by Mark Friedman on Monday, May. 14, 2018 12:00 am 6 min read
Matthew Henry, as he appeared in 2014, has been jailed since March 22 (inset).
A Little Rock attorney who has been in the Pulaski County jail since March 22 for contempt of court is being investigated after $425,000 in client money went missing, and his recent divorce case reveals that he used money from his client trust account for personal expenses.
An estimated $400,000 in client funds stemming from a Jefferson County probate case was deposited into Little Rock attorney Matthew M. Henry’s client account in August 2015 and “are not presently accounted for by Mr. Henry,” according to a March 7 order of interim suspension filed by the Supreme Court Committee on Professional Conduct.
Another $25,000 of Henry’s client trust money in a Pulaski County Circuit Court case also is missing, according to court documents.
Henry, 45, landed in jail after Pulaski County Circuit Judge Mackie Pierce in January ordered him to return the $25,000 to his client. Pierce also wanted records for Henry’s client trust account covering Oct. 1 to Jan. 26.
Henry didn’t return the money nor did he file his account records, which resulted in his being jailed for contempt, where he remained as of Thursday. Pierce said Henry would stay in jail until he hands over the $25,000.
Henry’s financial problems have been simmering for months. In January, he served a day in the Pulaski County jail for not paying his child support. He was released on Jan. 24 when he wrote a check on his law firm’s account for $3,387.
But that check was returned for insufficient funds, according to court documents. As a result, Henry also is in jail for failing to pay child support, which totaled $10,200 between October and March, according to court records.
“Mr. Henry has failed to pay even a partial amount of support in over six months,” Pulaski County Circuit Judge W. Michael Reif wrote in a March 23 order.
Little Rock criminal defense attorney Jeff Rosenzweig said a hearing is set for today to have Henry released from jail.
“It is now obvious that Henry is not able to pay the $25,000,” Rosenzweig said in an April 25 motion for finding that further incarceration for civil contempt is futile and unconstitutional.
He declined to comment on Henry’s cases other than saying that he was aware of an investigation by the Little Rock Police Department into the missing $25,000. Rosenzweig is not representing Henry in the Jefferson County probate case.
Court records in that case don’t indicate what happened to the money the court says is missing from the client account. During a contempt hearing last month in front of Pierce, Henry, who is the only attorney at the Henry Firm in Little Rock, exercised his Fifth Amendment’s right against self-incrimination, according to a court document.
Henry’s spending, however, was tracked in documents made public as part of his divorce, which was finalized in October.
Between June 2016, when the account had a balance of about $300,000, and August 2017, Henry withdrew about $200,000 from his client trust account, according to the divorce decree issued by Judge Reif.
“The records did not indicate that those amounts were going to clients but rather into the law firm’s operating account,” Reif wrote. “The evidence was clear that [Henry] used his law firm operating account as his personal checking account.”
Through the Henry Firm’s operating account, Henry spent thousands of dollars on meals and personal expenses, according to the divorce decree. In 2015, he spent about $50,000 from the firm account on meals and other personal expenses, and $69,000 the next year. He also had $87,000 in checks and cash withdrawals from the firm’s operating account in 2015 and $30,000 in 2016, Reif’s decree said.
Henry began practicing in 2005 and in 2013 was listed as one of Little Rock’s Best Lawyers in Little Rock Soirée, the monthly magazine published by Arkansas Business Publishing Group, which also publishes Arkansas Business.
In his profile, the graduate of the University of Arkansas at Little Rock’s Bowen School of Law said, “My clients know that I will stick my neck out for them no matter how challenging or complex their case is. … Nothing is more satisfying than hearing a client tell me they’ve had their case with two or three other attorneys but I was the one to get results.”
Henry, whose practice area includes commercial real estate, made the Soirée list again in 2014. He touted achievements that included winning a $136,000 jury verdict and a $600,000 judgment in another case.
“It’s been such a great privilege to work on both the plaintiff and defendant side of litigation,” he said in his 2014 Soirée profile. “I can’t imagine doing anything else.”
He noted in his 2013 profile that his favorite accolade was a Client Distinction Award he received from Martindale-Hubbell, a legal directory, for having perfect reviews from his clients on its ratings board.
That’s certainly changed.
Henry, whose law license was suspended in March for “serious misconduct,” has been the subject of at least 10 complaints to the Office of Professional Conduct since October 2016, according to the suspension order.
After 19 years of marriage, Sarah Henry filed to divorce Matt Henry in 2015.
At first, Matt Henry had an attorney to represent him, but ultimately he decided to represent himself during the proceedings.
In suspending his law license, the Supreme Court Committee on Professional Conduct also made a note of the divorce file, which “recites evidence of at least interesting, if not suspicious use by Henry of his trust account funds.”
A client trust account isn’t meant to be used as an operating account, said Carole Buckner, a legal ethics lawyer at the law firm Procopio Cory Hargreaves & Savitch of San Diego. She was speaking generally, not about Henry’s case.
“A client trust account is designed so that the attorney holds funds that belong to the client in that trust account,” she said.
In some cases, it would be permissible for an attorney to transfer his earned fees out of a client trust account, she said.
Contempt of Court
It didn’t take long after the divorce decree was entered on Oct. 20 for financial problems to surface.
On Oct. 30, Henry received a $25,000 refund on a cash bond that his clients had posted. CSI Renovations LLC of Bedford, Texas, and its owner, Chris Irving, asked Henry for their money when Henry said he had received it, according to a civil suit the Henry Firm filed in December against CSI and Irving in Pulaski County Circuit Court.
Henry said he would return the money after he had a chance to bill them. Irving said he would rather pay Henry’s bill from a different account and wanted the money.
Irving then fired Henry on Nov. 7 and hired another attorney.
Henry didn’t submit a final bill to Irving until Dec. 5. Henry then said in his pleading that he “did not include several hours of phone calls and other billable hours in an effort to settle the matter more expeditiously and give Irving some since [sic] of being treated fairly as he seemed scorned by Plaintiff’s delay in getting invoices to him.”
Henry asked that a judge hold the $25,000 and then decide who is entitled to the money.
But Irving’s new attorney, Tré Kitchens of the Brad Hendricks Law Firm in Little Rock, filed a motion to dismiss Henry’s lawsuit and have the $25,000 returned immediately.
On Jan. 23, Judge Pierce ordered Henry to return the money by noon the next day. When Henry didn’t, Kitchens filed a motion for contempt.
Pierce ordered Henry to appear on March 12 and explain why he shouldn’t be held in contempt. He failed to appear, which led to his being arrested on March 22 and booked into jail.
While the CSI case was in motion, another of Henry’s clients was also having trouble getting money.
In January, the estate of Keshavlal Patel hired attorney Brandon Haubert, of the law firm Wilson & Haubert of North Little Rock, to be its new attorney. Haubert asked Henry to transfer the estate’s $400,000 to Haubert’s firm, according to a March 2 filing in Jefferson County Circuit Court.
“Mr. Henry has made numerous promises and scheduled appointments to transfer the estate funds to Wilson & Haubert,” the filing said. “As of the date of this motion, he has canceled every appointment and not transferred any estate funds.”
Jefferson County Circuit Judge Leon Jamison signed an order on April 25 to have Henry transported to the Jefferson County Courthouse to appear for a hearing today at 11 a.m.
Following his appearance in Jamison’s court, Henry is scheduled to appear before Judge Pierce in Pulaski County at 3:30 p.m. in an attempt to get out of jail.
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