Lawyer ‘Stole Money and Lied About it’

On behalf of Raymond Giudice P.C. posted in Criminal Defense on Monday, October 28, 2013.

Whenever Cedartown lawyer Miles Gammage was feeling flush, he would take his private jet on gambling jaunts to neighboring states, often bringing a law firm associate with him, a Polk County suit by the lawyer’s former client says.

Gammage supported that lifestyle, and subsidized his firm’s payroll and operating costs, at the expense of dozens of clients for whom he had secured cash settlements for serious work-related injuries, according to federal prosecutors in Atlanta.

Gammage, 60, is scheduled to begin serving a five-year, 10-month federal prison sentence on Nov. 4.  In January, when he pleaded guilty to fraud, his lawyer described in a sentencing memo how Gammage had fleeced his clients:  “He simply deposited settlement checks into his trust account, lied about possessing those funds to clients, and used those funds for his own purposes.  When clients became suspicious, he did not create a false paper trail or recruit third parties to aid in his deception, he merely provided an amount of cash to each victim to alleviate their fears, referring it to as an ‘advance’ or ‘interest free loan.'”

Now representing himself, Gammage who has been disbarred, is appealing the sentence.

It’s a predicament no one could have forseen when his father, E. Lamar Gammage Jr. – known as the grandfather of workers comensation litigation in the state-founded the Cedartown firm in 1952.

Miles Gammage was admitted to the State Bar of Georgia in 1979 after earning his law degree from Cumberland School of Law at Samford University in Birmingham.  Said Atlanta attorney David Hungeling, who has sued Gammage and his firm on behalf of 11 Gammage’s former clients in Polk County Superior Court:  “He is an incredibly charismatic, nice, interesting guy.  These folks, of course, all trusted them.”

Until a financially strapped client to whom he owed $90,000 reported Gammage to the state Board of Workers Compensation and the State Bar of Georgia in 2010, the lawyer had defrauded his clients of more than $2.5 million in workers compensation settlements, court records and prosecutors say.

“There were victims from all over the state of Georgia,” said joseph Burford, director of the Prosecuting Attorneys’ Council of Georgia, which was asked to assist the Georgia Bureau of Investigation in a 2011 investigation of Gammage that was prompted by the workers compensation board investigation.

In November 2011, the GBI charged Gammage with 13 counts of theft and forgery in connection with the misappropriation of settlements form five of his clients, said Chuck Olson, PAC’s general counsel.  Those charges are pending but will likely be dismissed now that the federal case has been resolved, he said.

Olson said the GBI investigation progressed, “the number of victims began to increase exponentially.”  He said that when the total suspected thefts topped $1 million from more than 100 victims, ” We realized the case was bigger than what we could actually handle.  That’s when we alerted the U.S. Attorney’s office.”

Last January, Gammage pleaded guilty to a federal criminal information charging him with a single count of mail fraud associated with the misappropriation of his clients’ funds and surrendered his law license.

This month, U.S. District Senior Judge Robert Vining Jr. ordered Gammage to repay more than $1.3 million to his victims once he is released from prison:  $200 a month plus 25 percent of any monthly income exceeding $2,000.  Federal prosecutors have also sought to depose Gammage prior to his departure for prison to determine whether he has any assets that could be used to repay his former clients.

“We heard the stories about the fancy houses, the fancy cars, the planes,” said Assistant U.S. Attorney Russell Phillips.  But investigators have found few assets that Gammage could forfeit to repay his victims.  Gammage has also claimed in federal court papers that he is now indigent.

“I can assure you the FBI looked into it,” Phillips aid.  “If we thought there was anything substantial we could have seized and forfeited and made available to the victims, we would have done it.”

Gammage twice has sought to put off going to prison by claiming medical ailments, including surgery he scheduled after filing his notice of appeal that he claimed was needed to repair the ravages of a “40-year addiction to prescription nasal spray.”  Vinings granted him one reprieve but on Oct. 17 denied a second stay for what Gammage claimed was a neck injury he said he sustained earlier this month while moving boxes.  Gammage had sought to delay the start of his prison term until Friday.

Hungeling said that at Gammage’s July sentencing, “The courtroom was packed” with what he said appeared to be more than 60 of Gammage’s former clients and their families, some in wheelchairs.

“There were about a dozen victims who spoke,” he said.  “Every one of them would bring tears to your eyes listening to their stories. …Every one of them was in a desperate situation.”

Each of the former clients who testified at Gammage’s sentencing hearing “spoke about how much they trusted Gammage,” Hungeling continued.  They lawyer, he said, “was preying upon the people who are most easily victimized.  They are out of work; they are injured; they are not sophisticated in legal matters.  They come to a lawyer and trust the lawyer is going to watch out for them.”

Gammage’s firm, he said, advertised heavily and had “a huge presence” in Georgia;s northwestern counties, especially in Floyd, Polk and Bartow counties.

The voice mailbox on Gammage’s home phone was full and he could not be reached for comment.  His former attorney, Christopher Twyman of Cox, Byington, Brumlow & Twyman in Rome, also could not be reached.

Twyman’s sentencing memo acknowledged how Gammage victimized how many of his clients in the simplest of ways.

“No intricate planning was involved.  No shell corporations were used.  No offshore accounts concealed funds.  No fraudulent identification papers were created or used.  No other people were required to further the scheme,” Twyman wrote.  “While there are certainly many victims and a large amount of money involved, at its core.  Gammage’s scheme is about as unsophisticated as it gets:  He stole money and lied about it, using nothing more than his own credibility and reputation to avoid detection.”

The memo also suggested that any sentence should take into consideration Gammage’s disbarrment because ‘he is now permanently deterred from further criminal conduct of this kind.  [He] will no longer be in a position to settle cases or hold trust funds for his clients.”

Mark Giuliano, special agent in charge of FBI’s Atlanta office, said after Gammage was sentenced in July that the damage he left in his wake was “enormous” and “will be felt by his former clients for quite some time.”

“It is our sincere hope that those many victims of Mr. Gammage’s greed will take some solace in the fact that he has been held accountable for his criminal actions,” the special agent said.

Hungeling, who has talked with Gammage, said the lawyer, who has been defending himself in the Pol County suit, insisted he wasn’t a criminal.  “The way Miles would tell the story, this all snowballed, and he really wasn’t a crook,” Hungeling said.  “He would say he inherited the firm from his father.  It was heavily staffed.  His father, and then Miles, paid the staff very well.  It was a huge monthly nut to cover between the [law firm] building and all his people.”

To keep the firm afloat, Hungeling said Gammage would take settlement checks he had negotiated for clients and deposit the funds in his firm’s escrow accoutn, then draw on the funds to operate his firm.

As clients whose workers compensation benefits had ended when their company’s insurers had settled with Gammage but had never received their settlement checks became restive at the delays and increasingly desperate for funds, the lawyer would put them off with explanations that a settlement check either had not been sent or was still waiting to clear, Hungeling said.  “He just had all kinds of excuses for people.”

To pacify his clients, Gammage adopted a practice by which he would dole out small cash payments from what was actually their far larger settlement “in dribs and drabs and nickels and dimes,” Hungeling explained.

But at a certain point, Hungeling  said, ” So many people were coming and demanding their money, he didn’t have enough to pay them all off.  It truely snowballed.”

Nor have all the misappropriated funds been recovered or repaid, the lawyer said.

“The difficulty is that we are not aware of any kind of Cayman Island accounts or any other big assets the guy has,” Hungeling said.  “I just think he spent all the money.  I think it went to support all his extracurricular activities as well as pay his associate and his staff members.”

While waiting for settlement checks that Gammage had channeled into his personal accounts, some of his clients were forced to forego medical treatment, or skipped a house payment, because they didn’t have the funds to pay for it.  Hungeling said, “Most of these people were working class, working poor,” he said.  “They were already living on the edge.  To have this happen to them … was devestating.”

In fall 2010, Randy Pierce, one of Hungeling’s clients in the Polk County suit against Gammage, reported Gammage to the state Workers Compensation Board and to the State Bar of Georgia after Gammage for months had held back payment of Pierce’s $90,000 settlement check.  Gammage had recieved the check on July 9, 2010, according to disciplinary papers filed by the state bar with the Supreme Court of Georgia.  Gammage had earned$27,500 in fees in the case, which was paid in addition to Pierce’s settlement, according to the bar investigation.

Gammage, according to the bar, signed Pierce’s name to the check without notifying Pierce and without his client’s authorization.  The lawyer then deposited it his escrow account.

The problem for Pierce, and others like him, is that once the company’s insurer settled a case with Gammage and cut a settlement check, weekly workers’ compensation benefits checks and medical expense checks ceased, Hungeling explained.

In settling a workers compensation claim, “Your medical coverage ends,” he said.  “You are trading future benefits for a lump sum cash payment right then.”

Beginning in July 2010, Pierce and his wife began making what became a string of increasingly urgent inquiries about the missing settlement check, according to the state bar, but Gammage and his staff repeatedly insisted they had not received it.

In an effort to mollify Pierce, from July through September 2010 Gammage forwarded small sums to his client for perscriptions and a leg brace, and multiple checks ranging from $1,000 to $2,500 for living expenses, according to the bar investigation.

Only after Pierce complained to the state Workers Compensation Board did Gammage pay him the $90,000 balance, minus the monies he had already paid him.  According to the state bar, in order to pay Pierce what he owed him, Gammage had to use funds from another client’s settlement proceeds.

The State Bar filed a formal complaint against Gammage recommending disciplinary action in July 2011 and called the GBI, according to Prosecuting Attorneys’ Council lawyers.  In January 2012, Gammage surrendered his law license, acknowledging that his mishandling of his clients’ settlement funds were offenses punishable by disbarment.

Rome attorney John Strain, who represented another former client whose name Gammage had forged on a settlement check, recalled that when he confronted Gammage, after months of excuses and delays, “I used an old country term.  I said, ‘Miles, your holding ‘stole’ money.”

“He promised it was in his trust account,” Strain recalled.  “He said he would get it.”  When the promised funds still failed to materialize, Strain said he confronted Gammage again.

“He said he was borrowing it [the money] from a doctor in Cedertown.  Then he said he was borrowing it from his mother.  Then he said it was in a trust account.  Finally, he said he didn’t have it.”

“I called him a thief,” Strain recalled.  “I accused him of being a liar.  He had been doing this for a very long time.”

SOURCE:  www.dailyreportonline.com,  “Lawyer ‘Stole Money and Lied About it’  R. Robin McDonald, October 28, 2013.