UPDATED: Firm says Atlanta law partner stole $30 million

Claims unfounded, arose from ‘gargantuan accounting’ mess, his lawyer says

A former top partner of a prominent Atlanta law group that handles real estate transactions from Alabama to Delaware has been accused by his own firm of taking $30 million from various accounts for his own use, according to a lawsuit in Fulton County Superior Court.

Nathan E. “Nat” Hardwick IV, a Buckhead resident who ran the residential practice at Morris Hardwick Schneider, diverted money held in certain bank and escrow accounts controlled by the law firm and a related title company, the firm claims in the civil lawsuit.

It claims Hardwick used the money to help pay for a $3 million condo in the tony St. Regis Atlanta hotel and wired $4 million to casinos. The suit also accuses him of diverting $6.3 million to a company he controlled, $1 million for private jet services and about $645,000 to cover losses in failed real estate investments.

Hardwick’s attorney called the allegations “false,” adding “Nat looks forward to clearing his name.”

“Nat became aware of a problem with the accounting earlier this summer and immediately alerted his partners and initiated a review by outside auditors,” high-profile defense attorney Ed Garland said in a statement.

In an interview, Garland said the controversy over the movement of funds boils down to a “gargantuan accounting mess” within the firm that Hardwick discovered, but that there was never any financial misconduct on his client’s part.

Garland said he is not aware of any criminal investigations, adding “nor should there be.”

Phone and email messages left for executives and an attorney for Morris Hardwick Schneider and the related title company, Landcastle Title, were not immediately returned.

The effects of the litigation on customers’ pending home or other real estate purchases that are handled by the law and title firms are likely minimal, as a major title insurer has stepped in to aid Landcastle, industry observers said.

“Their reputation has suffered a major blow,” said Ken Chalker, a closing attorney in Kennesaw with Chalker & Chalker.

He said clients of the firms shouldn’t worry, but the allegations of impropriety are “going to raise scrutiny on all closing attorneys.”

Fidelity National Title Group, a major title insurance firm, announced it has acquired a 70 percent stake in Landcastle. Fidelity “stands behind the funds you have on deposit, or may in the future deposit” with Landcastle or the law firm, according to a letter to clients posted on the Morris Hardwick Schneider website.

Buyers of real estate typically deposit money with a third party until the transaction is consummated and the title is transferred from seller to buyer.

A separate letter to clients stated “a primary focus of both Landcastle Title and Fidelity is to protect the many consumers, customers, lenders and employees who would have been harmed by the escrow account misappropriations.”

David Lefkowitz, a legal malpractice attorney and an adjunct professor at the University of Georgia School of Law, said he is unsure what effect the case might have on the Morris Hardwick Schneider law firm.

“Clients want to be assured their funds are being held in safekeeping when they’re in a law firm escrow account,” he said.

The suit claims that, in addition to diverting the money, Hardwick created fraudulent bank records to conceal shortages. Also named in the suit are Divot Holdings, a company Hardwick controls, and “John Does” that might have conspired or aided in alleged wrongdoing.

“Anybody who knows Nat knows that he loves the law firm, its employees, the attorneys and the firm’s many loyal clients,” Garland said. “He would never knowingly or intentionally take money he was not entitled to or harm the firm or its clients in any way. The law firm was profitable, and Nat believed that all of the money he received was properly distributed to him as his share of the profits of the firm.”

Hardwick has no history of disciplinary action with the State Bar of Georgia.

Garland said Hardwick helped grow Morris Hardwick Schneider, formed in a 2005 merger, to offices in 13 states with 800 employees. The firm aids in 36,000 transactions each year involving billions of dollars, Garland said. Hardwick recently resigned, he added.

Hardwick is on the board of pro golfer Dustin Johnson’s family foundation, according to the organization’s website, and he’s listed as the president of Dustin Johnson Enterprises, a for-profit company registered in Florida.

A message left with the foundation was not immediately returned.

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