How California’s Bar Stole $95M From Client Trust Accounts to Fund Open Borders

The Center for Gender & Refugee Studies has spent years battling on behalf of illegal alien invaders. Earlier, Freedom Center Investigates exposed how the lawfare group housed at a University of California law school provides full service open borders support.

“During Trump, my CGRS colleagues and I expended a tremendous amount of energy challenging the anti-immigrant policies that were issued on what seemed like an almost daily basis,” Karen Musalo, the CGRS founding director, boasted.

The Center also offers a database of “expert witnesses” willing to testify on behalf of the ‘refugee’ claims of border invaders. It urges licensed medical or mental health personnel to register to “support asylum seekers with forensic mental or physical evaluations.”

Who funds the CRGS open borders lawfare? Many of those who fund it don’t even know it.

CGRS is one of the radical leftist groups that benefits from interest seized from trust accounts controlled by lawyers and redistributed to some of the most extreme groups around.

Last year, the State Bar of California Board of Trustees handed out a stunning $95 million to groups that included not only CGRS, but the Asian Law Caucus, which among other pro-terrorist litigation fought a lawsuit by Jewish students complaining about antisemitism at California universities, as well as the California Collaborative for Immigrant Justice which in its own words, “fights for the liberation of immigrants in detention”, the Center for Immigrant Protection which advocates specifically for gay migrants, the Centro Legal de la Raza (Legal Center of the Race), which urges calling their “rapid response unit” if they see ICE.

Both the La Raza centers in Oakland and San Francisco received this looted ‘grant’ money.

The source of the money is the obscure Interest on Lawyer Trust Account (IOLTA) Program which was authorized by a Democrat Congress and by assorted state courts and legislatures who were either left-leaning or not paying very close attention. IOLTA turned funds being held in trust by lawyers for clients over short periods of time into a massive piggy bank to fund the Left.

The way it works is simple. The money held in trust by lawyers is pooled into interest bearing checking accounts and the interest is stolen to fund leftist groups. Everyone from accident victims to widows has been quietly robbed for the last 40 years in the name of social justice.

The theory behind IOLTA is that it would be ‘unethical’ for lawyers to profit from holding money for their clients, but it’s somehow ethical for law associations to take the money and hand it out to their political allies in order to advocate for their pet political causes. When IOLTAs were formed, they were supposed to underwrite legal aid for the poor. And some state IOLTA funds still generally do that, but as California’s example shows, much of the stolen interest money is going to single issue radical groups that offer legal aid to illegal aliens, terrorists and radical groups and that offer not only legal services, but advocacy for extreme political causes.

An estimated $4 billion has been stolen from clients by state bars through IOLTA but California offers a striking example of the scale of the looting and how it has become a growth industry.

Last year the California State Bar bragged of an “an 88 percent increase” in grants distributed.

Part of that may have been the move by the State Bar last year to impose the Client Trust Account Protection Program (CTAPP) that required lawyers to register IOLTA accounts annually for more efficient looting.

IOLTA accounts are part of a complex financial ‘social justice’ infrastructure. For example, Tom Steyer, the billionaire radical who ran for the Democrat presidential nomination co-founded the Beneficial State Bank which operates as a nonprofit and boasts of being an “activist” and “fossil free” bank. The bank seeks out IOLTA accounts and offers “higher IOLTA interest rates” which are then used to fund “access to justice” and “support for diversity in the legal profession.”

“Holding funds in an IOLTA saves me time since I don’t have to account for how to divide the interest earned among my clients. The fact the interest supports access to legal services also aligns with our firm’s values,” a law firm that banks with Beneficial explains.

Lawyers don’t have to reimburse clients, law firms get to virtue signal and leftist causes get funded. Everyone except the client wins. This is what state bars describe as “ethical”.

Banks across the country solicit IOLTA accounts from law firms with promises of higher interest rates allowing state bars to steal from clients and banks to profit from the stolen money, all the while financing leftist groups that are engaging in lawfare, advocacy and undermining America.

Beyond those already listed, open borders grantees in California included the Center for Human Rights and Constitutional Law, which has engaged in extensive litigation with the government over migration invaders, and the Southern California Immigration Project that focuses on helping migrants claim refugee status.

There is also the Immigrant Defenders Law Center “a next-generation social justice law firm that defends our immigrant communities against injustices in the immigration system.” Its mission is “creating systemic change to dismantle the systems that seek to deport our clients and separate our families” by which it means dismantling the immigration system.

It boasts of having “partaken in groundbreaking litigation such as the Innovation Law Lab V McAleenan case, a federal lawsuit that challenged the Trump administration’s policy forcing asylum seekers to return and remain in Mexico while their cases are considered.”

A number of grantees don’t just provide immigration or even litigation, but policy advocacy.

Immigrant Legal Defense, another grantee, also claims to provide legal services to migrants while “working toward systemic change” and “policy advocacy”. The Immigrant Legal Resource Center works to “shape effective and just immigration policy and law” and “with grassroots immigrant organizations to promote civic engagement and social change.”

Some grantees, like Berkeley’s Impact Fund, a leftist advocacy group that funds other leftist causes, also move money around to other leftist groups.

While California may be one of the worst examples of IOLTA abuses, they are a nationwide problem. IOLTAs are used to fund advocacy for illegal aliens and migrants in states across the country including Maine, New York and Texas. For example, IOLTA grantees in Texas include the South Texas Pro Bono Asylum Representation Project, the Catholic Charities Cabrini Center for Immigration Legal Assistance, Diocesan Migrant & Refugee Services, and the Texas Immigration Law Council. But California’s IOLTA is by far the most radical and conflicted.

IOLTA’s seizure of property had been challenged before the Supreme Court in Brown v. Legal Foundation of Washington and Thomas Phillips v. Washington Legal Foundation where, in the latter case, the court’s leftists claimed that the clients had no basis for demanding their money.

“The Court today concludes that the State of Washington may seize private property, without paying compensation, on the ground that the former owners suffered no ‘net loss’ because their confiscated property was created by the beneficence of a state regulatory program,” Justice Scalia scathingly wrote in a dissent. “A lawyer is not required to obtain his client’s consent, or even notify his client, regarding the use of client funds in IOLTA accounts.”

IOLTAs are one of the many ways that radicals have learned to seize money to fund their projects. States can reform IOLTAs by making them voluntary instead of mandatory. Radical bars in radical states seek to make IOLTAs mandatory in order to redistribute money from accident victims and insurance claims to their own causes. But there is no reason for them to be. Furthermore states may be able to set limits on what sorts of groups IOLTAs can fund.

The IOLTA money was supposed to provide legal aid for the indigent. It was not meant to fund single issue or advocacy groups. And that is exactly what California’s IOLTAs are doing. Even if the money is supposedly earmarked for legal aid, funds are fungible and should not be going to any organization that does political advocacy: especially for the state bar’s pet causes.

The Supreme Court’s decision in Thomas Phillips v. Washington Legal Foundation was fundamentally wrong and a violation of the fundamental rights of people whose income is being seized. It may also be time for state legal foundations and the Supreme Court to revisit it.

The Left has the right to fund its own causes using its own money. But instead of honestly funding those causes, it has found countless means to legally and illegally divert other people’s money to them. Beyond taxes, it has developed schemes employing the legal profession to directly siphon off money from settlements, hijack foundations and even steal from trust accounts to finance its causes. State bars claim that IOLTAs are a form of social justice.

IOLTAs sealing money from widows and accident victims isn’t social justice: it’s theft.

Daniel Greenfield is a Shillman Journalism Fellow at the David Horowitz Freedom Center. This article previously appeared at the Center's Front Page Magazine.

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