A State Bar of Texas employee is under investigation for the alleged misappropriation of funds from a Texas Supreme Court account primarily used to reimburse lawyers who overpaid annual fees.

State Bar president Bob Black, managing partner of MehaffyWeber in Beaumont, identifies the person under investigation as Kathy Holder, the Bar’s membership director. He says the Bar suspended Holder without pay on April 5.

“Fortunately, no lawyers have failed to receive their overpaid fees,” Black says.

State Bar and Supreme Court officials announced in an April 6 news release that they had notified the Travis County District Attorney’s Office about “a potential misappropriation of funds” by a State Bar employee, who serves as a deputy clerk of the court.

According to the news release, the State Bar discovered several “questionable checks” as accountants worked to reconcile bank charges with the Supreme Court account.

John Neal, first assistant Travis County DA, says he met with several State Bar leaders about the matter on April 6.

“We have agreed to investigate,” Neal says.

State Bar spokeswoman Kim Davey says the investigation is under way. She says State Bar officials met with investigators from the DA’s office on April 10.

Neal says he does not know yet how much money may be missing or how long the investigation will take.

“I can’t talk about the investigation at all,” Neal says.

A telephone call placed to Holder’s home seeking comment on the investigation was answered by a man who identified himself as Holder’s husband. “We don’t have anything to say about that [the investigation],” said the man, who declined to give his name.

Black, who was present for the April 6 meeting with Neal, says State Bar officials discovered the alleged misappropriation on the afternoon of April 5 and started reviewing bank records.

Black says that the State Bar regularly audits all of its accounts but that the account in question is not a part of the Bar’s accounting process because it is a Supreme Court account.

Supreme Court spokesman Osler McCarthy declines to confirm the identity of the person under investigation but says she is a deputy clerk of the court who is on the State Bar’s payroll.

McCarthy says the “apparent process” was for the individual to meet once a month with the Supreme Court’s clerk to go over the account, which was set up by the State Bar Act, Chapter 81 of the Texas Government Code.

Supreme Court clerk Blake Hawthorne refers questions to McCarthy.

Government Code §81.054(c) provides for annual membership fees to be paid to the Supreme Court clerk, who must retain the fees until the court orders their distribution. Under Government Code §81.032, the Supreme Court clerk, with the court’s permission, may employ a deputy to assist the clerk with discharging the duties for the fees, but the State Bar’s board of directors sets the deputy’s salary, which is paid out of Bar funds.

Michelle Hunter, the State Bar’s executive director, says Bar records indicate that its membership director traditionally serves as a deputy clerk for the Supreme Court to oversee the court’s account. Hunter says that Holder was sworn in as a deputy clerk on April 1, 1992.

Supreme Court Chief Justice Wallace Jefferson declines to discuss specifics about the investigation since it is ongoing.

He notes that he thinks the court and Bar need to look at their internal operations. “I am quite confident we will discuss all of our operations,” Jefferson says.