State of Connecticut Superior Court Raymond E. Baldwin Courthouse in Middletown, Connecticut. (Photo: Joe Mabel via Wikimedia Commons)
A Middletown law firm has sued one of its own managing members for allegedly stealing more than $2 million from the firm.
The nine-page lawsuit, which was filed April 10 in Middletown Superior Court, accuses Sean M. McHugh of “statutory theft.” The lawsuit, filed on behalf of McHugh, Chapman & Vargas, accuses McHugh of diverting “profits of MCV for his own personal use, including, but not limited to, falsifying expenses and submitting the same to MCV for payment in order to steal profits from MCV and to avoid personal state and federal income tax liability.”
McHugh has access to the firm’s financial accounts, including bank accounts, trust accounts and credit card accounts, according to the suit.
McHugh, whose wife Lori McHugh is also an attorney at the firm, is a managing member and partner, and owns two-thirds interest in it. As the managing member, Sean McHugh is responsible for the day-to-day operations of the firm and its finances.
According to the lawsuit, partner David Chapman, who holds one-third of the interest in the firm, held a meeting with other members on April 7 to determine whether to commence litigation. McHugh’s vote was excluded from consideration in accordance with state law.
The firm employs 17 people, including six attorneys, according to its website.
The lawsuit also maintains that McHugh violated the Connecticut Unfair Trade Practices Act (CUTPA) with regard to filing tax returns.
McHugh’s actions “caused MCV to file false and inaccurate tax returns” and “directed or otherwise caused MCV to reimburse him for his false and improper personal expenses from MCVs operating funds,” according to the lawsuit.
Under the statutory theft count, it’s alleged that McHugh’s “knowing and intentional acts” caused the firm to suffer and “will continue to suffer harm” in violation of the Connecticut General Statutes.
The lawsuit seeks compensatory and punitive damages.
The firm mailed a copy of the lawsuit to the Connecticut Commissioner of Consumer Protection and the state attorney general in accordance with CUTPA mandates.
McHugh did not have an attorney as of Thursday. McHugh, who lives in Haddam, declined to comment.
The law firm is represented by Thomas J. Finn and James E. Regan of McCarter & English in Hartford. Neither was available for comment. Chapman was also not available for comment.