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Weekly UpdatesLittle Rock attorney S. Gene Cauley is scheduled to plead guilty to two felony counts in federal court in New York on the afternoon of June 1, according to a document filed with the Arkansas Supreme Court.
Last week, after news broke that some $9.3 million was missing from an escrow account Cauley set up to hold the settlement funds from a New York securities case, Cauley filed a petition with the state Supreme Court to voluntarily surrender his law license.
The exhibits filed with that petition include the two-count information (charges filed by prosecutors, as opposed to an indictment by a grand jury) to which Cauley has agreed to plead guilty. The charges are wire fraud and criminal contempt.
The information makes clear that Cauley had a $65.8 million settlement in litigation against The Bisys Group wired to an escrow account at Centennial Bank in Little Rock sometime after Aug. 20, 2007. Cauley was a major shareholder of Centennial until it was sold to Home BancShares Inc. of Conway in early 2008.
Of the total, plaintiff's attorneys--among them Cauley and his former law firm, now known as Carney Williams Bates Bozeman & Pulliam--were to receive a 30 percent fee and other reasonable costs. After the judge in the case, U.S. District Judge Jed S. Rakoff, ordered the distribution of the remaining $46 million to the plaintiffs on Nov. 26, 2008, Cauley was able to come up with only about $36.7 million.
Cauley was the sole signatory on the account, according to a letter three of his former partners--Allen Carney, Darrin Williams and Curtis Bowman--sent to Rakoff on April 15, two days after Cauley informed Bowman that he wouldn't be able to make the final distribution.
In an e-mail sent to Stark Ligon, executive director of the Supreme Court's Committee on Professional Conduct, Cauley's defense attorney, John Wesley Hall Jr. of Little Rock, wrote, "We are set for June 1st at 2 p.m. in the [Southern District of] N.Y. to enter the guilty plea."
Hall also wrote: "Cauley is liquidating assets to make restitution, because it is his and our [his lawyers'] firm desire to repay the $9.3 M before sentencing to lessen his exposure. He plans on doing so even if he has to sell assets at a loss."
In his petition to surrender his law license, Cauley said he had been "faced with issues of depression and [is] seeking appropriate help for them."
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