‘That’s theft’: Law firm questioned over missing funds owed to Louisiana homeowners

When Hurricane Laura hit Lake Charles in August 2020, Aaron Sonnier's roof was badly damaged. He was lucky: his insurance company quickly paid for repairs. But when he started noticing more damage to the house in the following months, things got messy.

Sonnier hired Houston law firm McClenny Moseley and Associates, also referred to as MMA, to try and obtain the funds for the remaining repairs in the summer of 2021. Two years later, he is still waiting for the money his insurance company agreed to pay out in August of that year.

A check issued by the insurer was one piece of evidence held up by U.S. District Judge James Cain when he questioned the firm's founding partner, Zach Moseley, at the federal courthouse in Lake Charles on Tuesday. So were copies of over 1,000 checks, ordered by Cain and supplied by the firm, that had not yet been deposited.

"Where is all the Louisiana residents' money?" Cain asked Moseley, who was in court to argue that a suspension issued by Cain, preventing him from practicing in the state's Western District, should be lifted. In total, Cain said roughly $20 million worth of checks had yet to be deposited, holding up repairs to homes across the district.

MMA, which briefly kept an office in New Orleans, filed thousands of lawsuits on behalf of homeowners across the state who suffered damages from hurricanes Laura, Delta and Ida, and has claimed to represent thousands more. But its questionable business practices have led to the firm and its attorneys being temporarily banned from practicing in the state, causing a legal mess that has left many clients stranded.

In the case of Sonnier, two checks were issued. One, cut shortly after he retained the firm, arrived at his mortgage company's offices months later, after it expired. The second, held up by Cain in court, was deposited in March — but Sonnier said he never received a dime.

"That's theft," Cain, who has been investigating the firm's business practices since October, told Moseley. Moseley denied having deposited the check – which Cain said bore the attorney's signature – or having any knowledge of the account it was deposited in.

A raft of questions

Questions about the firm's handling of client funds abounded at Tuesday's hearing, including questions about 22 checks totaling over $3 million that left the firm's trust account to unknown destinations, according to Cain. Pointed questions were directed at Moseley and former attorneys at the firm who were also there to appeal their suspensions about their problematic conduct.

The firm's lawyers have been accused of violating professional codes by soliciting clients, forging signatures, mishandling funds and failing to communicate with their clients. The structure undergirding that conduct came into sharper focus as a result of Tuesday's hearing.

Rather than assigning individual clients to each attorney, the firm operated on an assembly-line system, the lawyers explained. Each lawyer would handle one stage of a case, such as pre-trial mediation or litigation, instead of seeing a case through from start to finish. That prevented them from seeing the bigger picture until it was too late, they argued.

"That's truly the core of the issue, in hindsight," former MMA attorney Grant Gardiner, the youngest and least experienced lawyer to take the stand on Tuesday, said of the firm's siloed structure.

Gardiner, along with fellow former MMA attorneys Cameron Snowden and Claude Reynaud, who were attorneys of record in many of the questionable cases the court has reviewed over the past year, also mounted another defense: He had been deceived by his former bosses.

Gardiner said he had been "courted into" working for the firm with a significant pay raise. But he said he soon began to question its business practices, especially after news coverage and court transcripts revealed the trouble the firm was in.

Still, when he asked the firm's leading attorney in Louisiana, William Huye, about it, he was mollified.

"He had an answer for everything," Gardiner, 28, told the court, admitting he was now ashamed of his naivete.

Cain, who was nominated to the federal bench by former President Donald Trump, had seen and reprimanded both Gardiner and Huye in his courtroom in October for failing to communicate with their clients. He was skeptical.

"I feel like I made it very clear to you all that what you were doing wasn't ethical or legal," Cain said.

Avoiding direct communication with clients was a priority at the firm, a former employee said.

Once in charge of client communications, attorney Kathleen Aromi said she was regularly confronted by frustrated clients carrying boxes of paperwork and demanding to speak to a lawyer. But she said she was under strict instructions from Huye not to budge, and so were the other lawyers on the team.

"He told them that their time was too valuable to talk to clients," Aromi said.

'I just want my money'

Aromi, who was not individually suspended, quit the firm in early March, along with the other three attorneys in court on Tuesday. She has since founded a new law firm, together with Reynaud, who said he has struggled to find employment as a result of his involvement with MMA.

"I've never been this embarrassed in my whole life," Reynaud told the court.

Cain was especially critical of Reynaud – the most experienced of the group – who he said should have known and done better.

"You had the experience," Cain told him. "You should have put your foot down."

Cain did not issue a decision on the attorneys' ongoing suspension. On the issue of the missing client funds, the judge ordered Moseley to open a trust account in Louisiana and produce originals of the undeposited checks by noon Friday, threatening action by federal law enforcement should he fail to do so.

"The court will handle these checks from here on out," Cain said.

Sonnier, who said he has had to go into debt to cover the increased electricity bills caused by the damages to his home, was approached by Moseley after the hearing and promised an immediate check. He's skeptical.

"I just want my money, that's all," he said.