Disbarred lawyer's use of client funds is unusual

Susan Hense to plead guilty Monday

Gavel. (MGN)
Gavel. (MGN)

CEDAR RAPIDS — A Cedar Rapids attorney wants the public to understand most of the funds disbarred attorney Susan Hense was holding in client trust accounts should have never been in those accounts.

John Titler, with Howes Law Firm, said he looked into what happened with two of the victims and their funds Hense deposited in the trust accounts should have never been in her possession. Titler’s concern is the public may think lawyers have “huge sums of money sitting in their trust accounts” and those aren’t normal practices.

Hense, of the former Hense Law Firm, is charged with one count of wire fraud in federal court, according to a criminal complaint. Hense admitted last year to stealing $837,011 from her clients to support her “gambling addiction” at the time of her disbarment last year. She will plead guilty 11 a.m. Monday in U.S. District Court. If convicted of wire fraud, she faces up to 20 years in federal prison and restitution.

According to the plea agreement filed Tuesday, she devised a scheme to defraud her clients and to obtain money by telling them their money would be held in a client trust account on their behalf. Hense, from December 2009 through Dec. 27, 2012, intended to steal a portion of each client’s money.

Over the course of the scheme, she made unauthorized withdrawals from the accounts, transferring those funds into her business and personal accounts, according to the plea. She also used clients’ trust money to pay other clients she owed. She stole and misappropriated $837,011 in client funds.

Titler said a trust account isn’t a holding place for assets. It’s a holding place for client’s deposits against fees for legal work. Attorneys may also hold client funds if they are an administrator of the client’s estate or holding funds in escrow pending completion of a real estate transaction.

Matt Piersall of Piersall Law firm in Cedar Rapids, said Hense had Brad Huff, one of her former clients, signed over $79,000 from his mother’s estate to her law firm but then Hense took it out and used it for her own personal benefit.

Huff told a Gazette reporter Monday that Hense also required him to pay her $1,500 in advance before she would do any work on his mother’s estate.

Piersall said he doesn’t usually require a fee upfront but that part wasn’t illegal. Hense in Huff’s case also took out $3,000 for her fees on top of stealing the over $79,000 from him and then didn’t include the $3,000 in the “confessions of judgment” she filed in state court, which stated she stole money from 15 clients. The filing allowed the court to enter a judgment against her for the amounts owed so former clients can try to collect their money.

Huff and the other victims did receive reimbursement from the Iowa Client Security Commission but it’s just a percentage of what Hense stole. Huff received $16,914 for his over $79,000 claim from the commission fund.

The commission’s client security fund provides reimbursement from the legal profession for losses caused to the public in cases where lawyers betray their client’s trust and misappropriate funds, said Steve Davis, Iowa judicial branch communications officer. Every lawyer practicing in the state pays into it and no other profession provides a self-funded reimbursement program of this kind. The maximum payment from the commission’s client security fund will pay $150,000 per attorney and that was split among Hense’s 14 clients, said Davis. The remaining claim wasn’t eligible for reimbursement from the fund.

Davis said this was the largest claim paid by the fund. The final distribution of approved claims was made in August.

According to the plea agreement, Hense will be ordered to pay at least $837,011 in restitution for the victims. Hense agrees to cooperate in efforts to collect the restitution “by any means the United States deems appropriate.”