Misappropriation leads to resignation, criminal charges

A former Roseville attorney who was facing 30 charges of misconduct in nine cases, many involving misappropriating money from his clients, has resigned. DERK WAYNE SCHUTMAAT [#163633], 51, gave up his law license in July and was immediately placed on involuntary inactive enrollment as a threat to the public, pending the Supreme Court’s acceptance of his resignation.

Schutmaat is charged with six counts of felony embezzlement in Placer County arising from the bar’s misappropriation charges. A status conference was set for Oct. 9.

Schutmaat’s resignation “was consistent with the State Bar’s three strikes policy,” said deputy trial counsel Sherrie McLetchie. “We were seeking his disbarment because he stole so much money from several people.” The three strikes policy requires that an attorney who has been disciplined twice previously should be disbarred when a third incident of misconduct is proven.

Ten of the bar charges involved acts of moral turpitude and of those, six entailed misappropriating funds. In the final set of charges filed against Schutmaat shortly before his resignation, the bar accused him of taking almost $67,000 from a client’s settlement proceeds.

In that matter, the client hired Schutmaat while she was hospitalized as a result of an automobile accident. Schutmaat ultimately received two checks, one for $129,004 and a second for $38,496, three months apart to settle his client’s claims. Neither was deposited in a client trust account. He made no disbursements to the client from the larger amount and within three weeks, his non-trust account had a negative balance.

When the smaller check was deposited, Schutmaat made no payments to the client or for her benefit. The balance in his account fell below the required amount when Schutmaat withdrew $45,000.

Over a two-year period, Schutmaat did make payments of more than $33,000 on the client’s behalf, paying her rent and other bills. It was unclear what funds he used to make the payments. And although he negotiated a lower bill with her chiropractor, he never paid it.

Schutmaat also was charged a year ago with misconduct in five matters. In one matter, the State Bar alleged that he forged a client’s signature on a $15,000 settlement check, misappropriated the money and then told the client the insurance company had decided against settling the case.

He took $495 from another client, the bar charged, and when he later wrote a check to repay him, the check bounced.

In another matter, bar prosecutors alleged that Schutmaat misappropriated $900 a client gave him to pay the fees of an arbitrator employed to hear a real estate dispute. When the bar investigated, Schutmaat said in a letter that he paid the client’s fee “out of my own pocket.” The bar charged him with an act of moral turpitude by misrepresentation.

Schutmaat represented two clients in another personal injury matter and received separate checks for each — one for $15,438 and the other for $72,348. The bar charged that he withheld $3,800 from the smaller check and $15,600 from the larger award. He was to pay an expert witness $600 and said he was withholding $15,000 to satisfy the client’s obligation to pay unspecified medical care providers. While Schutmaat eventually repaid the $3,800 to one client, he never accounted for the $15,000 and the bar charged him with misappropriation.

Schutmaat also sent a letter to one of the two clients seeking payment on a debt for attorney fees in an unrelated matter, although the client was represented by counsel and Schutmaat knew the debt had been discharged in bankruptcy more than a year earlier. Schutmaat threatened to sue the man if payment was not forthcoming.

Despite a series of letters over the course of a year between bar investigators and Schutmaat and his lawyer, he did not respond to requests for documentation and submitted false information about two matters.

In two other cases he took over from another lawyer, the bar charged that Schutmaat failed to perform legal services competently.

In total, the bar charged Schutmaat with failing to deposit client money in a trust account, account for client funds, refund unearned fees, respond to reasonable client inquiries, perform legal services competently or cooperate with the bar’s investigation, as well as 11 counts of moral turpitude.

Schutmaat also was suspended and placed on three years of probation in 2001 after stipulating to three counts of misconduct, all involving money matters. In a 1995 case, Schutmaat failed to notify a client that he had received a partial divorce settlement for $2,025 on her behalf and charged an unconscionable fee, collecting from the client both an hourly and maximum contingency fee. He first collected the hourly fee, telling the client he would agree to a 30 percent contingency fee if the case settled and 40 percent if it went to trial. The matter settled, but Schutmaat failed to credit the client with $3,296 he owed her.

In another case, Schutmaat issued at least 25 checks in 1997 and 1998 from a client trust account for personal expenses or business expenses not related to his client.