Despite a challenging negotiation due to one side being in prison, a resolution is in the works to end the legal dispute between Bruce Matson and the LandAmerica bankruptcy estate.
Matson, a longtime local bankruptcy attorney who is currently serving a nearly four-year sentence for stealing millions of dollars from the LandAmerica wind-down fund during his time as the case’s trustee, is in settlement talks with successor trustee Benjamin Ackerly.
The settlement is playing out through a mediation process, with longtime Judge Frank Santoro acting as mediator.
If reached, the agreement would end a slow-moving lawsuit Ackerly filed in January, claiming Matson breached his fiduciary duty to the estate as a result of his crimes and seeking a judgment forcing Matson to pay back at least $480,000.
That would be in addition to more than $4 million Matson has already paid back into the LandAmerica trust from the time he was caught stealing the money in 2019 through October 2021 just prior to his sentencing.
At a hearing Tuesday, attorneys representing Matson and Ackerly told presiding Judge Kevin Huennekens that the framework of a settlement has been drafted but they’re awaiting more information from Matson.
“It’s been slow,” Brown said. “I think some of the communication difficulties in coordinating calls with Mr. Matson probably have slowed it down a bit.”
Matson was sentenced last fall and is currently held at FCI Morgantown, a minimum-security compound in West Virginia. His status as a prisoner has hamstrung Ackerly’s case from the get-go.
After being sentenced in November in Richmond federal court, Matson has apparently moved from federal facilities in Hanover, Petersburg, Philadelphia and Pittsburgh, and finally to Morgantown.
The process was also slowed initially by Matson’s attempts to represent himself in the case from prison. He argued in court filings earlier this year that his process of being “in transit” with the Federal Bureau of Prisons hindered his ability to properly receive court documents in a timely manner and his efforts to mount a proper defense.
Prior to entering mediation, the two sides had sparred over whether Matson could reasonably represent himself in the matter. Ackerly’s camp argued that he couldn’t and a guardian ad litem should be appointed on his behalf to allow the case to move along in a more conventional fashion.
The judge agreed and Matson is now represented by Washington, D.C. attorney Stanley Samorajczyk, who also has enlisted attorney Roy Terry, formerly of Sands Anderson and now in his own practice.
Ackerly, who was brought on to replace Matson as the scandal was unfolding, is represented in the matter by attorney Tyler Brown of Hunton Andrews Kurth.
At Tuesday’s hearing, a pre-trial conference in the case was extended to October while the settlement process plays out.
Huennekens concluded Tuesday’s brief hearing by saying he’s pleased that both sides are working to avoid a trial.
“I have to say I was not relishing to try this matter,” he said.
A longtime LeClairRyan attorney, Matson was convicted on one count of obstruction of an official proceeding. The obstruction was related to lies he told during the ensuing investigation after the initial missing $3 million in LandAmerica funds first came to light.
Ackerly, as part of his investigation as substitute trustee, found that Matson was “out of trust” much earlier than previously disclosed and began comingling money from the estate with his own funds in 2015.
The comingling included Matson’s use of a fraudulent bank account, overpaying trustee fees to himself and paying hundreds of thousands of dollars to LeClairRyan for his own benefit. He also used LandAmerica funds to make charitable contributions in his name to groups like the Appalachian Trail and Veritas School and to pay for a holiday party he once hosted at a golf course.
As part of this latest lawsuit, Ackerly also is trying to recover unspecified costs incurred by the estate to-date and in the future related to unwinding the mess left by Matson’s actions.