Lawyer is missing; so is $1 million

Staff WriterJuly 14, 2006 

— More than $1 million in clients' money appears to be missing from accounts handled by a prominent Chapel Hill lawyer who now himself is missing, according to records filed in Wake and Orange courts.

The N.C. State Bar got a temporary restraining order this week to freeze bank accounts that attorney John McCormick was to have used to hold client money. The bar alleged that McCormick failed to transfer more than $800,000 owed to clients, and that he even transferred some money in those accounts into a personal account.

McCormick, 58, was reported missing early Tuesday after an Orange County sheriff's deputy spotted an empty Subaru registered to the family near an entrance to Duke Forest about 1 a.m.

Law enforcement officers searched the woods for about two days and are treating McCormick, who lives at 338 Tenney Circle, as a missing person, Chapel Hill police spokeswoman Jane Cousins said.

For more than 20 years, McCormick has been the Chapel Hill-Carrboro school board attorney. He also owns more than a dozen rental properties in Orange County. School officials said McCormick didn't have access to the school system's accounts and isn't suspected of mishandling any real estate transactions involving the school system.

But in June, McCormick, whose private practice included real estate law, was the closing lawyer on five properties sold by D.R. Horton Inc. to various buyers, according to a motion the State Bar filed Wednesday in Wake County Superior Court.

McCormick was supposed to give $802,185.82 from those sales to D.R. Horton but never did. Those may not be the only sales he mishandled, court records say.

About $1.3 million is missing from trust accounts at SunTrust that McCormick used to hold client money, according to the State Bar. In May and June, McCormick transferred at least $65,000 in client funds to his personal account, according to an affidavit by David J. Frederick, a State Bar investigator.

McCormick was late in handing over payments from three home sales in May and owed the company $529,214.48, according to an affidavit by O. Kenneth Bagwell Jr., general counsel for D.R. Horton's northeast region.

McCormick told Bagwell "he had been in the hospital for a serious operation and that the following day, June 27, would be his first day back in the office." McCormick also said he had lost personnel who had worked on the Horton accounts.

On June 28, Horton received money for two of those closings, but that same day Bagwell found out that the money from the June closings also was missing.

McCormick said he would wire the money from the remaining closings the next day, but only sent payments from the final May closing. After that, Bagwell repeatedly called McCormick but couldn't get through to him until July 5, according to the affidavit.

"On that occasion, he assured me that all of the overdue proceeds would be wired out of his trust account to Horton no later than noon on July 7, 2006," Bagwell said in the affidavit. But the money never came and McCormick avoided Bagwell's calls, Bagwell said.

About the same time as Horton's last payments, McCormick also borrowed $300,000 from friends and clients Shahla and Amir Rezvani, according to another lawsuit that couple filed Wednesday in Orange County Superior Court.

On June 27, Shahla Rezvani wrote McCormick a check, and he was supposed to put a deed of trust or lien on one of his own properties as collateral, the lawsuit said. But no record of a lien for the loan can be found on any of McCormick's property, the lawsuit states.

McCormick had 90 days to pay back the money plus 10 percent annual interest, so the loan is not overdue. The Rezvanis' attorney, Robert Maitland, called himself a friend and colleague of McCormick's. Maitland said the lawsuit was filed "in an abundance of caution."

Calls to McCormick's law office and to the family's lawyer were not returned late Thursday.

(Staff writers Patrick Winn and Cindy George contributed to this report.)

Staff writer Jessica Rocha can be reached at 932-2008 or jessica.rocha@newsobserver.com.

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