Solicitor jailed for 10 years for misappropriating millions meant for charities
A Sydney-based solicitor has been jailed for 10 years for misappropriating more than $6 million that two deceased clients had left to charitable organisations.
Mark Lee O'Brien was handed the sentence in the District Court of NSW after it found him guilty of fraudulently obtaining more than $6 million from his clients in 2015, 2017 and 2018 to purchase a $3.5 million property and to allegedly intend to use some of the funds to keep his firm afloat.
He will serve a non-parole period of six years and his wife, Therese O'Brien, will serve three years by way of intensive correction order. Mr O'Brien’s practising certificate was immediately suspended by the Law Society in 2019 following a referral after his fraudulent behaviour was eventually suspected.
In misappropriating the funds meant for charities, Mr O'Brien employed a number of other fraudulent methods for covering up his behaviour, including transferring under a different name, making smaller donations to charities to obtain a receipt and using letterheads from the organisations to create fake letters appearing from the chief executives.
The letters had the “undoubted capacity” to mislead any prospective audit of the trust account by the Law Society and, in its due course, “helped to achieve that objective”.
Mr O'Brien was eventually discovered by colleague John Maguire who worked alongside him at law firm Harrington, Maguire and O'Brien. When Mr Maguire questioned how Mr O'Brien was able to afford the $3.5 million property when his previous one had sold for less than $1.5 million and was met with pushback, he became suspicious and asked that an accountant review the firm’s trust accounts.
In an interview with police, Mr O'Brien admitted to opening an account with his wife that was deliberately meant for the fraudulently obtained monies and that some of it were to be used to financially support the “struggling firm”. He said he had become concerned that the firm would go under and he needed to secure his future.
Particulars of the $6m misappropriation
By 2015, the District Court acknowledged that Mr O'Brien was “to all external appearances, a respected and reputable small firm solicitor” who had been working for some time at a firm that “did not enjoy the financial success of many other firms”.
Despite this, the firm had attracted some high-valued estates, including that of Mr O'Brien’s first client. After her passing, her estate was valued at $2.8 million, some of which was left to several charitable organisations. As the executor of her will, her nephew retained Mr O'Brien to assist in administering and settling the estate.
The client had specifically left two sums of $100,000 each to the St Vincent de Paul Society and to the South Eastern Sydney Local Area Health District. She also left a further $1.3 million to be divided equally between the Paraplegic and Quadriplegic Association of NSW (Paraquad) and the Royal Australian and New Zealand College of Ophthalmologists’ Eye Foundation (RANZCO).
In the course of purportedly giving effect to client instructions, Mr O'Brien misappropriated the first two $100,000 into his personal bank account. He then sought to cover up this activity by making false entries into the solicitor’s firm trust ledger that had falsely recorded the monies went to the intended beneficiaries.
Some weeks before this initial misappropriation, Mr O'Brien and his wife had opened a bank account “for the purpose of receiving future fraudulently obtained funds”. In September 2015, the $1.3 million meant for Paraquad and RANZCO Eye Foundation was withdrawn from the trust accounts and transferred into their shared account.
“This second fraudulent acquisition of funds which had been intended for the nominated charitable organisations revealed a degree of pre-planning and some level of sophistication and refinement in the steps taken to conceal the crime from ready disclosure or discovery,” the District Court wrote in judgement.
The cheques were withdrawn using a name other than his own to reduce suspicion. He then made false entries in the trust account ledger and prepared forged documents that intended to reflect that the funds had gone to the charities.
The total amount taken from this client was in excess of $1.5 million. Other funds misappropriated during 2015 was used to lease a BMW, gift $50,000 to his child and the creation of a separate account in his own name on which he operated a credit card that was utilised for payment of monies otherwise liable to be paid by the firm.
Two years later, “with self-confidence undoubtedly buoyed by the fact that the earlier misappropriations had not been discovered and that his forged entries in the trust account ledger and elsewhere had remain undetected despite the Law Society trust account audits”, Mr O'Brien tried again, this time with retirement decisions in mind.
In November 2017, “perchance by way of a preliminary ‘tester’”, he transferred $5,000 from a bank account of a second client into his own personal account. After he had successfully “abused his position of trust”, he then transferred a further $100,000 from his client’s account and into the account he shared with his wife.
Four days later, he transferred an additional $50,00 into his superannuation fund account, which was self-managed and administered by him and his wife. When the client died in January 2018 – having left an estate valued in excess of $6.6 million – he quickly began taking advantage of the funds in his trust.
Shortly after her passing, the aged-care centre she was living in had refunded a deposit of $1,773,496. Three days later, Mr O'Brien drew a trust account cheque in the full amount of the refund and made it out to his wife. A separate trust account ledger was opened in her name and the entry was made as “proceeds of estate”.
When inquiries were made of his partner about this trust account, Mr O'Brien said that his wife had been a beneficiary under a deceased estate. The District Court said this account was a “thought-out subterfuge for this particular misappropriation”.
Shortly before his next misappropriation of $2.7 million owed to the St Vincent de Paul Society, Mr O'Brien and his wife purchased a house in Bondi Junction. He used the same method he had employed some years earlier to create a false trust account entry and forged a letter purportedly from the charitable organisation’s CEO.
Mr Maguire was not aware of the misappropriations or fraudulent activity of his partner until he questioned the property purchase. Mr O'Brien at the time had provided a written letter asserting that his wife had taken independent advice and claimed that Mr Maguire had no right to any of her personal financial information.
After confronting Mr O'Brien following a trust account audit by an independent accountant, Mr Maguire reported the misappropriation to the Law Society.
It is not known whether he had actually used any of the misappropriated funds for the firm’s purpose.
The entire judgement can be read on AustLII: R v Mark Lee O'Brien; R v Therese O'Brien  NSWDC 67 (16 March 2021).