FOX 29 Investigates: Bankruptcy Lawyer's Clients Want Money Back

Some local families say they were in deep financial trouble when they paid a local attorney to file bankruptcy for them. But they claim he kicked them when they were down by taking the money and hitting the road. FOX 29 Investigates' Jeff Cole found him.

Playful 3-year-old daughters aren't the only thing these two South Jersey moms have in common.

Both hired attorney Phillip F. Drinkwater III to handle bankruptcies.

They paid him, but say their cases were never filed, and he's vanished.

"Everybody needs to get every cent back that they gave this man," said one of his clients, Kelly Dayton.

Authorities have been taking their time looking into the claims, FOX 29's Jeff Cole reports.

"Mr. Drinkwater, they claim that you took their money. These are people who didn't have anything. You took their money for bankruptcy filings and made no filing at all?" Cole asked.

"No, it wasn't purposeful," Drinkwater said.

When Atco mother-of-three Katie Brown crashed her fiancé's car, his insurance didn't cover her, and she got sued.

She hoped a bankruptcy payment plan would help her regain her driver's license.

"I have to get rides to work, rides to take my kids to their sports activities after school, ride to get a gallon of milk," Brown said.

She paid Drinkwater $700 to start, sending more when she could. After paying more than $2,300, little progress came the next two months.

Then, she received a letter that Drinkwater "retired." A trustee referred her to a new lawyer, but there was trouble.

"So, [the trustee] got all these files from all Mr. Drinkwater's clients, but he had no money to do the work," Brown said.

Kelly Dayton spent nine years in the Army National Guard, including one in Iraq, before staying home with her young daughter.

A workplace injury to her husband left them seeking bankruptcy protection.

After the Daytons paid $2,900 over nine months, they learned Drinkwater wouldn't represent them, either.

Now, their marriage has fallen apart. Their Williamstown home is in foreclosure. Kelly is living in an apartment with her toddler. An older daughter moved away.

"What do you do at that point?" Cole asked.

"So, I don't hire a new lawyer, and I try to get my money back from this guy," Dayton said.

"How?" Cole asked.

"Just spread the word," answered Dayton.

These two indignant clients chased their lawyer online. They met along the way, found a couple dozen others with similar complaints, and formed a "Duped by Drinkwater" Facebook group.

One member asked us not to show his face due to his line of work. He says money got tight for his family when his overtime dried up.

Upon hiring Drinkwater, they say the lawyer suggested borrowing more, if necessary, to cover his fees. And this was his mortgage advice…

"He said we didn't have to pay it because we were claiming bankruptcy," the client told us, later adding, "The next lawyer, he said, 'No, that's crazy. You can't stop paying your mortgage. You could lose your house now.'"

So far, police say five theft complaints have been filed, and they'd like to talk with Drinkwater, but he's moved out of Pitman, where he had a home and office.

But we were able to locate the 56-year-old and his wife, Sallie.

They turned up living in the rolling hills of Schuylkill Haven, Pennsylvania.

"We have heard from a number of your clients in your legal bankruptcy business who say that you have left them high and dry, sir," Cole said.

"Yeah, I was hospitalized," Drinkwater replied.

"Did you take their money and not do work for them?" Cole followed-up.

"No, um, actually my, my firm was insolvent at the time I was hospitalized," Drinkwater said.

In a letter to New Jersey's Superior Court last fall, Drinkwater wrote that he "experienced a serious mental breakdown."

That plus ongoing health and financial strains led him "to the unavoidable decision" to "close" his practice. His apologetic Nov. 3 letter asks the court to mark him "inactive disabled."

The next week, a trustee was appointed to take control of the law firm, its accounts, and to inventory its files.

"Did you have no idea that you were physically sick before you took these people's money?" Cole asked.

"No, I didn't," Drinkwater answered.

"They don't believe that, sir. They believe that you've hurt them," Cole said.

Drinkwater told us, "No, I didn't purposely hurt them. I do agree that they were hurt, but I would not purposely hurt anyone."

But hold on: One client says a $1,000 check was mailed on Nov. 12 and put in the firm's bank account on Nov. 18. That's 15 days after Drinkwater asked the court to intervene.

"Did you do that?" Cole asked.

"I don't recall," Drinkwater said.

"You don't recall if you did that or not?" Cole asked.

"No," Drinkwater said.

"Would that have been improper if you did do that?" Cole asked.

"I don't – I don't have any comment," answered Drinkwater, before adding, "I think I've given you enough of my time."

One of Drinkwater's employees told FOX 29 they were operating as if he'd return. It was the trustee who said to close down.

We pressed for more answers.

"Why did you tell people to stop paying their mortgages?" Cole asked. "It significantly hurt them."

As Drinkwater began to reply, his wife told him, "You've said enough."

But he went on to say, "Without giving you a course in bankruptcy, I can't answer all of your questions."

"I don't need a course in bankruptcy. I just, people want to know where their money's gone? How much money did you take, sir?" Cole asked.

"OK, go back," his wife said.

And Drinkwater said, "I don't have any further comment."

No charges have been filed. Nor is there a publicly-acknowledged complaint before the state's attorney Disciplinary Review Board. Its investigators must maintain confidentiality, but Drinkwater's clients say they've talked to them and sent documents.

Some clients reached out to New Jersey Lawyers' Fund for Client Protection. But there's a big problem? There's no reimbursement unless the attorney has been disciplined.

Others were steered into fee arbitration.

"Do you have an apology that you could say to them or anything?" Cole asked.

"Yes, I could," Drinkwater said, walking back towards the reporter.

"What would it be?" Cole asked.

"I would say … I'm very sorry for the circumstances that led to the loss. It was no intentional, on my part. I was hospitalized, and I'm disabled. I haven't made a dime since then. And I've lost – I had a 23-year-career," Drinkwater said.

He says he's never before been accused of malpractice.

"They believe that you should be arrested, that you have committed a crime," Cole told him.

"It's going through the legal process, and the legal process will have to take its course," Drinkwater said.

"Are you going to make any of these people whole?" Cole said.

But Drinkwater's wife told him, "OK, go."

Six months after his retirement, former clients are still trying to get their money back.

"Are you concerned that the authorities have not moved quickly enough?" Cole asked one of his clients.

"They haven't moved at all," Dayton said. "Not quickly enough? Just not at all. I'm getting the run-around."

Drinkwater also claimed some money was stolen from him, but police say they aren't aware of that. Meanwhile, former clients are moving ahead: Katie Brown's new attorney filed her bankruptcy – the first time they met, Cole reported.

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