Lawyer Used Elder Law Practice to Snare Ponzi Victims

By R. Robin McDonald
Daily Report
April 24, 2009

ATLANTA -For five years, a Marietta, Ga., attorney who specialized in elder law arranged community workshops where he sought investors for a bogus financial scheme that would siphon more than $40 million from his unsuspecting clientele, according to a federal prosecutor.

When the scheme collapsed earlier this year and investors began complaining to local police and the FBI, attorney Robert P. Copeland confessed to federal prosecutors in Atlanta, said his Decatur lawyer, Marcia G. Shein.

Shein said that Copeland surrendered to authorities because, "He didn't want to do this any more. He needed to resolve the problem."

In U.S. District Court on Monday, Copeland pleaded guilty to a criminal information (charges filed either prior to or in lieu of a grand jury indictment) charging him with a single count of wire fraud. He is free on $100,000 unsecured bond pending his July 10 sentencing.

In a separate civil action, the U.S. Securities and Exchange Commission in Atlanta has secured a permanent injunction ordering Copeland to repay all the money, much of it from retirement accounts, that the attorney stole from his investors.

Federal prosecutors are also seeking the forfeiture of a dozen residential, commercial and rental properties owned by Copeland in Fulton, DeKalb, Cobb, Cherokee and Bartow counties that they believe were purchased with funds he acquired by fraud. Copeland has already surrendered personal property bought with his illicit earnings, including a baby grand piano, cars, jewelry and "expensive artwork," according to government filings.

The SEC complaint states that Copeland misappropriated more than $9 million of investor funds for his personal use and diverted an additional $2 million to pay commissions to a sales staff who recruited investors for him.

Assistant U.S. Attorney Justin Anand said that the sale of Copeland's seized properties likely will not raise funds sufficient to make whole his victims, many of whom invested their retirement nest eggs with Copeland.

"In most of these cases, the money's all gone," the federal prosecutor explained. "In this case, we were able to take a whole lot more than in my experience is usual. On the other hand, it would be foolish for me to speculate ... that it will be anything close to a full recovery."

Copeland's at least 140 victims, many of them nearing or past retirement age, included two members of his own family and several charities, according to court papers and prosecutors. Anand declined to identify anyone who lost money with Copeland.

As a condition of his release on bond, Copeland also has agreed to surrender his Georgia bar license and is closing his law practice, said Anand, who prosecuted Copeland.

Copeland earned his J.D. at John Marshall Law School in Atlanta and was admitted to the Georgia Bar in 1995. He is a member of the elder law section of the Bar, which this week still listed him as in good standing.

Information advertising his legal services that is published on the Internet states that Copeland's practice concentrated on estate planning and Medicaid planning associated with the preservation of assets, powers of attorney and wills and trusts.

Through estate planning and elder law seminars that Copeland arranged through his law firm, and with the help of six financial planners and investment counselors (all but one of them from Georgia) to whom he paid commissions for referrals, Copeland recruited victims from Georgia, Florida, Texas, Missouri and South Carolina who invested funds with him ranging from a few thousand dollars to more than $1 million, according to court records.

Copeland paid those financial planners commissions ranging from 4 percent to 6 percent of the funds invested in return for their referrals, according to court papers. The attorney also paid additional commissions if referrals agreed to reinvest, rather than withdraw, their reported earnings, court papers stated.

This week, federal prosecutors and an attorney with the SEC declined to identify any of the financial planners who referred investors to Copeland, saying that the federal investigation that led to Copeland's guilty plea is ongoing.

According to court papers, Copeland had been an attorney for 10 years before he began soliciting investors in what federal prosecutors describe as a classic Ponzi scheme. Named for famed swindler Charles Ponzi, the scheme collects money from legitimate investors but pays returns on those investments only by luring in additional investors and using their contributions to pay the scheme's original participants.

A Ponzi scheme eventually collapses because it requires more and more investors and an increasing flow of cash to pay returns required to sustain the fraud.

"The scheme is unsustainable inherently," Anand explained. In Copeland's case, "He was having to start paying people. He couldn't get any money."

Through an entity called Advanced Asset Strategies -- which court papers say he operated out of his law firm -- Copeland solicited investors for what he billed as "private mortgage lending" that would produce returns as high as 15 percent to 18 percent annually, according to court records.

Copeland promised that investors' funds would be used as short-term loans to buy or renovate residential properties, according to court papers, and that he would locate "suitable borrowers" or "suitable real estate" that would generate the promised returns.

An Advanced Asset Strategies brochure that Copeland distributed assured investors that "your loan is secured by the actual property that the real estate investor purchases. That gives you security. ... The protection of your loaned money is in the property's equity. We are dealing with properties of 40 percent equity or greater."

According to the SEC complaint, Copeland's credibility with investors "was enhanced by the fact that he was a licensed attorney with his own real estate and elder law practice, he was a speaker at seminars, and he had co-authored a published book on estate planning."

But, according to the criminal information, Copeland "engaged in little if any real estate development or financing and was using little if any investor funds for legitimate profit-making activities. Most of the notes and security deeds were fabricated and were never filed with any court or other government office. ... He had never consistently generated 15 percent annual returns, and was not investing the funds as represented, and had no reasonable basis to project future profits of 15 percent annually."

Investors' funds also flowed through Copeland's law firm, specifically the firm's escrow and operating accounts, according to court records, and he commingled investor funds with monies he received from his law practice.

Because Copeland was not generating any real profits on investor funds, he could only pay existing investors by recruiting new ones and diverting their newly invested monies to his older investors, according to court papers.

In perpetuating the frauds, Copeland created fictitious promissory notes, fake warranty deeds, bogus security deeds and property appraisals, court papers state. The borrowers listed on those notes were often entities that Copeland controlled, and Copeland personally signed notes on behalf of at least five companies that he controlled, "each of which essentially operates as his alter ego," according to the SEC complaint.

Sometimes, Copeland also would appropriate addresses of real properties owned by clients for whom he had handled real estate closings, Anand said, adding that he doesn't yet know how many investors' deeds contained misappropriated addresses.

The true owners of those properties should not be harmed as a result of those fictitious notes and deeds, the federal prosecutor said, because Copeland never registered those deeds in the state's county courthouses. "But we're still going through a lot of transactions," he continued, "and I can't say that it wouldn't be a problem. ... A number of victims are looking into what rights they may have. I can't say there won't be people who will attempt to assert their rights. I can't opine on whether that will be effective."