Attorney Sentenced to 8 Years for Stealing Insurance Settlement Checks

A former Portland, Oregon personal injury attorney was sentenced Monday to eight years, five months in prison and ordered to pay $4.5 million in restitution for stealing insurance payouts from 135 clients.

Lori E. Deveny’s actions led to the largest loss in history from the Oregon State Bar’s Client Services Fund, which paid just over $2 million to victims of the scheme, said Kateri Walsh, communications director for the Bar. The fund increased its maximum payout to $100,000 from $50,000 after Deveny’s crimes were exposed.

Walsh said the organization received 52 claims with total losses of $3.2 million from Deveny’s former clients. The fund was forced to temporarily raise its annual assessment on attorneys to $50 from $15 to recoup is losses from the scam, but the assessment is not back down to $20.

In response to the fraud scheme, the Oregon legislature in 2021 Senate Bill 180, which requires insurers to notify both the insured and the insured’s attorney when issuing settlement checks. The law went into effect on Jan. 1, 2022.

“We expect that the payee notification will be another deterrent to this type of lawyer malfeasance,” Walsh said. “While rare, the consequences to clients are devastating, as demonstrated by this particularly troubling case.”

Deveny, who is 57, pleaded guilty in June to seven felony fraud and identity theft charges. A 2019 federal grand jury indictment charged her with 24 felony counts.

“While serving as an attorney, Ms. Deveny brazenly stole money that should have gone to pay for health care for her clients for serious injuries and ailments,” stated Kieran L. Ramsey, special agent in charge of the FBI Portland Field Office. “Instead, that money funded things like big game hunting trips to Africa and home remodeling.”

The US Attorney’s Office said in a court filing that Deveny began to pocket her clients’ insurance settlement checks in 2006 or 2007, although charging papers cite only crimes that started in 2011 and continued until she was indicted in May 2019. She forged insurance checks made payable to her clients, deposited the money into her bank accounts and “lulled clients into believing they would receive compensation for their injuries,” the office said.

Deveny spent $173,000 of the money she embezzled on “numerous” big game hunting trips to Africa that she took with her husband and $35,000 on taxidermy expenses for hunting trophies. Expenses included $150,000 in airline tickets for trips to Las Vegas and Mexico, $60,000 on stays at a luxury nudist resort in Palm Springs California, $220,000 on cigars, $58,000 on pet boarding and veterinary expenses, $125,000 on home renovations and $195,000 on mortgage payments, prosecutors said.

“Deveny stole in order to live an extravagant lifestyle that many people only dream about, while leaving her clients desperate and either destitute or barely able to make ends meet,” the government said in a sentencing memorandum.

Deveny’s husband, Robert Deveny, committed suicide in March 2018. Prosecutors say she told them that she was a victim of her husband’s “weird sexual proclivities and avarice,” but she continued to embezzle funds even after her “alleged tormenter” died, the sentencing memorandum says. Prosecutors say her motive was “unadulterated and unbridled greed.”

She continued to steal settlement checks even after she surrendered her law license in March 2018 after the Oregon State Bar investigated misconduct allegations. She repeatedly told clients that their cases would need more time, prosecutors said.

“The cruelest thing of all is knowingly providing false hope,” stated Bret Kressin, a special agent in charge at the Internal Revenue Service’s Seattle field office. “Having already suffered losses, Ms. Deveny’s clients deserved an attorney who represented their best interests. What they got instead was someone who inflicted more loss.”

Deveny has also pleaded guilty to 28 felony counts of aggravated theft and identity theft in state charges filed in Multnomah County Circuit Court. Sentencing in that case is scheduled for Jan. 26.

Federal prosecutors said that Deveny wants to serve any state prison time in federal prison. To do so, she must surrender to federal authorities before she is sentenced for the state charges, a government court filing says.

Top photo: This image, attached to a sentencing memorandum filed by the US Attorneys Office in Portland, depicts Lori and Robert Deveny surrounded by hunting trophies that they financed by thefts from accident victims.