Attorneys’ Licenses Temporarily Suspended for Improper Use of Social Security Funds in Trust Account

April 18, 2011 | Erin Herbold

The Iowa Supreme Court recently recommended a six-month suspension from the practice of law for two attorneys (a husband and wife) licensed to practice in Iowa and Kansas.  In 1998, they moved their family to care for the wife’s bedridden mother. The mother was the beneficiary of a trust account in which her social security benefits were also customarily deposited. The wife was the trustee of her mother’s trust and routinely paid her bills and ordinary expenses from the trust account. The mother died in 2000 and the Social Security Administration (SSA) was notified of her death.  However, social security payments continued to be erroneously deposited into the trust account and the wife continued to withdraw money from the account for the payment of “legal services” she and her husband “rendered to the trust.” In other words, the social security benefits were commingled and withdrawn along with other assets of the trust account. The wife also withdrew money for upkeep of her mother’s home after her death. 

Upon discovering the discrepancy, the bank and the attorney for the mother’s estate notified SSA of the mistaken deposits.  Despite the fact that the husband and wife promptly reimbursed SSA, the U.S. Attorney for Kansas filed charges for felony fraud and illegal conversion of social security benefit payments. Under a plea agreement, the husband and wife plead guilty to the misdemeanor charges in 2003.  The Kansas Board for the Discipline of Attorneys found that the couple committed “professional misconduct” and suspended the wife’s license to practice law in Kansas for two years and suspended the husband indefinitely (he had been reprimanded in the past.) 

The Iowa Supreme Court Disciplinary Board filed a complaint against both parties and found that the couple “knowingly and willingly” converted government property (no explanation was given as to how the court reasoned that social security benefits were “government property”) for their own use and suspended their licenses to practice law in Iowa for an additional six months. The couple asked the Iowa Supreme Court to review the case, and the Court found that the couple engaged in “illegal conduct involving moral turpitude” (or fraudulent and dishonest intent), conduct involving fraud, dishonesty, deceit or misrepresentation and “conduct prejudicial to the administration of justice.  So, the Court upheld the additional six-month suspension for both parties.  Here, the husband and wife had no claim to the social security benefits and, according to the court, should have notified the SSA when they began erroneously receiving benefits after the mother’s death.  Iowa Supreme Court Attorney Disciplinary Board v. Polsley, 796 N.W.2d 881 (Iowa Sup. Ct. 2011).