Beaufort lawyer J. Ashley Twombley pulled on a thread and unraveled what he alleges is a long-running conspiracy between a law firm and a local bank.
Twombley has brought a class-action suit against First Reliance Bank on behalf of a group of former clients of the late John Schurlknight, founder of the now-defunct Schurlknight & Rivers personal injury law firm in Florence.
Schurlknight committed suicide in his office last year after being accused of stealing his clients’ settlement payments over the course of about six years. Initially, the clients hired Twombley to sue Schurlknight’s family in hopes of reclaiming a portion of the $6 to $10 million they say was taken from them.
“In looking at records related to individual cases, individual people wronged by Schurlknight, we started noticing these incredibly troublesome trends in documents,” Twombley said, “like writing checks to cash out of the client trust account, which is expressly forbidden.”
That spurred Twombley to take a closer look at Schurlknight & Rivers’ relationship with Florence-based First Reliance Bank, which he says knew about the firm’s dealings and assisted it in a scheme.
The bank benefitted by collecting tens of thousands of dollars in fees from the firm – including more than $36,000 in fees in 2008 alone, according to the class-action filed at the Florence County Court of Common Pleas.
The suit states that First Reliance covered bad checks that Schurlknight & Rivers wrote on its operating account then let the firm pull money from its client trust account to repay the bank. The firm allegedly was bouncing as many as 100 checks a month, and the bank was receiving $33 in overdraft fees on each bad check while failing to report the overdrafts to the S.C. Commission on Lawyer Conduct, as required by state law.
First Reliance also is accused of helping the firm launder money and pilfer its client account. For instance, it regularly allowed the firm to write checks out to cash from the account and commingle money from its operational and client accounts, the suit alleges.
The bank’s actions were “grossly negligent” and violated the terms that it voluntarily agreed to in order to offer Interest on Lawyers Trust Accounts, which are regulated by the S.C. Bar and designed to protect a firm’s client money, according to the suit.
An attorney for First Reliance, Jeffrey L. Payne of Turner Padget Graham & Laney in Florence, turned down an interview request.
The class-action is unfolding alongside the suit Twombley is pursuing against Schurlknight’s family, which also is filed in Florence County. The family is accused of being aware that Schurlknight was scheming against his clients and using stolen client money to support a lavish lifestyle that included expensive homes, luxury cars and private school tuition.
Earlier this month, a judge issued a temporary order freezing what’s left of a $1.3 million life insurance policy payout to the family as he considers Twombley’s request for a permanent injunction.
Schurlknight’s former law partner, William J. Rivers III, has been placed on interim suspension while the state Supreme Court’s disciplinary office looks into whether he was involved in a scheme. No claims have been filed against Rivers by his former clients.
Follow Phillip Bantz on Twitter @SCLWBantz