Former Richmond attorney pleads guilty to obstructing investigation of bankruptcy embezzlement

A former Richmond attorney pleaded guilty this week to obstructing an official proceeding in connection with his attempts to thwart a 2019 investigation into his own fraudulent conduct as a bankruptcy trustee.

According to court documents, Bruce H. Matson, 64, misled the U.S. Trustee’s Office in 2019 when he made false statements in response to allegations that he misappropriated funds as a court-appointed trustee in the bankruptcy of LandAmerica Financial Group.

A federal investigation into those allegations uncovered multiple instances of Matson’s embezzlement from the LFG Trust between 2015 and 2018, totaling approximately $800,000 in misappropriated funds.

“Matson abused his position as an attorney, officer of the court, and bankruptcy trustee to enrich himself at the expense of the people whose very interest the court appointed him to protect,” said Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia. “As part of our unwavering commitment to pursuing equal justice under the law, we will continue to root out the fraudulent conduct of those who violate the public’s trust and use their positions of power to conceal their crimes.”

Additionally, Matson manipulated the budget for LFG’s post-bankruptcy wind-down period so that he could divert residual funds to himself and others after the close of the LFG bankruptcy, when he would no longer be subject to scrutiny by LFG creditors and the Bankruptcy Court. In particular, Matson misrepresented the amount of money needed for the wind-down process and obscured the amount of money actually retained in Trust accounts.

In order to access these residual funds, Matson also inserted language into the budget the night before it was filed with the Bankruptcy Court. This language seemingly gave Matson the authority to pay discretionary bonuses using residual funds. Matson knew the last-minute language included in the budget contradicted other court filings, but he instructed other trust professionals not to amend the filings, including the proposed Final Decree ultimately endorsed by the Bankruptcy Court in December 2015.

As a result of this conduct, Matson was able to siphon away more than $3.2 million for personal payments to himself and others, depleting the Trust account more than two years before the end of the wind-down period.

The federal investigation also uncovered an unrelated instance of Matson embezzling approximately $23,000 in 2016 from the estate of Forefront Capital, a defunct futures broker for which Matson served as receiver and debtor-designee. In total, between 2015 and 2019, Matson wrongfully obtained more than $4 million in bankruptcy-related assets.

Matson is scheduled to be sentenced on Nov. 22. He faces a maximum penalty of five years in prison.

“The investigation into Mr. Matson’s conduct as a bankruptcy trustee resulted in authorities uncovering a separate, unrelated incident. His plea today, for obstruction, is an admittance of responsibility,” said Stanley M. Meador, Special Agent in Charge of the FBI’s Richmond Field Office. “This plea is also a reflection of the investigative team’s hard work and partnership between the FBI, the U.S. Postal Inspection Service, and the United States Attorney’s Office, Eastern District of Virginia.”

“This guilty plea highlights the joint efforts of the U.S. Postal Inspection Service, our law enforcement partners, and the U.S. Attorney’s office to prosecute those who seek to exploit and embezzle by misleading the government,” said U.S. Postal Inspector in Charge for the Washington Division Daniel Adame. “The mission of the U.S. Postal Inspection Service is to protect consumers by ensuring the nation’s mail system is not used in furtherance of criminal activity, which safeguards our customers’ trust in the United States Postal Service.”