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Former law firm employee speaks out about alleged insurance fraud

"It made me sick to my stomach," a former paralegal at McClenny, Moseley & Associates said.

NEW ORLEANS — As Louisiana and federal officials accused him of fraud and the walls started crashing down around his Houston-based law firm, founding partner Zach Moseley came to McClenny Moseley & Associates’ New Orleans office to assure the staff that all was well.

“All of y'all stay. No one's losing their job,” said Moseley in secretly recorded audio obtained exclusively by WWL-TV.

Moseley was speaking on March 6, right after a federal judge had suspended MMA from filing any more cases in the Western District of Louisiana court. The firm was in trouble for how it had solicited thousands of storm victims after Hurricanes Laura, Delta, Zeta and Ida slammed the state in 2020 and 2021.

When Moseley came to New Orleans, the Louisiana Supreme Court had also just suspended MMA’s Louisiana managing partner, William Huye, from practicing law, and all the rest of MMA’s Louisiana-licensed attorneys had resigned. Plus, Moseley informed the staff, he had just bought out his co-founder, James McClenny, who was leaving to start a new Texas firm called Charger Law.

“We're kind of in a hole right now, but we're going to build our way out of it,” Moseley said. “And it's not even that big of a hole, if I’m being honest. I've got a great plan moving forward and I hope that y'all are a part of it for years to come.”

The plan to rebuild didn’t work. The firm’s clients have filed three class-action lawsuits against MMA in Texas and Louisiana. The firm’s trust account has been frozen by the bank, and an investor and a contractor are suing MMA for $12 million, alleging Moseley made false claims to get seed money and failed to pay bills. Two weeks ago, MMA fired 92 employees, according to three former staff members who spoke to WWL-TV on condition of anonymity. That included a paralegal in the New Orleans office who attended the March 6 meeting and provided WWL-TV with the recording.

She said she believes she was fired for raising questions about how MMA signed up what Moseley claimed to be 15,000 clients in Louisiana in less than two years. The firm got storm victims to hire MMA – some of them unknowingly -- by using agreements with a roofing company, in apparent violation of some homeowner’s insurance policies, and by using more than 1.1 million mailers and automated text messages from a marketing firm, which judges determined violated Louisiana’s rules of professional conduct for attorneys.

“It made me sick to my stomach,” the former paralegal said. “Some clients were trying to reach us over a dozen times. And of course, none of our attorneys (responded). I've never seen one of our attorneys on the phone with a client (or) even discussing a conversation that they had with a client. That was a big question that I had. Who's speaking to these clients?”

Court testimony later showed dozens of cases where MMA filed lawsuits on behalf of clients without an attorney ever speaking to them, and without receiving the client’s approval to file the lawsuit. MMA filed more than 1,600 lawsuits in August 2022 for Hurricane Laura or Delta damage, in the final days before a legal two-year deadline to sue. In some cases, court records show, MMA filed against the wrong insurer, and now it’s too late for those storm victims to sue the correct insurance company.

According to court documents in both Louisiana’s western and eastern district federal courts, MMA negotiated and collected the money from some insurance settlements for clients who say they never hired MMA and still don’t know where their money is.

Huye testified last month that he did file lawsuits for some clients who didn’t respond to text messages seeking their approval to sue. He told federal Magistrate Judge Kathleen Kay on April 26 that he did that because he was worried those clients would lose their right to sue if he didn’t take action.

The New Orleans paralegal who spoke to WWL-TV said MMA used overseas staff and a call center to handle client calls and there were no office telephones, just individual staffers’ cell phones.

“They were telling me about these robo-text messages that they would send in order to retrieve documents from the clients,” the paralegal said. “And, you know, in my brain, I'm thinking, ‘Why don't you just pick up the phone and call the client?’ That's what I'm used to.”

She said she was fired after she asked for assurances that she wasn’t doing anything illegal. Another employee, who was fired from MMA’s Houston office, said they were told the firm’s bank accounts had been frozen and it didn’t have enough money to pay employees.

But the former MMA employees say the firm is still operating in Louisiana with a pared-down staff and no attorneys.

In the audio of the March 6 meeting, Moseley said the firm would be able to keep making money on the cases by partnering with another firm and continuing to work “in the background.”

But the deal Moseley said he was negotiating with San Antonio personal-injury attorney Mikal Watts – whom Moseley touted as a “billionaire” whose resources would help MMA survive and even thrive – fell through.

Watts told WWL-TV he worked through March hoping to find a way to help MMA’s clients but an agreement with Moseley “wasn’t attainable.”

In April, Moseley testified in federal court in Lake Charles that he tried to strike a similar deal to share fees with a big Louisiana law firm, LaBorde Earles.
Court records show MMA clients received letters on LaBorde Earle's letterhead and purportedly signed by the Lafayette-based firm's founding partner Digger Earles, saying, “We have agreed to substitute as your counsel and are pleased to take over your case” with the client’s approval.

Except, one problem: Earles stood up in court after Moseley’s testimony and testified that his firm never had an agreement with MMA and never sent the letters, either.

The former MMA paralegal told WWL-TV it was MMA that sent the letters, not LaBorde Earles.

“We did distribute those with the understanding that (Earles) did have an agreement with Zach Moseley,” she said.

Earles said his firm signed up 400 former MMA clients but declined to comment further on Moseley’s claim that LaBorde Earles had an agreement with MMA. The court later ordered MMA to stop communicating with any of its former clients.

In the March 6 meeting with his staff, Moseley said he was looking for a new name for his firm, one without any partner’s name in it, and would offer a prize to the person who came up with the best name. Later, he asked his staff not to call him with questions or concerns, explaining he’s a Millennial and prefers text and email to speaking on the phone. One of the staff members quickly interjected with a suggested new name that made her colleagues burst out laughing:

“Don’t Call Us Law Firm.”

This is part five in a David Hammer Investigation into allegations of fraud against MMA. In part one, David took a closer look at the court cases filed against MMA and the massive 'roofing scheme' that left the payouts in limbo. In part two, an investigation into what led to the firm's suspension from practicing law in Louisiana. Part three, focuses on the impact of MMA's alleged fraud on their clients. On Wednesday, in part four, David unpacked the recordings of Moseley. 

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