As wildfires ravage Southern California, the State Bar of California has filed disciplinary charges against a Bay Area attorney who allegedly withheld $400,000 in settlement funds from victims of a 2006 fire.
William James Reed of the Law Office of William J. Reed, in Alamo, is facing nine counts stemming from two checks that Pacific Gas and Electric Co. cut to him and five of his clients in October 2013. Those clients were landowners who suffered damages in a 16,000-acre wildfire in Yolo County that was sparked by downed power lines.
Reed failed to notify his clients that he received the settlement checks, and he later moved the money out of a trust account when those clients disputed his right to keep the funds, bar senior trial counsel Sherrie McLetchie wrote in a notice of disciplinary charges filed with the bar court on Dec. 4.
State bar attorneys also alleged Reed failed to work with PG&E counsel to dismiss his clients’ lawsuit after the settlement payments were made, and that he also failed to appear at a related motion hearing in November 2013.
Other counts in the complaint against Reed relate to his alleged failure to turn over documents to his clients after they fired him and falsely telling a bar investigator in September 2015 that half the settlement proceeds were still held in trust.
In April, Reed was arraigned in Contra Costa County on four felony charges related to the settlement funds, including grand theft of personal property and grand theft by embezzlement. Reed has pleaded not guilty and is expected back in court in February for a preliminary hearing, a spokeswoman for the Contra Costa County District Attorney’s Office said.
Reed’s former clients have yet to receive any money from the settlement, according to the state bar.
Reed said in an email Tuesday the disciplinary charges “don’t match with nor are they supported by any of the documents, court filings, statements, including the ~$950,000.00 contractual fee bill these parties incurred with me, and other evidence we have assisted the state bar in gathering in their intermittent investigation over the last four years.”
Reed referred further questions to his defense attorney, Michael Markowitz, a partner at Gagen, McCoy, McMahon, Koss, Markowitz & Fanucci in Danville. Markowitz declined to comment, saying he does not represent Reed in the state bar matter.
After Northern California wildfires killed more than 40 people and destroyed more than 8,000 homes this fall, the state bar issued a fraud alert that urged residents to be wary of potential attorney-related fraud.
The bar also warned lawyers about their ethical obligations to clients and potential clients seeking legal advice related to the fires.
Bar officials say Reed held several public meetings in Yolo County after the 2006 fire, offering to represent property owners who suffered damages. Reed’s attorney profile on the state bar website shows no records of discipline prior to the Dec. 4 notice of charges. He must respond to the current charges within 20 days.
The California bar’s notice of disciplinary charges against William J. Reed is posted below: