Judge: No Priority Payment For Ponzi Schemer's Legal Fees

Judge: No Priority Payment For Ponzi Schemer's Legal Fees

 A Pennsylvania judge has denied a request to allow a convicted Ponzi schemer's lawyer to collect his legal fees from funds earmarked for victims.  Defense lawyer George Heitczman had petitioned the court to permit payment of his approximately-$20,000 in legal fees from funds forfeited from his client Richard Freer, who was recently convicted of a $10 million Ponzi scheme and sentenced to serve at least twelve years in state prison.  The move drew fire from both prosecutors and Freer's victims, as authorities had seized approximately $54,430 - meaning that victims would have recovered less than 1% of their losses while Heitczman would have recouped his entire fee for defending Freer.  

Heitczman had argued that the funds forfeited by authorities were not tied to the Ponzi scheme, but rather were Freer's personal funds that could be applied towards the approximately-$20,000 owed to Heitczman for his legal services.  After Heitczman filed his motion, prosecutors immediately signaled their opposition, noting that their intention remained to ask the court to apply the forfeited funds toward the $7.75 million in restitution owed by Freer.  Judge Sletvold may have also tipped her feelings as she issued an order seeking written responses to several questions she had relating to Heitczman's motion, including whether Heitczman's fees could be paid out of criminal proceeds or whether doing so would have any effect on Freer's ability to pay his restitution obligations.

At a hearing last week, Heitczman slightly changed his position, indicating that he was seeking only approximately $8,700 from the forfeited funds that could be traced to social security income received by Freer and his wife.  However, Judge Sletvold rejected that request, questioning how Heitczman could be entitled to priority over Freer's victims and signifying her belief that any payment towards Heitczman's legal fees would have to be commensurate with payments to victims.

Heitczman has indicated he does not plan to appeal the ruling.

 For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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