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#2228950 - 01/14/20 03:29 PM Misuse of IOLTA- SAR?
chuckchuck Offline
Junior Member
Joined: Apr 2018
Posts: 45
We have a customer who used to be a sole practitioner, he has since gone out of business, but continues to use his IOLTA account as his personal account. His former operating account is closed, but his IOLTA did not. At this stage he is working for another firm and is running his own personal payroll through his IOLTA and then just takes it out in cash. The cash is not structured or high dollar amounts.
Is this a SAR worthy infraction? Initially all the cash leaving was suspicious but we have figured out what he is doing.
It's not the intent an IOLTA was used for but I am not sure it's suspicious and/or illegal.
It is violating our states' BAR regulations, but other than that? I would like some feedback on how others would handle this one.

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#2228957 - 01/14/20 04:08 PM Re: Misuse of IOLTA- SAR? chuckchuck
rlcarey Offline
10K Club
Joined: Jul 2001
Posts: 80,359
Galveston, TX
Close the account and move on. Report the infraction to the BAR association if the rules require that.
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#2228971 - 01/14/20 04:52 PM Re: Misuse of IOLTA- SAR? rlcarey
TomS Offline
Gold Star
Joined: Jan 2004
Posts: 315
I agree with rlcarey. An IOLTA account is set up for a specific purpose. If that purpose no longer exists the account should be closed, or at least reclassified as a personal account.

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#2229050 - 01/15/20 01:40 PM Re: Misuse of IOLTA- SAR? chuckchuck
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,608
Pulling people out of the ditc...
sounds like he is using the IOLTA to avoid paying any bank fees, and you've caught him doing so. From you limited description it doesn't sound like any client money is running through this, just his own. So i'd close it and move on as well, but i probably would not bother reporting to the state bar association unless you've determined he is commingling client funds with personal funds.
Providing alternative truths since the invention of time

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