By Paul Gable
Attorney and Lexington Chief Magistrate Judge John Rakowsky will have to answer charges in a Nevada lawsuit that he misappropriated funds from his trust account intended for legal expenses in the Southern Holdings case.
The action, Case No. 2:12-cv-02161-GMN-CWH, was brought by Center for Legal Reform (CLR), a Nevada Non-profit Corporation as successor in trust to Resolution Settlement Corporation (RSC), a former Nevada corporation.
The suit brings four causes of action, Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, Intentional Misrepresentation and Conversion of Property.
Key to the charges is the $70,000 in litigation funding that RSC provided to Rakowsky for the Southern Holdings case. According to the pleadings, Rakowsky “intentionally misappropriated the litigation funds by depositing the funds into his personal account and using them for personal purposes.”
Additionally, the suit alleges Rakowsky “intentionally failed to give written accounting for the use of litigation funds” and “denied knowledge of the funding provided by RSC.”
Through a series of connections inside the legal community of South Carolina, Rakowsky has successfully delayed a similar suit in state court. The state action has different plaintiffs and somewhat different pleadings, but the basis remains the same – Rakowsky took money for litigation funds, used those funds for his personal use and has refused, so far successfully with the help of his friends, from accounting for them.
This is a case with a complex set of exhibits and evidence. We will continue to explore the lawsuit if succeeding articles, dealing with a few exhibits in each.
The basic lawsuit as filed in Nevada Federal District Court can be viewed here: Nevada Complaint Rakowsky