LawFuel.com – LEV L. DASSIN, Acting United States Attorney for the
Southern District of New York, announced that STEVEN EUGENE
CAULEY, 41, an attorney based in Little Rock, Arkansas, pleaded
guilty today in Manhattan federal court to charges stemming from
his theft of $9.3 million from an escrow fund. The escrow fund
contained the proceeds of a settlement of a class action that had
been brought in the United States District Court for the Southern
District of New York. CAULEY entered his plea of guilty before
United States District Court Judge PAUL A. CROTTY.
According to the two-count Information filed today, and
statements made during CAULEY’s plea and other court proceedings:
On May 19, 2004, a class action, In re BISYS Securities
Litigation, 04 Cv. 3840 (JSR), was filed in the United States
District Court for the Southern District of New York and assigned
to United States District Judge JED S. RAKOFF. On August 27,
2004, the Little Rock, Arkansas, law firm of Cauley Bowman Carney
& Williams LLC was appointed co-lead counsel for plaintiffs in
the case. CAULEY, a named partner at the firm, participated in
negotiating a $65.8 million settlement of the action. The
settlement f unds were wired into an escrow account that CAULEY
controlled. Thereafter, CAULEY misappropriated millions of
dollars from the escrow account, using the proceeds to finance,
among other things, businesses in which he had an interest.
The scheme unraveled when AB Data, the settlement
administrator on the BISYS case, requested that CAULEY transmit
the funds in the escrow account to AB Data for distribution to
the class action members. Between December 19, 2008, and
February 19, 2009, CAULEY wired approximately $36.7 million in
total to AB Data, leaving approximately $9.3 million missing. On
April 3, 2009, a former partner at Cauley’s law firm asked CAULEY
to explain his failure to transfer the remaining funds. CAULEY
responded that he had invested the missing money in United States
Treasury bonds that were due to mature shortly, and that he would
wire the $9.3 million on April 8, 2009. But CAULEY, who had not
purchased any such bonds, failed to wire the money as promised.
The law firm partner reported the matter to Judge RAKOFF, who
referred it to the United States Attorney’s Office.
CAULEY pleaded guilty to one count of wire fraud and
one count of criminal contempt, and is scheduled to be sentenced
by Judge CROTTY on September 10, 2009 at 3:00 p.m. He faces a
maximum prison sentence of ten years on the wire fraud charge;
the sentence on the criminal contempt charge is at the discretion
of the court. In addition, CAULEY must make restitution in the
amount of $9.3 million and has agreed to pay any expenses arising
out of the distribution of any restitution.
In an order dated May 28, 2009, the Arkansas Supreme
Court also accepted CAULEY’s voluntary surrender of his law
Mr. DASSIN praised the investigative work of the
Criminal Investigators of the United States Attorney’s Office for
their investigation of this case.
Assistant United States Attorney WILLIAM STELLMACH is
in charge of the prosecution.