May 8, 2009

The Wall St. Journal Legal Blog reports that Arkansas plaintiffs' lawyer Gene Cauley "cannot find" over $9 million due to his clients, according to federal court records. Cauley was one of the lead plaintiffs' lawyers in a 2004 securities suit that settled in 2006 for $65.8 million.

According to an April 20 Federal court transcript, Cauley informed co-counsel that he could not produce about $9.3 million in settlement funds. He told Judge Jed Rakoff that the missing funds "are presently unavailable." but declined to elaborate, citing his privilege against self-incrimination.

"The inference I'm drawing is that Mr. Cauley has either misappropriated or otherwise misallocated these funds," Rakoff announced. "I trust there will be a prompt investigation of this matter by the U.S. Attorney's office."..."When I hear people cracking lawyer jokes, I always take umbrage and point out that the profession of Lincoln, the profession of Madison and Jefferson often represents the highest ideals in our society," the judge said. "But recent events give me pause about how true that is."