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Nigerian Embassy Demands $6.2 Million Damages Over Tax Refund Embezzled By Ugwuonye, Law Firm

Newsfact Online


Nigerian Embassy Demands $6.2 Million Damages Over Tax Refund Embezzled By Ugwuonye, Law Firm

Emeka Ugwuonye during one of his Nigerian trials

Embattled Nigerian lawyer, Emeka Ugwuonye, and his law firm, ECU Associates, may be ordered to pay more than $6 million for confiscating and embezzling a tax refund of $1.5 million belonging to their erstwhile client, the Embassy of Nigeria. Newsfact Online obtained a court document showing that the embassy’s attorneys are asking a judge to compel Mr. Ugwuonye and his firm to pay $6.2 million in restitution and additional costs.

In a motion for default judgment, the Embassy seeks a ruling by the United States District Court for Washington, DC ordering Mr. Ugwuonye to pay the following:

·      $1.55 million in base compensatory damages;
·      Prejudgment interest on the tax refund in the amount of 6% per annum commencing on November 20, 2007;
·      Punitive damages in an amount equal to two   times the total compensatory damages, inclusive of prejudgment interest;
·      Post-judgment interest in accordance with 28U.S.C. § 1961; and
·      Such other relief as the court may deem just and proper.

The court also granted the Embassy another $1,200 in punitive sanction over motions it filed last year to compel to Mr. Ugwuonye to answer discovery requests and interrogatories.

Last week, Justice Rothstein gave a ruling in which she upheld the embassy’s claim that Mr. Ugwuonye embezzled $1.55 million that was meant as a tax refund to the embassy. The embassy had hired Mr. Ugwuonye to provide legal help in the sale of some of the embassy’s real estate assets between 2005 and 2007. As a sovereign entity, the embassy was exempt from paying taxes to the US government. But when the Internal Revenue Service (IRS) sent a tax refund cheque for $1.55 million, Mr. Ugwuonye lodged it into his own account. He then began to draw down the account, claiming that the embassy owed him for legal work not related to the real estate transactions.

Last week, the court ruled that he must refund the money.

In a renewed motion for default judgment dated May 7, 2013, the embassy described the conduct of ECU Associates on the matter as “inexcusable.”

“The Court should not permit any law firm or attorney to unilaterally seize a client’s funds and ignore subsequent requests by the client for documentation supporting any entitlement to the funds,” it argued.  “ECU Associates’ wrongful conduct is even more egregious in this case because it purported to possess superior knowledge of U.S. law and invoked false legal rights over a foreign sovereign that relied upon ECU Associates to represent its legal interests in the United States.”

Making its case for punitive damages, the embassy reminded the court that, as a foreign sovereign, it hired ECU Associates and Mr. Ugwuonye to advise it as to matters of U.S. law, and relied on them to represent its best interests and trusted them to tell the truth.

But rather than honor those professional obligations, it said, ECU Associates and Mr. Ugwuonye knowingly provided the Embassy with erroneous legal advice, including by permitting the tax to be withheld from the property sale proceeds and by informing the embassy that they could unilaterally take the tax refund for themselves.

“They exploited the Embassy’s trust for their own financial gain. They led the Embassy to believe that they were helping it interact with the U.S. Government to secure the refund based on the Embassy’s status as a foreign sovereign and that they would deliver the refund to the Embassy promptly upon receipt.”

It further noted that after obtaining the tax refund in November 2007, ECU Associates did not immediately contact the Embassy or deliver the funds.

“To the contrary, in a December 12, 2007 letter, ECU Associates and Ugwuonye represented to the Embassy that that they did not yet have access to the funds and misled the Embassy into believing that they would deliver the funds when they became available.  In reality, ECU Associates and Ugwuonye had already deposited the funds into their account three weeks earlier.

“In fact, ECU Associates and Ugwuonye had withdrawn $550,000 of those funds from the account on December 3, 2007, nine days before they misrepresented to theEmbassy that the funds had not yet cleared.”

The Embassy further asserted that ECU Associates and Ugwuonye flagrantly disregarded their contractual, fiduciary, ethical and legal obligations to the Embassy by stealing the $1,550,000 belonging to its clients.  “In reviewing analogous case law, it is difficult to find another case in which an attorney or law firm has so brazenly exploited a client for personal financial gain. Indeed, the egregious misconduct of ECU Associates far exceeds that which has previously justified the imposition of punitive damages by this Court.”

In last week’s judgment, Judge Rothstein agreed with submissions made by the embassy’s attorneys regarding sanctions against Mr. Ugwuonye for blatantly violating deadlines and ignoring court orders related to the case.

Those omens do not portend good for the once boisterous lawyer who had sought to fight off both the embassy and anyone who thought he had a case to answer.  He targeted Newsfact Online in a defamation lawsuit that was dismissed in December 2012.  He also lost his appeal last March.

Mr. Ugwuonye has broadly intimidated, harassed and blackmailed several Nigerians for making comments on his fraudulent endeavors relating to the real estate transactions and his alleged stealing of $94,000 belonging to another client, Sola Adeeyo.

Mr. Ugwuonye rushed to the US Circuit Court of Appeal last week asking it vacate the default judgment. Newsfact Online ascertained that his appeal notice was filed Thursday last week, but Mr. Ugwuonye did not submit any document regarding the grounds of appeal.

A DC-based lawyer who had followed the legal brickbats told Newsfact Online that Mr. Ugwuonye’s appeal could be no more than the use of the appellate process to stall a possible conclusion of another pending case before the Maryland Attorney Grievances Commission. The embassy filed a report with the commission seeking professional sanctions against Mr. Ugwuonye for the embezzlement of funds.

Our legal observer said it would be extremely difficult for Mr. Ugwuonye’s appeal to prevail when the docket and the memorandum of Judge Rothstein clearly showed his pattern of flagrant and contemptuous treatment of court proceedings. “He seemed to approach the court proceedings with disdain, often ignoring clear orders given by the lower court,” said our source. He specifically cited Mr. Ugwuonye failure to hire a separate lawyer to represent his law firm, even after Judge Rothstein had barred him from appearing for ECU Associates.


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