Despite jury exoneration, lawyer faces bar charges

A Roanoke County lawyer accused in connection with an investment fraud avoided personal liability in a federal jury trial but now faces Virginia State Bar ethics charges.

The allegations against William Lee Andrews III arise from an apparent $325,000 swindle of an investor who claimed he was told he could nearly triple his money in 10 business days. Andrews contended he initially knew nothing of the investor or the purported deal. He said he was simply a “paymaster” who wired money on instructions from a business associate.

Virginia State Bar prosecutors, however, say Andrews failed to give a proper accounting of the money entrusted to him after he held himself out as an attorney.

Elaborate scam described

Although licensed for 19 years, Andrews apparently has never had an active law practice. His address of record with the VSB is his home in Roanoke County.

In the federal lawsuit, Andrews was accused of being part of a fraudulent scheme in which a group of borrowers would use the investor’s money to obtain and transfer instruments described as “International Standby Letters of Credit.”

Connecticut lawyer and businessman John A. Tatoian claimed he was solicited to make a short-term loan to a company called Global Financing Solutions. He said he was led to expect repayment in excess of $850,000 in just 10 business days. If the deal failed, he was to receive his principal plus $1,000 a day in late penalties, his pleadings said.

In December 2012, Tatoian said he wired $326,650 to a California lawyer.

“Unfortunately, the transaction … was a sham,” Tatoian wrote in an affidavit filed in his federal court case.

About two years later, the U.S. Securities and Exchange Commission issued a warning about such investments.

“Promoters of prime bank programs often claim that investors’ funds will be used to buy and trade supposed prime bank instruments, and that investors will receive guaranteed, high investment returns with little or no risk. Promoters try to make the schemes sound legitimate by using complex, sophisticated, and official-sounding terms,” said a Feb. 5, 2015, SEC alert.

Among the terms used by scammers was “standby letter of credit,” the SEC warned.

‘Paymaster’

Most of Tatoian’s money passed through the California lawyer’s trust account and landed in the account of a company controlled by Andrews, according to allegations in the federal lawsuit and in the VSB charges.

The bar contended Andrews did not have a trust account at the time, but agreed to act as an escrow agent.

Although the money was intended to remain in Andrew’s control until the terms of the purported financial transaction were met, Andrews allegedly disbursed the money on instructions from another person connected with the scheme.

“I just received instructions. I was just doing the work of the paymaster,” Andrews said, according to a transcript of a July 31, 2015, deposition. Andrews said he had been hired in part because he had the ability to wire money at any time of the day or week.

A federal jury heard Tatoian’s claims in November and cleared Andrews of any liability. The jury found that a company allegedly controlled by Andrews was liable for just $20,870.

U.S. District Judge Glen E. Conrad rejected a bid to enter judgment against Andrews personally, regardless of the jury’s decision. Tatoian did not appeal.

VSB charges

Despite the jury exoneration, VSB prosecutors say Andrews’ hands were not entirely clean.

In a VSB Disciplinary Board subcommittee determination filed Aug. 9, the bar pointed to letters signed by Andrews reassuring Tatoian that banks would be making payments as expected.

“Despite his repeated assurances that the transaction was proceeding according to plan, [Andrews] has been unable to give a proper accounting of the monies with which he was entrusted,” the bar certification said.

Andrews told the bar he never acted in any legal capacity.

“I don’t think you could say it was an attorney-client relationship,” said Tatoian attorney Jeffrey Hellman of Connecticut.

Nevertheless, the bar claims Andrews used letterhead identifying him as an attorney licensed to practice in Virginia. Hellman said he argued to the jury that Tatoian expected Andrews, as an attorney, to be fulfilling his responsibilities as an escrow agent.

The VSB subcommittee charged Andrews with rule violations including committing a criminal or deliberately wrongful act and conduct involving dishonesty, fraud, deceit or misrepresentation.

No hearing date has been scheduled yet.

Tatoian has obtained judgments against others involved in the alleged scam, according to lawyers in the case. Hellman said Tatoian has recovered some of what he lost, but Hellman declined to say how much.

The woman who sent instructions for Andrews’ payments of the Tatoian money pleaded guilty to an unrelated California real estate investment fraud scheme in 2015, according to news accounts.

Andrews is represented by Alexandria attorney Timothy J. Battle, who also represented Andrews and his company in the federal fraud case. He declined to comment for the record.