Ex-Portland lawyer sentenced to more than 8 years in prison for stealing more than $3.8 million in clients’ money

Former personal injury lawyer Lori E. Deveny, who cheated more than 135 clients out of more than $3.8 million, was sentenced Monday to nearly 8 ½ years in federal prison.

U.S. District Judge Michael W. Mosman called Deveny’s fraud more “calculating and predatory than desperate,” though he said he believed part of what contributed to Deveny’s downfall was the emotional and physical abuse she endured from her late husband, who took his own life in 2018.

Deveny’s defense lawyer pointed to her terrible marriage to a controlling husband who was 16 years older and convinced her to do things she never would have done before.

But the judge said that still doesn’t explain why Deveny crossed the “huge line” instilled in all trial lawyers from the time they’re sworn in: Stealing from clients will get you disbarred, and you’ll wind up in jail.

In addition to sentencing Deveny, 57, to eight years and five months in prison, Mosman ordered her to pay $4.6 million in restitution in what the state bar has called the worst fraud by a single lawyer in Oregon’s history.

Deveny intends to forfeit her home, her lawyer said.

The sentence came after the judge heard testimony from five of Deveny’s victims, many of whom said the lawyer betrayed their trust when they were struggling to heal from serious injuries.

Gabriella Davidson said she was 18 and relied on a promised settlement from a car accident case to help pay college tuition, but the payment never materialized.

Aubrey Hunter, who was in a head-on car crash, said he had to dip into his retirement funds after losing his job, while Deveny kept stringing him along with all kinds of excuses why his settlement wasn’t forthcoming.

“She used me,” said Nancy Freyer , who came to court on crutches, of Deveny. “She told me I was a model client but she failed me.”

She said a doctor removed the big toe on her right foot without consent and she hired Deveny to file a lawsuit. But Deveny kept the medical settlement, claiming she was working to reduce a Medicare lien, Freyer said.

“I felt like I was nothing to her,” Freyer said. “She preyed on me at my most painful, vulnerable time in my life.”

Assistant U.S. Attorney Claire M. Fay called Deveny an “unfeeling financial predator” who used lies and manipulation to defraud her clients. Many had suffered serious brain and bodily injuries in traffic crashes or other accidents and were awaiting payments from insurance company claims that Deveny had filed on their behalf.

Instead, Deveny stole the identities of countless clients, forged insurance checks made payable to them and deposited the money to her own bank accounts to cover her and her husband’s lavish lifestyle.

“For 12 long years, she systematically robbed her clients, not with a gun and a mask, but with a pen and a law license,” Fay said.

HUNTING AND CIGARS

Deveny used her clients’ money to pay for “unbridled and decadent spending” on big game hunting trips to Africa, taxidermy costs for the hunting trophies, guns and ammunition, travel to Las Vegas, Mexico, South Africa and Alaska, cruises and fishing trips, according to Fay.

Deveny bought more than $220,000 worth of expensive cigars from Broadway Cigars and more than $60,000 for stays at the Desert Sun Resort, a Palm Springs luxury nudist resort, Fay said.

Deveny also used the money to support her husband’s photography business and remodel their home to include a dog kennel, cigar room and new roof.

She left many of her victims “either destitute or barely able to make ends meet,” Fay said.

Some didn’t know Deveny had settled their claims. When others complained about the length of time to get their payments, Deveny would offer up excuse after excuse, even claiming a bogus death in her family, Fay said.

Hunter, who was in a head-on crash in 2014, said he suffered a head injury and his ankle had to be reconstructed in two surgeries.

Deveny told him he should expect a couple of hundred thousand dollars in a settlement, he said, but then she stalled, telling him that one lawyer she was dealing with had died and then about a year later that the insurance company had gone into bankruptcy.

He said he was laid off and hit rock bottom, pleading with Deveny to take care of his case. He has known her for nearly three decades, he said.

“I was a complete fool, just stupid,” Hunter told the judge. “Sorry, I’m so pissed, I was waiting years for this opportunity.”

Hunter said he read in the paper that Deveny was under investigation for defrauding her clients and immediately called her on her personal cellphone. She still denied she had done anything wrong and told him she’d have his settlement by the end of the year, he said.

“Even when you had been caught … you still lied,” Hunter said, turning toward Deveny as she sat beside her lawyer. “By that point, she had already taken all my money. … I don’t know how you can live with yourself.”

$4.6 MILLION IN LOSSES

Deveny was indicted in May 2019. Last June, she pleaded guilty in federal court to mail fraud, wire fraud, aggravated identity theft, bank fraud, engaging in monetary transactions with property derived from unlawful activity and filing a false federal income tax return for 2012.

The charges she pleaded guilty don’t cover a full 12 years though she admitted the scheme began in 2006, Fay said. The charges span . from April 2011 through May 2019. When agents from the Internal Revenue Service and FBI began investigating Deveny, they could only bank records dating back seven years.

Deveny relinquished her law license in Oregon in May 2018.

When factoring losses to Deveny’s lawyer’s trust account at Wells Fargo, the state bar’s restitution account and the Internal Revenue Service, Deveny’s theft resulted in $4.6 million in losses, according to Fay.

She would transfer client settlement money from her lawyer’s trust account to a series of personal accounts controlled by her and her husband, according to the government. She also made large cash withdrawals from her lawyer’s trust account.

Deveny never reported the money she stole from her clients as income on her federal tax returns for 2011 through 2017. She owes $621,137 to the IRS in past due taxes on her ill-gotten gains, Fay said.

The fraud prompted the state bar to raise dues of all its members for two years to cover partial restitution payments of more than $1.2 million to some of Deveny’s clients, according to Fay.

The prosecution sought a sentence of nine years and three months for Deveny, calling her crimes “totally reprehensible” as a sworn member of the state bar and officer of the court.

Deveny’s lawyer, Mark Ahlemeyer, argued for a five-year prison term.

Her crimes were driven by her attempt to cover the costs of her husband’s extravagant spending and his long-standing physical, emotional and sexual abuse of her, Ahlemeyer told the court.

She was intelligent but sheltered socially, he said. She was valedictorian of her high school class and active in the Church of the Nazarene.

As the youngest student in her first year of law school at Willamette University College of Law, she met her future husband, Robert Deveny, also a first-year law student in the midst of an acrimonious divorce.

It was her husband who took cruises, went on fishing trips and smoked expensive cigars, Ahlemeyer said. She had to get his permission to be buzzed into their home’s cigar room, he said.

It was her husband’s desire to go to the nudist colony, not hers, Ahlemeyer said.

“This case is not about a serial fraudster or a greedy criminal looking to take advantage of vulnerable individuals. Ms. Deveny is a well-meaning person who loved practicing the law and helping her clients,” Ahlemeyer wrote to the judge.

Since her sophomore year of high school, she wanted to be a lawyer to help others, he said.

Now, Ahlemeyer said, “She is 57 years old and has lost essentially everything she has worked for her entire life. She is ostracized and banned from the only profession she has known. Her name and reputation, once unassailable, are in tatters.”

‘MY DEEPEST APOLOGIES’

The prosecutor dismissed Deveny’s defense, arguing that her fraud continued after her husband’s death in March 2018.

“Her claims that she was a pawn in her husband’s scheme to acquire spending money are unpersuasive, particularly since she continued her larcenous behavior long after he passed away,” Fay said.

Deveny, a past president of the Oregon Women Lawyers group from 2000 to 2001, said she wishes she could go back and change things, starting with her decision to marry Robert Deveny.

“The one thought that overrides everything is how sorry I am to have caused hurt, distress, disillusionment and mostly the betrayal of trust. I want each individual to know that I did not set out to hurt them,” Deveny said.

“I did not choose them specifically to be a target, but I did fail to see them. I see them now and will always feel an obligation to them,” she said. “Regardless of how many I have helped, I will forever remember those I’ve hurt, and I can only express my deepest apologies.”

Deveny was ordered to surrender to the U.S. Marshals Service on Jan. 17.

She’ll be in custody when sentenced on separate but related state charges in Multnomah County Circuit Court on Jan. 26.

In state court, Deveny has pleaded guilty to 28 felony counts of first-degree aggravated theft, seven counts of first-degree theft and one count of identity theft.

She asked to be housed at the federal prison in Tallahassee, Florida, near close friends.

As a result of Deveny’s fraud, the state bar pushed for a change in state law in 2021 that requires an insurance company to notify a claimant directly, as well as the attorney, if a settlement is reached and money is paid out.

— Maxine Bernstein

Email [email protected]; 503-221-8212

Follow on Twitter @maxoregonian

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