Lawyer Faces Embezzlement Trial, Disbarment : Settled Cases and Took Money Without Telling His Clients, Authorities Charge

A Chatsworth personal injury lawyer embezzled at least $125,000 from dozens of clients by settling insurance claims without their knowledge or consent and keeping the money, the State Bar of California alleges.

State Bar officials are seeking the disbarment of Richard F. Murkey, who they say swindled 29 clients and their doctors and committed a host of violations of his “oath and duties as an attorney.”

Acting on three of these cases, the Los Angeles County district attorney’s office has filed five felony counts of theft and forgery against Murkey, who is scheduled for a preliminary hearing today in Van Nuys Superior Court.

Murkey, 42, once accused by his grandmother of trying to cheat her out of her life savings, is temporarily prohibited from practicing law pending the outcome of formal disciplinary proceedings by the State Bar. A Bar referee ruled that Murkey has “demonstrated a reckless disregard” for his clients and that his continued practice could cause “substantial harm to the public.”

Earlier this year, San Fernando Superior Court Judge David M. Schacter said Murkey is a disgrace to the legal profession and ordered him jailed for contempt of court for refusing to turn over several case files to Gerald Steinmetz, a former client. Steinmetz wanted the files to give to his new lawyer, whom he hired after learning that Murkey had settled his personal injury case with an insurance company without giving him any money.

Bad-Checks Accusation

Susan Leventhal, a State Bar attorney, said when Murkey settled cases without consulting clients, he frequently accepted sums much lower than the clients would have agreed to.

When clients discovered their cases had been resolved--usually by contacting insurance companies directly--Murkey wrote them checks that frequently bounced, the Bar alleges.

Murkey also kept settlement money that was to be used to pay clients’ medical bills, and when doctors contacted him to try to collect, he denied that he was responsible for paying them, the Bar says. In some cases, accident victims were harassed for months by collection agencies hired by angry doctors, according to the Bar.

One client, Patrick Boyd, said his credit rating was ruined because Murkey refused to give him any of an $11,900 insurance settlement, which Boyd needed to pay more than $4,100 in medical bills.

According to a former employee, who worked for Murkey for a year, the attorney had little interest in his clients except as a source of revenue.

Charlitte Sweeney, of Woodland Hills, who began working as a legal secretary in Murkey’s office in July, 1985, recalls that “he seldom came into the office. He would just come in on Saturdays and sign up new clients and then never see them again.

“It became very apparent to me that money was being amassed. Cases were being settled, but the doctors were not being paid,” she said. “I saw the checks come in, I knew they had been deposited.” But she said Murkey forbade his office staff to tell clients that their settlement checks had been received.

Murkey’s grandmother, Evelyn Wadell, said her grandson raided two of her savings accounts after she had asked him to keep her passbooks while she visited relatives in Ohio.

In a lawsuit filed in 1979, Wadell said that when she returned from her trip, Murkey refused to give back the passbooks for the three accounts, which had contained all the money she received from the sale of her house in Sacramento--her life savings.

By contacting the bank, she learned that most of the money had been removed from two of the accounts, the lawsuit stated. The case was settled out of court about a year after it was filed. Court records do not indicate how the suit was resolved.

Murkey is in custody in lieu of $750,000 bail for the criminal and contempt charges. According to Schacter’s order, if Murkey posts bail he must document that none of the money came from his legal practice. He must also turn over his passport to ensure he does not flee the country.