PROVIDENCE — A Rhode Island personal injury lawyer has admitted in federal court that he ran a Ponzi scheme by misappropriating more than a half-million dollars of his clients’ settlements and failed to pay more than $250,000 in taxes.
For years, Peter P.D. Leach had specialized in medical malpractice, wrongful death, product liability and disability cases, representing clients before the state and federal courts, until complaints about him misappropriating clients’ money surfaced in early 2019.
The state Supreme Court suspended him from practicing law in March 2019 and appointed the court’s chief disciplinary counsel as special master of Leach’s clients. The US District Court and US Court of Appeals First District soon followed in suspending Leach from practicing before them.
More than four years later, Leach stood before a judge in US District Court on Tuesday, pleading guilty to charges of wire fraud and tax evasion.
As a personal injury lawyer, Leach was negotiating settlements for his clients and receiving checks on their behalf from insurance companies and others. Under agreements with his clients, Leach was supposed to receive 33 percent of any settlement and pay the remainder, minus expenses, to the client.
Instead, an investigation by the state police financial crimes detectives and the IRS found, Leach had forged clients’ signatures and deposited their settlement checks into his attorney IOLTA account — an account held by a lawyer that contains money kept in escrow for clients — and then used those funds to pay personal expenses and repay other clients whose funds he’d embezzled.
Some of those personal expenses included checks to family members to pay university tuition, as well as using his accounts to pay travel and restaurant expenses, and costs at Wheeler School, Syracuse University, Pitzer College, and the Metacomet Country Club in East Providence, according to a federal indictment.
US Attorney Zachary A. Cunha’s office said that Leach also repeatedly made false representations to clients about the status of their cases, and told them that he would pay their medical expenses and other bills with settlement funds he had received. Going back to about November 2014 until his license was suspended in March 2019, Leach had misappropriated over $500,000 of his clients’ settlement funds, causing over $250,000 in losses to those who never received the money they were due.
The IRS tried to collect unpaid taxes from Leach, including by placing a lien on property he owned, serving a notice of levy on his bank, and attempting to set up payment plans, according to an indictment. However, the investigation found, Leach tried to prevent the IRS from collecting taxes from him, by using his business accounts to pay personal expenses, ceasing to use his personal bank accounts, using relatives’ bank accounts, submitting false forms, and withdrawing large amounts of money from his IOLTA accounts in cash.
In court, Leach admitted that he tried to conceal his gains from the IRS, made false statements on his IRS forms about his assets and to IRS Revenue officers about his ability to pay his taxes, and made false statements about his withdrawal of more than $540,000 cash from his IOLTA accounts to pay personal expenses and transfer money from his client account to family members.
The investigation determined that Leach failed to pay more than $250,000 in taxes.
Leach is scheduled to be sentenced on Jan. 4.