Cauley Asks for More Time to Raise Restitution

by George Waldon  on Monday, Oct. 5, 2009 12:00 am  

Why would Gene Cauley, with a net worth once pegged at $100 million by those familiar with his financial affairs, need so many months to raise a mere $9.3 million?

The record suggests that the former class-action lawyer with a national reputation still has liquidity issues that are making it difficult for him to come up with the restitution owed to clients in a securities case.

Ongoing cash-flow problems are further complicated by financial claims against him and by his highly leveraged spending habits.

Lawyers who won a multimillion-dollar judgment against Cauley and his billboard companies in the electrocution of a young employee have moved aggressively to protect their clients' interest, and at least two banks have filed collection suits for loans made when Cauley was considered to be very rich indeed.

Along the way, Wachovia Financial Inc. of Charlotte, N.C., repossessed his private jet, a Gulfstream G450 with an estimated value of $27 million.

Cauley, who surrendered his law license in May, was scheduled to be sentenced this Wednesday in federal court in New York for his confessed misappropriation of client funds. But last week, his lawyer requested a second continuance, saying Cauley needed still more time to come up with the restitution "because, after sentencing, it will be much harder and most certainly disserve the victims."

Unspoken in the motion is the presumption that Cauley's sentence will include significant time in a federal prison; the sentencing guideline in his case ranges from about six to about eight years, according to a source familiar with the federal criminal system.

If the motion is granted as expected, the new sentencing date likely would be in December at the earliest. Cauley's criminal defense lawyer, John Wesley Hall of Little Rock, is set to begin a six-week federal capital murder trial on Oct. 13.

To This Point

Cauley pleaded guilty on June 1 to wire fraud and criminal contempt for stealing from what was originally a $65.8 million settlement in a class-action securities case against the Bisys Group.

Cauley, sole signatory on the settlement account, couldn't come up with the last $9.3 million owed to clients when the federal judge in New York ordered the final distribution of funds.

Cauley himself told The Wall Street Journal that shoring up cash-flow problems was the motive behind his theft. (Last fall, Arkansas Business agreed to Cauley's demand that its reporters no longer attempt to contact him for comment on any articles.)

He was charged only with misappropriating $9.3 million, although there is widespread suspicion that he helped himself to considerably more of the settlement money.

 

 

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