Bruce Matson, a prominent, longtime local bankruptcy attorney formerly of LeClairRyan, had his law license revoked last week by the Virginia State Bar after he admitted to inappropriately pocketing seven figures worth of funds from the long-dormant LandAmerica bankruptcy trust account.
The disbarment stems from an episode last year when it was discovered that Matson withdrew $2.8 million from the LandAmerica wind-down account and put the money into his own personal account and those of his associate Robert Smith, and their wives.
Matson, who has spent a portion of his nearly 40-year law career as a bankruptcy trustee, acting as the main fiduciary on often complex corporate bankruptcy cases, oversaw the untangling of LandAmerica’s collapse. The once mighty Henrico-based title insurance firm went under in a heap in 2008 as the Great Recession was beginning.
The case was brought to what was considered a successful conclusion in 2015, with Matson recovering ample funds for creditors and setting aside around $3 million should incidental matters arise. Those funds were not to be disbursed until the wind-down period came to a close in 2021.
But in August 2019, it was brought to the bankruptcy court’s attention that the wind-down funds were missing and the account’s balance was zero.
The discrepancy was brought to light by Protiviti, which works as a financial adviser on bankruptcy cases, including those of LandAmerica and, and at the time, LeClairRyan.
Smith, a former employee of Protiviti, led the advisory firm’s work on the LandAmerica case.
When questioned about the missing funds last year, Matson told Judge Kevin Huennekens the money was accounted for and gave various excuses, including purported business reasons, for the money being moved about and ultimately into personal accounts.
“In retrospect, that clearly was probably not the best idea,” Matson told the judge. “And I may have made a mistake.”
In an affidavit attached to the VSB’s revocation order last week, Matson admitted that the funds were transferred to his and Smith’s accounts “for our benefit.”
“It is my position that I disbursed the $2.5 million as discretionary bonuses and that I preserved (an additional) $341,000 in an escrow account which was in my name,” he said in the affidavit, dated Nov. 13.
While the full $2.8 million has since been returned by Matson to the LandAmerica bankruptcy estate, the VSB said its investigation of the matter was prompted by previous media reports about the missing funds.
When confronted by the VSB, Matson conceded that the allegations are true and that he could not successfully defend the claims. He ultimately consented to revocation of his license to practice in Virginia.
Matson did not respond to requests for comment Tuesday afternoon.
Smith, who now works at patent analytics and litigation finance startup Randolph Square IP, has not been charged by the VSB to date. While Smith has a law degree from University of Richmond, he does not appear to have an active practice. Matson also was previously involved with Randolph Square.
No further allegations have been filed in federal court related to the matter.
The saga may continue on within the confines of the LandAmerica bankruptcy case, which was forced to be revived four years after its conclusion as a result of the misappropriated money.
Matson, as a result of last year’s hearings, was forced to relinquish his role as trustee in the case, despite his pleading with the judge to stay on. Veteran Richmond attorney Benjamin Ackerly, who is retired from Hunton Andrews Kurth, was appointed to replace Matson.
Ackerly was tasked with investigating and tracking down the transfers Matson made and distributing the remaining funds back to the estate. That investigation continues.