Former East Bay lawyer convicted of embezzling from 2006 fire victims
MARTINEZ, Calif. - An attorney formerly of Alamo was convicted Tuesday in Contra Costa County Superior Court in Martinez of embezzling $400,000 from clients he represented against PG&E for damages from a 2006 fire.
William James Reed, 80, was convicted of felony grand theft by embezzlement with a white-collar crime enhancement related to a settlement agreement with PG&E.
The agreement included payments to victims of the 2006 Zamora Fire near Woodland. According to the Contra Costa County District Attorney's Office, Reed wrote a letter, purportedly from a fellow landowner impacted by the fire, stating that in a lawsuit against PG&E, attorney's fees would be covered by PG&E.
Reed invited fire victims to a town hall meeting in Zamora, where he assured them that, according to the law, PG&E would be responsible for attorney's fees, not the clients.
Two families, including elderly victims with ranch properties damaged by the fire, agreed to have Reed represent them.
Prosecutors said Reed presented unclear and confusing lawyer-client relationship documents, including a contract implying clients would pay his hourly legal fees and costs at the rate of $625 an hour, and a cover letter stating PG&E would cover Reed's attorney's fees and costs.
After obtaining victims' agreement on legal representation, Reed filed a lawsuit against PG&E on the victims' behalf in 2008.
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In 2013, a $200,000 settlement for each family was brokered by Reed with PG&E. Reed received the $400,000 settlement from an attorney representing PG&E, but failed to inform his clients about the money.
Prosecutors said Reed's clients discovered at an unrelated court hearing that the settlement money had been paid to Reed. Afterward, when the victims asked Reed about their money, he presented them with a proposed settlement agreement, saying the clients would each give him $103,000 for attorney's fees and costs, and in turn each client would receive $97,000.
The victims refused to sign Reed's proposed settlement agreement because it contradicted their initial agreement with him. Years of civil litigation ensued between Reed and the victims, with Reed using some of the settlement money to pay his lawyers to fight the victims.
Prosecutors in Contra Costa were alerted in 2017 to possible criminal violations related to the victim's settlement money.
A forensic accountant at the DA's office analyzed Reed's bank account statements and determined Reed spent the entire $400,000 on himself, and felony grand theft by embezzlement charges were filed against him. The case went to trial Oct. 13.
The DA's office said in a statement Thursday that a key piece of evidence presented to the jury was the document saying Reed's fees would be paid by PG&E and not the victims.
The jury convicted Reed on two felony counts of grand theft by embezzlement and a white-collar crime enhancement, establishing illegal possession of over $100,000.
Reed faces three years and eight months in prison. He'll be sentenced Jan. 10.