Gallagher lawyers confronted Roth about secret Veridian loan - KWWL - Eastern Iowa Breaking News, Weather, Closings

Gallagher lawyers confronted Roth about secret Veridian loan

Gallagher lawyers confronted Roth about secret Veridian loan

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For David Roth, it all unraveled quickly, says Attorney Steve Wandro, who now represents former Gallagher, Langlas & Gallagher lawyers, George Weilein and Tim Boller,  in an ongoing case which has virtually destroyed the once prestigious Waterloo law firm. 

Wandro, of Wandro and Associates of Des Moines, says Gallagher lawyers confronted their company President, David Roth, in late September, 2014, about a letter which had arrived at the Gallagher law firm. 

The letter was a collection notice from Veridian Credit Union, the state's largest credit union, based in Waterloo. Attorney Wandro says that alarming collection letter immediately raised red flags, because no one at Gallagher, Langlas & Gallagher knew anything about a Veridian Credit Union loan. No one, that is, except the Private Corporation's President, David Roth. 

Shortly after being confronted by his partners, Roth took his own life, hanging himself in a Hudson storage facility and igniting a firestorm of accusations involving Roth and his law firm. 

Over the past several months, dozens of former clients, creditors and financial institutions have filed Probate Court claims against the Roth estate. Ultimately, it's believed as many as one hundred claims against the Roth estate could be filed. 

The allegations against Mr. Roth are wide-ranging. Some alleged victims say Roth stole their money from lawsuit settlements and insurance payouts, while others say Roth simply borrowed money from them, but, never paid them back.

To date, those claims total more than $10,740,000. Steve Wandro says those claim totals could reach $13-million, and that's one of the reasons lawyers George Weilein and Tim Boller filed four claims against the Roth estate, 

Each claim is for $11-million. But, attorney Wandro says those claims are known as 'contingent claims,' in which the dollar amount can be modified as the claims themselves increase in scope. 

They are also filed to help protect the other partners as the case moves forward. The so-called 'contingent claims' are basically all-inclusive, in that they also include the dollar amounts of the previously filed claims against the Roth estate. It's not a $44-million claim, as it might appear at first glance. 

In its own court documents on file in Black Hawk County, and in an earlier media statement, the Gallagher, Langlas & Gallagher law firm denies having any knowledge of Mr. Roth's alleged wrongdoings. 

Attorney Steve Wandro told KWWL, 'Mr. Roth went to great lengths to hide his activities from his partners, including setting up a phony bank account.” 

As reported earlier by KWWL, that alleged phony bank account was also discovered by the law firm's professional liability insurance carrier, Minnesota Lawyers Mutual. The liability insurance company, in its court filings, claims Mr. Roth had what it calls a 'secret bank account' at a Waverly branch of Veridian Credit Union. 

Some of the alleged victims have already gone to court, naming both Mr. Roth and the law firm.

One question is to what extent, if any, the other Gallagher partners could be held liable for Mr. Roth's actions while he represented the law firm. 

Some Iowa lawyers, like Steve Wandro, say law office partners are not responsible for the actions of the other individuals within the firm. 

Iowa Lawyers follow what is known as the Iowa Rules of Professional Conduct. Rule 32:5.1 of The Iowa Rules of Professional Conduct,
Responsibilities of Partners, Managers and Supervisory lawyers, states: “A lawyer shall be responsible for another lawyer's violation of The Iowa Rules of Professional conduct if: (1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or

(2) the lawyer is a partner, or has comparable managerial authority in the law firm in which the other lawyers practice, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated, but fails to take reasonable remedial action.”

Again, the Gallagher law firm has denied knowing anything about Mr. Roth's alleged illegal or unethical activities.

In an article for the Kentucky Law Journal, Douglas R. Richman wrote about what he called 'rogue' lawyers as law office partners. His lengthy piece was entitled: Law Firm Partners As Their Brothers' Keeper. 

Mr. Richman wrote,  "The “specter of ‘rogues' is serious,” especially in large law firms. The larger law firms grow, the more lawyers they hire, and the longer they exist as organizations, the greater the odds that they will encounter rogues. This is true even for the best firms." 

As earlier reported by KWWL, The FBI is aware of the Roth case and is investigating. But, FBI Spokesperson, Sandy Breault, from the Omaha FBI office, told KWWL Friday that she cannot comment on any ongoing investigation.

Earlier this week, this quote: ”Very complicated.” That's how Judicial Clerk and Black Hawk County Probate Court Referee, Becky Zoll, described the Roth probate case.. Zoll says the Roth probate is unlike anything she has ever seen. 

Probate Court generally allows four months for claims to be filed after the estate is opened and the public notices published. That means the four-month filing deadline in this case is March 7. 

However, Probate Referee Zoll says she always continues to accept claims against an estate, as long as an estate remains open. Because the Roth case is so complicated, Zoll told KWWL news she expects that estate to remain open for quite some time.

Wednesday, three other Gallagher lawyers, Tom Langlas, Edward Gallagher, III and Thomas Verhulst filed individual claims against the Roth estate totaling $286.000. 

The claim from Edward Gallagher, III, is for $ 129,281. The Thomas Verhulst claim is for $98,417, and the Tom Langlas claim totals $58,307. 

Two other Cedar Valley area lawyers, Karen Thalacker and Melissa Timmermans, also filed a claim this week, but did not attach a dollar amount. 

One of the earliest claims against the Roth estate came from the Revocable Trust of Edward Gallagher, Junior. He is the senior partner of Gallagher, Langlas & Gallagher. His claim is for $121,418. 

Claims against estates are often settled through a negotiation process within the Probate Court. But, lawyers familiar with probate court believe the Roth estate will likely deny the claims filed against it. 

That would force alleged victims to prove their claims beyond the Probate Court, sending cases to actual trial in the Iowa District Court. In its own court filings,  Gallagher, Langlas & Gallagher has hired the law firm of Lederer Weston Craig of Cedar Rapids and Des Moines to represent the interests of Gallagher, Langlas & Gallagher, PC and its lawyers.

As previously reported by KWWL, Lederer Weston Craig has asked the court to combine all of the claims in the Roth case. The law firm wants the court to consolidate all pending litigation into one case.

As also previously reported on KWWL-TV and, several of the Gallagher lawyers have left the firm for other law offices, and the future of the once prestigious law office appears to be very much in doubt.

A key factor in the court battle will be the court's eventual decision concerning the professional liability insurance purchased by the Gallagher law firm. Court documents indicate Gallagher, Langlas & Gallagher, a Private Corporation, may have insurance coverage up to $4-million per claim, with a maximum payout of $5,000,000 a year. 

But, the liability insurance company, Minnesota Lawyers Mutual, has already filed with the court, asking that the liability policies be denied, claiming they were fraudulently obtained. The insurance carrier will try to prove Mr. Roth applied for the liability insurance, but, may have lied on the application. 

One of the key questions will be when the alleged illegal activity began. If illegalities are proven, did they begin before or after Minnesota Lawyers Mutual approved the liability insurance for the Gallagher law firm

Minnesota Lawyers Mutual has also raised questions about a renewal of the liability policies and if Mr. Roth was truthful in that renewal process for the liability insurance.

In its court filings, Minnesota Lawyers Mutual claims it discovered Mr. Roth held what it calls a 'secret bank account' at a Waverly branch of the Veridian Credit Union, Iowa's largest credit union, based in Waterloo. Veridian is also one of the some four-dozen alleged victims. Veridian has already filed several claims against the Roth estate.

The largest single claim so far against the Roth estate is $1.89 million. That claim was filed just days ago by VerJean and Eugene Walther of Waverly, in connection with an financial settlement with the State of Iowa. The Walther's were injured in a crash involving an Iowa State Trooper in 2012. Roth represented the Walther's, who now claim the money is gone.

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