East Bay Attorney Convicted Of Embezzling $400K From Clients: DA

MARTINEZ, CA — A Contra Costa County jury found an attorney guilty this week of embezzling $400,000 from his clients.

The guilty verdicts in the trial of William James Reed, 80, formerly of Alamo, were reached Tuesday by jurors in a Martinez courtroom.

Reed was convicted of felony grand theft by embezzlement and a white-collar crime enhancement related to a settlement agreement with PG&E for victims of the 2006 Zamora Fire near Woodland.

According to prosecutors at the Contra Costa County District Attorney's Office, Reed invited fire victims to a town hall meeting in Zamora where he assured them that under the law, PG&E would be responsible for attorney's fees, not the clients. He also wrote a letter that was purportedly from a fellow landowner impacted by the fire, stating in the letter that PG&E would cover attorney's fees for any lawsuits brought against it in the fire.

When two families, including elderly victims with ranch properties damaged by the fire, agreed to have Reed represent them, Reed presented unclear and confusing lawyer-client relationship documents. He included 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, the DA's Office said.

In 2008, after the victims agreed to his legal representation, Reed filed a lawsuit against PG&E on their behalf.

In 2013, Reed brokered a $200,000 settlement with PG&E for each of the victim families and received the $400,000 settlement from an attorney representing PG&E — but did not inform his clients about the money, prosecutors said.

His clients found out about the settlement money at an unrelated court hearing.

When asked about it, Reed proposed a settlement agreement stating the clients would each give him $103,000 for attorney’s fees and costs, and in turn, they would each receive $97,000, prosecutors said.

When the victims refused to sign Reed’s proposed agreement because it contradicted their initial agreement with him, years of civil litigation ensued.

At some point, it was discovered that Reed used some of the settlement money to pay his lawyers to fight the victims.

In 2017 when the DA's Office was alerted to possible criminal violations related to the victims' settlement money, a forensic accountant analyzed Reed's bank account statements and determined Reed spent the entire $400,000 on himself, prosecutors said.

Felony grand theft by embezzlement charges were then filed against Reed.

When the case went to trial Oct. 13, Deputy DA Scott Prosser had to prove to a jury that beyond a reasonable doubt, Reed was not entitled to the victim’s settlement money for attorney’s fees. A key piece of evidence presented to the jury during the trial was the document stating that Reed’s fees would be paid by PG&E and not the victims.

The jury deliberated for a few hours, then convicted Reed on two felony counts of grand theft by embezzlement and a white-collar crime enhancement, establishing illegal possession of over $100,000.

"It is unconscionable for an attorney to lead a client to believe they were not responsible for attorney’s fees, and then take 100 percent of the client’s money from a settlement agreement," Prosser said, following the verdict. "And we are very pleased with the outcome in our fight to seek justice for the victims in this case."

Reed faces imprisonment for three years and eight months and will be sentenced Jan. 10 by Superior Court Judge Charles Treat.