North Myrtle Beach attorney suspended for two years from practice for misconduct

troot@thesunnews.comDecember 13, 2012 

An agreement in the case of former North Myrtle Beach lawyer, who was suspended from practice following an arrest for failing to pay income taxes, has been accepted by the S.C. Supreme Court, according to an opinion released Wednesday.

Chad Hatley, 44, the son of North Myrtle Beach Mayor Marilyn Hatley, was suspended from the practice of law on Sept. 28, 2011, following his arrest five days earlier on the tax charges.

On Wednesday, state Supreme Court justices issued an opinion that approved an agreement, which retroactively suspends Hatley for two years from the date of his initial suspension.

Hatley could not be immediately reached Thursday for comment about the opinion.

The opinion showed that Hatley can file a petition for reinstatement after he has completed the Legal Ethics and Practice Program Ethics School and Trust Account School and fully reimbursed all clients and entities as result of his misconduct. Hatley has 30 days from Wednesday’s opinion to pay the costs state officials incurred in the investigation and prosecution of the matter, but it did not list a specific amount.

The allegations detailed in the opinion included Hatley failing to discover two paralegals, who once worked for him at separate times, misappropriating funds; the tax allegations; failing to request an alimony termination for a client; failing to pay a $100 in court costs for a Feb. 17 civil contempt order in Family Court; failing to pay a court reporter in a timely manner; paying a title insurance company from a closed checking account; and entering into a business relationship with a client without getting signed waivers and disclosures.

On Dec. 15, 2011, Hatley pleaded guilty to three counts of failure to pay taxes, file a return and keep records, according to the Horry County public index. Circuit Court Judge Edward Cottingham sentenced Hatley on each charge to a year in jail or pay a $5,000 fine and 15 days of public service.

The S.C. Department of Revenue filed charges against Hatley after saying that for tax years 2005 and 2006, Hatley earned $461,816 in gross income with a tax due of $21,599, but he failed to file individual income tax returns and failed to pay the tax due. Those charges are felonies and if convicted, Hatley faces up to $20,000 in fines and/or 10 years in prison.

During tax years 2007 and 2009, Hatley earned $164,408 in gross income, but he failed to timely file his individual income tax returns for those years. Those charges are misdemeanors and if convicted, Hatley faces up to $20,000 in fines and/or up to two years in prison.

Also between Dec. 31, 2005 to June 30, 2009, revenue officials said Hatley, who was the only member of the Hatley Law Firm, failed to account for and remit more than $11,826 of state income taxes, according to the release. For this time period, the company deducted from the taxable wages of its employees $17,562.22 in state income taxes and sent the state Department of Revenue $5,735.53 of the taxes withheld.

Other facts of the opinion included the following:

A former paralegal misappropriated $21,665.29 in funds from 20 separate closings and caused 28 checks to be issued on her behalf. The woman, who was not identified, was terminated and later charged; and another former paralegal misappropriated $473 on her behalf during a closing.

Hatley acknowledged he “failed to ensure procedures were in place that would thwart staff misappropriation and misconduct,” according to the opinion.

Hatley admitted he issued a check in 2005 from a closed account to a title insurance company, which delayed their payment.

Hatley also said he failed to pay a court reporter in a timely manner for her services rendered in 2008. After being summoned to Probate Court, Hatley paid the bill.

Contact TONYA ROOT at 444-1723.

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