could eject her. If it does, DeLeonardis says, she could become a ward of the state and be sent to a nursing home providing inferior care. The client protection program sent her a reimbursement notification: she will receive $1,500. “That pays for about 10 days in the nursing home,” says DeLeonardis. AN INCONSEQUENTIAL CHANGE Robert P. Cummins, of Chicago’s Cummins & Cronin, a member of the American Bar Association Ethics 2000 Committee, feels that Illinois lawyers are not doing enough about their client protection fund. “It sort of lost its luster as an issue when the Supreme Court took over,” he says. In 1994, when the client protection program was on the brink of bankruptcy, the Illinois Supreme Court stepped in to rescue it. The 22-year-old program had been run jointly by the Chicago and Illinois state Bars, and it had relied on voluntary contributions before then. The court took over its administration and made lawyers’ registration fees its source of funding. Six years later, it is clear that the court created a better client protection program, although hardly a generous one. Chicago attorney Denis Owens, of Owens, Owens & Rinn, represented the estate of a Cappetta victim who lost $1.1 million and received a letter awarding his client $10,000. “I have legal fees that are 10 times that,” Owens says. Still, that’s better than the response he got from the program before the Supreme Court takeover, when another client lost several hundred thousand dollars. “I got a letter back saying the fund has run dry. They just said, ‘Sorry.’ “ ILLINOIS BY COMPARISON Home of the American Bar Association, Illinois has the third-highest number of registered attorneys among the states, after New York and California. But New York attorneys pay $50 apiece each year to finance their fund, and California charges its lawyers $40 each, while Illinois lawyers pay only $6.30. The reimbursement limits in Illinois are clearly a direct result of the state’s limited funding commitment. The annual $140 lawyer registration fee, which bankrolls the fund and a number of other programs, hasn’t increased since 1988. New York also has limits on client reimbursements, but its cap is $300,000 per client. California’s is $50,000. New Jersey, with 5,000 fewer registered lawyers than Illinois, has a per-victim cap of $250,000, with a $1 million limit on all client losses from a single theft by a lawyer. Massachusetts, Connecticut, and Montana have no caps. Some big states’ funds have fat bank accounts. The Illinois fund is chronically starved. The average year-end balance for the state between 1996 and 1998 was $278,000.When the Illinois Supreme Court’s discipline committee took over the fund, it kept the existing claimant cap of $10,000, but it also created the $100,000 cap per lawyer theft. The decision, Grogan said, was due to budgetary concerns. “The commission didn’t want to be in the same situation as the Bar — of there being too many payouts — since there could conceivably be some big budget problems down the road,” he says. Donahue, the client protection counsel, said the caps are what allowed the state to open the fund to investor-victims in the Cappetta case. “If we were like Massachusetts, with no cap, we might have to deny the claims outright.” Cappetta apparently is Illinois’ largest lawyer-thief, but he’s not the only one whose thievery could bankrupt a modest-sized fund. Rockford attorney John Colman Tower, who was disbarred in 1993, stole $2.8 million. In re John Colman Tower, M.R. 9030. In 1995, entertainment attorney Saul Foos was convicted of stealing $7.2 million from clients, much of it through a Ponzi-type scheme. I n re Saul Foos, M.R. 10390. There are some changes afoot in Illinois. In July, the Illinois Supreme Court decided to raise the annual lawyer registration fee for active lawyers by $40 — the first increase in 12 years. It’s too early to say how much, if any, of the increase will go to the client fund. But even if all the new money, about $3 million, went to the program, it would still cover only a third of the losses suffered by Anthony Cappetta’s victims.

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