When a Legal Assistant Stole $92 Million
In August 2003, Eddie Liu, a longtime legal assistant at top Taipei law firm Lee and Li, asked for a year’s leave of absence to study for the bar exam, which he had previously failed. His request was granted, and firm managing partner C. V. Chen recalls personally wishing the 41-year-old Liu the best of luck on his studies and the exam.
“Eddie Liu had been with the firm for 13 years,” says Chen. “He was a senior assistant and had never acted out. Till today, it still puzzles us why he did it.”
What Liu did was steal $92 million that belonged to a major client—U.S. flash drive maker Sandisk Corp. Lee and Li uncovered the theft on Oct. 13, 2003, just four days after Liu departed the 101-lawyer Taiwanese firm for the leave from which he would never return.
To observers of today’s international legal scene, accustomed to seeing partners squabbling over money issues or firms falling apart ahead of lease renewals, what the partners at Lee and Li did next may be even more shocking. Ten years ago this week, they agreed on a plan to fully repay Sandisk out of their own pockets.
Today, Lee and Li’s partners are finally almost finished repaying their client; Chen thinks next year they will finally be free and clear. At that time, the 40 partners who were at the firm at the time of the theft will have paid an amount in cash and free legal services rivaling the largest legal malpractice settlements ever paid by U.S. firms, and they will have done so without the help of professional liability insurance, which Lee and Li did not have.
Liu, widely believed to be hiding somewhere in mainland China, is still one of Taiwan’s most-wanted fugitives, and the money he stole remains unrecovered. For a while, the firm hired private investigators to try to find him, but Chen says it’s no longer trying. Lee and Li today is stronger than ever, and remains Taiwan’s leading law firm with clients like Apple Inc., Microsoft Corp., The Carlyle Group and, of course, SanDisk.
“When I think about it now, all the money proved worth paying, ironically,” Chen says.
“Since this crime happened, something must have been very wrong with our firm,” he explains. As a result, the firm went through a “thorough soul-searching, from top to bottom, inside and outside.”
In 2002 Sandisk had authorized Lee and Li to open a trading account in which it could deposit the shares of Taiwanese companies in which it held an interest, with an eye toward selling them and reinvesting the proceeds. SanDisk placed 183 million shares of Taiwanese semiconductor maker United Microelectronics Corp. into the account in July 2003.
Lee and Li had been granted a power of attorney over this account and held its associated chops—seals often used in China and Taiwan in place of authorizing signatures. Liu somehow gained access to these chops as well as the account passbooks and, in August 2003, used them to forge documents authorizing the transfer of the UMC shares to several brokerage accounts he had set up in Taiwan and Hong Kong. He sold these shares for $92 million, which he then converted to diamonds and traveler’s cheques. By the time Lee and Li realized what had happened, Liu had fled the country.