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Former bankruptcy trustee pleads guilty in LandAmerica case
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Former bankruptcy trustee pleads guilty in LandAmerica case

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A former Richmond lawyer pleaded guilty in federal court Thursday to “obstructing an official proceeding” in connection to his wrongfully obtaining $4 million, primarily from the bankruptcy of the LandAmerica Financial Group.

Bruce H. Matson, 64, faces up to five years in prison when sentenced Nov. 22 by U.S. District Judge John A. Gibney Jr.

Matson’s law license was revoked last year by the Virginia State Bar after he admitted improperly disbursing $2.8 million in LandAmerica liquidation trust funds to himself and another lawyer.

Matson, a longtime attorney in the now-defunct Richmond-based LeClairRyan law firm, was charged this month by federal authorities with corruptly obstructing and impeding the proper administration of the law in an official proceeding pending before the United States Trustee Program. The program is a component of the U.S. Department of Justice.

Federal sentencing guidelines, which are not binding on the judge, likely will call for a sentence below the maximum. Nevertheless, Gibney warned Matson on Thursday that “it is very, very likely in this case that you will go to jail for a while.”

Gibney said later during the hearing that Matson’s misconduct, outlined in a statement of facts filed in the case, shows “a long history of malfeasance.”

Matson was represented at the hearing by Richard Cullen, a former Virginia attorney general, former U.S. attorney for the Eastern District of Virginia and the former chairman of McGuireWoods LLP; by Brandon Santos, a partner at McGuireWoods and a former prosecutor; and by Danny Onorato, a former federal prosecutor.

“You have quite a troika of attorneys here today,” Gibney told Matson.

The case is being prosecuted by Katherine Lee Martin and Kevin S. Elliker, assistant U.S. attorneys.

In 2019, Matson made false statements concerning allegations that he misappropriated funds as a court-appointed trustee in the bankruptcy of LandAmerica Financial Group, according to court documents.

“A federal investigation into those allegations uncovered multiple instances of Matson’s embezzlement from the LandAmerica Trust between 2015 and 2018, totaling approximately $800,000 in misappropriated funds,” prosecutors said.

The U.S. attorney’s office also said that Matson manipulated the budget for LandAmerica’s post-bankruptcy wind-down period so that he could divert residual funds to himself and others after the close of the bankruptcy, when he would no longer be subject to scrutiny by creditors and the U.S. Bankruptcy Court.

Matson siphoned away more than $3.2 million for personal payments to himself and others, depleting the trust account more than two years before the end of the wind-down period.

Investigation also uncovered an unrelated case of Matson embezzling $23,000 in 2016 from the estate of Forefront Capital, a defunct futures broker for which Matson served as receiver and debtor-designee.

In total, between 2015 and 2019, Matson wrongfully obtained more than $4 million in bankruptcy-related assets, prosecutors said.

Santos told Gibney on Thursday that all of the money has been paid back.

LandAmerica, a Glen Allen title insurance company that was one of the largest in the U.S., filed for Chapter 11 bankruptcy protection in 2008. In 2009, Matson was appointed the liquidation trustee by the U.S. Bankruptcy Court for the LandAmerica Financial Group Liquidation Trust.

In 2015, Matson was appointed to serve as the fiduciary of the wind-down funds. The Virginia State Bar revoked Matson’s law license last November after he admitted disbursing more than $2.8 million in wind-down money in 2019 to himself and another lawyer that was not to be disbursed until this year.

In a Nov. 13, 2020, affidavit filed with the state bar, Matson acknowledged the bar was investigating him and he consented to the revocation of his license because he could not successfully defend himself against the misconduct charge. He said $1.5 million was given to another lawyer and $1 million, plus another $341,000, to himself.

The money was ultimately returned to the fund, according to Matson’s affidavit. He also said in the affidavit that “it is my position that I disbursed the $2.5 million as discretionary bonuses and that I preserved the $341,000 in an escrow account which was in my name.”

In addition to his work as a lawyer, Matson has written books, including several about the Appalachian Trail. One titled “The Race Before Us: A Journey of Running and Faith” was reviewed in the Richmond Times-Dispatch in 2013 by Virginia Supreme Court Justice William C. Mims, a distance runner.

Though Gibney expressed some concerns, Matson was allowed to remain free pending his sentencing on conditions that included surrendering his passport and refraining from drinking alcohol.

Raj Parekh, acting U.S. attorney for the Eastern District of Virginia, said, “Matson abused his position as an attorney, officer of the court, and bankruptcy trustee to enrich himself at the expense of the people whose very interest the court appointed him to protect.”

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