The State Bar of Nevada has sued two Missouri companies to get back $300,000 in investment funds that may have been embezzled - and lawyers involved in the case say that's only a fraction of the money from various investors that's missing.
The lawsuit is against Rate Search Inc. and Clayton Analytical Services Inc., both of St. Louis, Mo. Lawyers for both firms are denying any wrongdoing - and Rate Search is claiming Clayton is to blame and as much as $4 million may be missing.
Al Watkins, lawyer for Rate Search and its president, Scott Luster, said Tuesday that his clients contacted the FBI and state authorities after confirming there were "irregularities" in funds from investors, including the Nevada lawyers and a religious order of nuns, that went to Clayton Analytical.
Rate Search had a contract with Clayton to buy certificates of deposit that would yield good interest rates for the investors.
Watkins said the arrangement had been in place for more than 10 years but ended last spring.
A follow-up audit disclosed "tragic and regrettable" problems, he added.
"We have been led to believe that $3 million to $4 million in customer funds can't be accounted for," Watkins said.
"Our highest order of business is to track down those funds and make
sure that every last dime is accounted for."
Clayton attorney Joel Krieger said the company and its president, Clarke Schultz, "did not do anything wrong."
He added that Schultz "is willing to cooperate, and we intend to vigorously defend this lawsuit."
David Clark, deputy counsel for the Nevada bar, said Rate Search has promised to cooperate and isn't making any claim to the money - and that's fine as long as the end result is the return of the missing $300,000.
"It's our money, so that's the least they could do," he said.
While Rate Search may be blaming Clayton, Clark said the Nevada lawyers' lawsuit names both Missouri companies to ensure that no legal avenues are cut off.
The lawsuit claims that Luster and Schultz "improperly and fraudulently placed" the certificates of deposit in their names and the names of others.
Clark and Nancy Alls, president of the Nevada bar group, also said the $300,000 represents only a small percentage of its invested funds and the dispute isn't causing any problems in the organization's operations.
The State Bar has invested $3.2 million with the two companies since 1999.
The State Bar has obtained a restraining order to protect other certificates of deposit purchased through the two men and their companies.
Clark said a one-day, non-jury trial of the case is scheduled Sept. 26 in St. Louis County Circuit Court.