By Ameet Sachdev | A Chicago debt-collection law firm has been sued by HSBC Finance Corp.
for more than $400,000 in missing funds that were supposed to be held in
trust for the bank.

HSBC fired Friedman & Wexler LLC in January, after it discovered the
firm had insufficient funds in its bank account to cover more than
$231,000 in remittances to the bank, according to the suit filed in
Cook County Circuit Court on Wednesday.

Upon further investigation, the bank also found four unpaid electronic transfers totaling more than $171,000, the suit said. HSBC said it has also identified more than $24,000 in phony expenses that the firm billed to the bank. The overcharges include expenses for court-filing fees related to complaints that the law firm never filed, HSBC said in the suit.

HSBC hired the firm in 2005 to help it collect outstanding consumer loans. The bank paid the firm 25 percent of the amount collected.

The suit also names attorneys Norman Wexler and Mitchell Wexler as defendants. On the firm’s Web site, the Wexlers say they are special assistant corporation counsels for the City of Chicago. Mitchell Wexler said he had not seen a copy of the suit and could not comment.

HSBC claims that this is not the first time the law firm and the attorneys have failed to account for and remit funds to clients. At least three former clients have sued the firm for failing to make necessary payments, the bank said in the suit.