At the time a Bermudian lawyer was accused of stealing half a million dollars from a mentally ill client, he was trying to clear himself of bankruptcy but only getting sucked into a deeper dept, the Supreme Court heard yesterday.

Julian Hall is being tried on five counts of stealing a total of $551,044 from Betty Lorraine McMahon between 1995 and 1996.

Hall, a former MP, was officially declared bankrupt and banned from practising law in January, 2000.

In December, 1997 he was ordered to pay Mrs. McMahon $1.6 million plus seven percent interest. As legal proceedings dragged on, he was charged with stealing from the woman. He has denied those charges.

The case is being heard by Chief Justice Richard Ground and prosecuted by consultant counsel to Department of Public Prosecution?s office Kulandra Ratneser. Hall is representing himself.

Mrs. McMahon is not considered fit to be a witness in the case.

Yesterday, the first witness for the Crown was former lawyer Charles Henry Vaucrosson ? who himself was found guilty of stealing close to $400,000 from a beneficiary in 1995. Mr. Vaucrosson served a year of his two-year sentence before being paroled.

Under questioning from Mr. Ratneser, Mr. Vaucrosson told the court that in 1987 he encouraged Hall to return to the Island from Canada after being bankrupted and loaned Hall $375,000 to pay off his debts.

Under cross-examination from Hall, Mr. Vaucrosson said he told Hall he wanted to help him because, ?a good mind is a terrible thing to waste?.

Hall had to clear his bankruptcy in order to practice law in Bermuda. Hall alleged in court that this Bermuda legislation preventing him from practising while being bankrupt was designed specifically with him in mind.

?Mr. Vaucrosson, do you recall how they called it the Julian Hall bill?? Hall asked.

Mr. Vaucrosson replied, with a large grin: ?Yes.?

The terms of Mr. Vaucrosson?s loan were that Hall had to pay off the bankruptcy, he had to repay Mr. Vaucrosson and he had to work for Mr. Vaucrosson for five years.

?There was no agreed method of repayment,? said Mr. Vaucrosson.

A promissory note was not issued until 1991 when Hall?s debt to Mr. Vaucrosson was upped to $550,000. The note made it an amortised loan that didn?t have to be paid back for ten years, with the condition that Hall paid $7,000 per month.

?In 1992 he had not satisfied the terms of the loan,? said Mr. Vaucrosson. ?Hall left the firm in March 1991 and started his own firm, Hall, Duncan & Trott.?

In December 1992 with the failure to comply with the terms of the loan, a writ was taken out against Hall for the amount in excess of $550,000.

Hall balked at paying because he felt Mr. Vaucrosson had no right to sue him since the ten years for the loan were not up. In 1995, Vaucrosson took out another writ for arrears.

?Do you recall that while in the throes of your own Supreme Court trial, you met with Hall?? said Mr. Ratneser.

?Yes,? said Mr. Vaucrosson. ?I met Hall outside of the court in November, 1995 and was handed a cheque for $50,000 and a letter from Hall.?

The letter asked for the sum to be deducted from what Hall owed, and that the writ be discontinued. In the letter Hall questioned the amount he was now alleged to owe which had grown to $625,000

In the letter he questioned if it was ?an error or exaggeration?.

During his questioning by Mr. Ratneser, Mr. Vaucrosson also told the court how Hall, unlike other lawyers at his firm, did not charge his clients by the hour, but charged them a flat rate, given that they agreed to this.

Under cross-examination by Hall, Mr. Vaucrosson said this was a permissible practice.

?Do you recall that under bankruptcy law I could have paid ten cents on the dollar off my debts, but I insisted I pay 100 cents on the dollar for my debts largely because I wanted the debt to be seen as fully repaid?? said Hall.

?That is correct,? said Mr. Vaucrosson.

Hall said that while he worked for Mr. Vaucrosson, it was agreed that 60 percent of the income he brought to the firm would be credited to him, and 40 percent credited to the firm. From his 60 percent, he had to pay back Mr. Vaucrosson.

?You said in your writ of December, 1995 that ?Hall was a capable attorney and the firm profited from him?. I brought in a lot of money and your firm benefited from that??

Mr. Vaucrosson agreed.

?What started off as a $375,000 loan, despite some repayment and various advances to your law firm, it came to me that I now owed half a million. Do you recall my reaction when I heard that I owed half a million??

?I do not recall that,? said Mr. Vaucrosson.

Hall said that when he questioned the amount he owed to Mr. Vaucrosson in 1995, Mr. Vaucrosson told him he should speak to the company?s financial controller, Steve Gibbons.

Mr. Vaucrosson was selected for a committee of creditors along with Alan Dunch, the Bank of Bermuda and the Registrar of Companies.

Hall said every effort he then made to get out of bankruptcy since then had been thwarted by the committee.

?Did any one of the committee ever approach people whom you thought might be engaging my services and advise them against it?? Hall asked Vaucrosson.

?Not to my knowledge,? Mr. Vaucrosson said.

?What about the Bermuda Industrial Union and BCM McAlpine?? Hall asked.

?I don?t know,? Mr. Vaucrosson said.

?I am caught in a conundrum,? Hall said. ?I am not able to pay off my bankruptcy because I cannot work, and I cannot work because I can not pay off my bankruptcy.?