Published: Saturday, May 31, 2008
Ex-lawyer admits he swindled his clients
One-time Everett fixture faces prison for fraud
EVERETT -- For more than a decade, Barry Hammer ran a high-visibility law office across from the Snohomish County courthouse. The former Everett attorney convinced dozens of clients to invest hundreds of thousands of dollars into what he promised were tax shelters and retirement funds bankrolled by lucrative property investments.
It now appears that Hammer's next address will be a federal prison.
Hammer, 62, pleaded guilty Thursday to a single count of wire fraud. He faces up to 20 years behind bars.
As part of the plea agreement in U.S. District Court in Seattle, Hammer admitted engaging in a scheme to defraud clients of up to $1 million. He also admitted that he entered into business dealings with his clients, not warning them that money actually was going into his pockets and that their investments, in many cases, were bankrolled by little more than his promises to pay.
"What he acknowledged in the agreement is he breached his duties as a lawyer to his clients," Assistant U.S. Attorney Mark Parrent said.
Hammer's law firm was a fixture in downtown Everett for years, with a large sign and a suite of offices on Pacific Avenue across from the courthouse. He's had a lower profile since 2004, when his law practice and business dealings melted down into a $13 million bankruptcy.
His fraud came undone when a former law partner, Ben Wells, realized what was happening and reported the violations to the Washington State Bar Association.
Wells wasn't involved in the crimes, Parrent said.
Hammer in 2005 gave up his law license in lieu of disbarment. He acknowledged evidence showed he'd entered business dealings with multiple clients and made misrepresentations about the risks.
"I don't think there's any question that Mr. Hammer feels very bad about what happened and feels very bad for his clients," said his Seattle attorney, Russell Aoki. "He cared very much for his clients. I think he got desperate when things didn't work out and he exercised some bad judgment."
Hammer faces a stretch in prison, but the likely duration won't be clear until closer to sentencing, attorneys said Friday.
Hammer's former offices and other properties were sold as part of the bankruptcy proceedings. He sought court protection after he could not make payments to dozens of people who had loaned him money or invested in one of his businesses, Able Mortgage and Investments Inc.
Many of the investors were people who had hired Hammer for advice on legal and tax matters. Some were owed a few thousand dollars, but more than 30 creditors filed claims ranging from $100,000 to $690,000 each.
Peter Arkison, a trustee appointed by a federal bankruptcy judge to attempt to untangle the mess, told the court that Hammer's businesses had just $859 in the bank account when his problems became public. Evidence suggested Hammer had been using his companies' assets "as his own 'piggy bank' " to cover debts owed to an increasingly large group of investors, the trustee told the judge.
Federal prosecutors this week charged Hammer with seven federal crimes: five counts of mail fraud and two counts of wire fraud.
Under the plea reached Thursday, the remaining six counts will be dismissed if Hammer sticks to the agreement at sentencing, scheduled for Sept. 5, Parrent said.
Reporter Scott North: 425-339-3431 or north@heraldnet.com.
It now appears that Hammer's next address will be a federal prison.
Hammer, 62, pleaded guilty Thursday to a single count of wire fraud. He faces up to 20 years behind bars.
As part of the plea agreement in U.S. District Court in Seattle, Hammer admitted engaging in a scheme to defraud clients of up to $1 million. He also admitted that he entered into business dealings with his clients, not warning them that money actually was going into his pockets and that their investments, in many cases, were bankrolled by little more than his promises to pay.
"What he acknowledged in the agreement is he breached his duties as a lawyer to his clients," Assistant U.S. Attorney Mark Parrent said.
Hammer's law firm was a fixture in downtown Everett for years, with a large sign and a suite of offices on Pacific Avenue across from the courthouse. He's had a lower profile since 2004, when his law practice and business dealings melted down into a $13 million bankruptcy.
His fraud came undone when a former law partner, Ben Wells, realized what was happening and reported the violations to the Washington State Bar Association.
Wells wasn't involved in the crimes, Parrent said.
Hammer in 2005 gave up his law license in lieu of disbarment. He acknowledged evidence showed he'd entered business dealings with multiple clients and made misrepresentations about the risks.
"I don't think there's any question that Mr. Hammer feels very bad about what happened and feels very bad for his clients," said his Seattle attorney, Russell Aoki. "He cared very much for his clients. I think he got desperate when things didn't work out and he exercised some bad judgment."
Hammer faces a stretch in prison, but the likely duration won't be clear until closer to sentencing, attorneys said Friday.
Hammer's former offices and other properties were sold as part of the bankruptcy proceedings. He sought court protection after he could not make payments to dozens of people who had loaned him money or invested in one of his businesses, Able Mortgage and Investments Inc.
Many of the investors were people who had hired Hammer for advice on legal and tax matters. Some were owed a few thousand dollars, but more than 30 creditors filed claims ranging from $100,000 to $690,000 each.
Peter Arkison, a trustee appointed by a federal bankruptcy judge to attempt to untangle the mess, told the court that Hammer's businesses had just $859 in the bank account when his problems became public. Evidence suggested Hammer had been using his companies' assets "as his own 'piggy bank' " to cover debts owed to an increasingly large group of investors, the trustee told the judge.
Federal prosecutors this week charged Hammer with seven federal crimes: five counts of mail fraud and two counts of wire fraud.
Under the plea reached Thursday, the remaining six counts will be dismissed if Hammer sticks to the agreement at sentencing, scheduled for Sept. 5, Parrent said.
Reporter Scott North: 425-339-3431 or north@heraldnet.com.
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