INDIANAPOLIS — The Indiana Supreme Court has placed a Floyd County bankruptcy attorney on probation after finding that his firm mismanaged trust accounts over a period of seven years.

A conditional agreement for discipline was filed Nov. 13 by the Indiana Supreme Court Disciplinary Commission related to Lloyd E. Koehler of Koehler Law Office — a business which processes roughly 100 bankruptcies each month in Southern Indiana. It states that Koehler violated multiple professional conduct rules by the way several trust accounts were handled between 2009 and 2017.

The court ordered that Koehler be suspended from practicing law for six months, however reduced that penalty to three years' probation in which he has strict contingencies such as he must retain and pay for a certified public accountant to monitor the trust accounts and report monthly findings to the commission. He also must pay $14,000 for the investigation of the case.

The original complaint filed June 17 states that proper documentation was not kept on multiple trust accounts — these are accounts in which clients' bankruptcy plan payments are kept before being sent to a bankruptcy trustee, who then distributes the funds to creditors.

In one case, a trust fund opened with MainSource Bank in 2009, which had had deposits in excess of $60 million between 2011 and 2017, was overdrafted by more than $38,000 in August 2017 — deposits of more than $44,000 were made to correct the account shortfall.

The disciplinary order also states that Koehler violated conduct rules by allowing a non-attorney employee perform jobs that require a law license, did not maintain adequate ledgers of different bank trust accounts and "improperly commingled client and attorney funds."

Koehler admitted that accounting errors were made during that time by the firm handling fund disbursements in-house, which it no longer does. He said that over the period of about 10 years, the firm dispersed more than $60 million in thousands of very small increments, for bankruptcy plan payments.

"[It was] beyond our accounting capabilities to handle that volume of accounting," Koehler said Wednesday. "Consequently — we admit it — we made accounting errors."

He added that despite the accounting errors, everyone received the funds they were supposed to.

"No one lost any money," he said. "There have been no allegations of misappropriated money in any way at all."

The firm has since began using NYC-based accounting firm TFS to handle the large volume of disbursements, to prevent future errors.

"So we [are] no longer required to cope with the massive accounting of dispersing huge amounts of money in very, very small increments," he said.

Aprile Rickert is the crime and courts reporter at the News and Tribune. Contact her via email at or by phone at 812-206-2115. Follow her on Twitter: @Aperoll27.

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