CONCORD, NH — Former Manchester Lawyer John Allen is facing federal wire fraud and money laundering charges after he was arraigned Monday in the United States Federal Court where he stands accused of stealing millions from his clients.
Allen allegedly used his firm’s Interest on Lawyer Trust Accounts, or lOLTA, to siphon off millions of dollars from at least five different clients over the past several years.
“Allen knowingly and willfully devised and intended to devise a scheme to defraud the client victims, and to obtain money and property from the client victims by means of materially false and fraudulent pretenses, representations, and promises,” the indictment filed in court states.
Allen sometimes kept the money given to him by clients that were earmarked for the purchase of real estate or other large purchases that required an escrow fund.
“Allen did not use the money for those transactions. Instead, he kept their money and spent it on personal and unrelated business expenses,” the indictment states.
In at least one instance, Allen allegedly created phony investment vehicles for one client. This client had won a substantial amount of money in a civil lawsuit and planned to retire by investing the money, according to the indictment.
“Allen caused Client 1 to invest more than $1.5 million in fraudulent promissory notes. Allen told Client 1 that his money would be deposited into an escrow account and disbursed with Client 1’s approval. In reality, Allen created the fake promissory notes using other persons’ real identities and spent Client 1’s money on his own personal and unrelated business expenses,” the indictment states.
Allen is accused of using his firm’s lOLTAs to transfer money in and out of his other bank accounts in order to hide his scheme, according to the indictment.
Allen had his license to practice law suspended via an emergency order issued by the New Hampshire Supreme Court last year after the state Attorney Discipline Office found red flags in the way he dealt with client monies.
“Mr. Allen’s conduct demonstrates that he presents a danger to the public if allowed to continue to practice (law,)” the order states.
The Attorney Discipline Office started when, among other concerns, Allen had reportedly not communicated with his paralegal for several weeks years about client financial business, prompting the employee of 25 years to resign. Around the same time he was failing to respond to client inquiries about their money, according to the emergency order, and other lawyers started expressing concern about his conduct.
When one client started asking about more than $500,000 he was supposedly holding for her, Allen reportedly told another client he had “buried the funds so deep they will never find it,’” the Attorney Discipline Office report states.
Allen was reported suffering serious medical issues when the Attorney Discipline Office investigation started.
Allen signed a plea agreement he negotiated with federal prosecutors in September, when the indictments were first handed up. He has not pleaded guilty at this time to any of the charges, and remains free pending the resolution of the case. The plea agreement stipulates Allen will serve 57 months in prison and repay more than $2.4 million to clients.