A former Freeland attorney accused of defrauding his clients of millions of dollars was charged in federal court last week with a single count of felony mail fraud.

Peter Moote has been cooperating closely with federal investigators and will plead guilty to the charge, according to Michael Filipovic, assistant federal public defender. Filipovic released a statement on behalf of his client.

“He is ashamed of his conduct, and is profoundly remorseful for the financial damage he has caused his former clients. He deeply regrets the fallout this has had on his family and friends, and the negative effect this has on the reputation of the legal profession,” the release states.

Moote was a well-known attorney on South Whidbey for years when he shocked the island legal community by resigning from the Washington State Bar Association in lieu of disbarment in 2010. Moote was accused of settling civil cases without notifying his clients and stealing the settlement money, all the while telling his frustrated — and in some cases, disabled — clients that their cases were ongoing.

Detectives with the Island County Sheriff’s Office started investigating and discovered that many more of Moote’s clients had been

swindled. The case was eventually taken over by the FBI and the U.S. Attorney’s Office.

A receivership has been set up in Island County Superior Court to collect and divide Moote’s assets among the victims. At least 32 people have filed claims, which total $4.5 million. Moote’s law office was sold and his South Whidbey home is currently on the market. The receiver found six people who owe Moote a percentage of their pensions, which can be distributed to victims. Yet it’s clear the victims will recover only a portion of their losses.

In fact, the case may be one of the most serious instances in state history of an attorney defrauding clients, court documents suggest.

The Washington State Bar Association has a “Lawyers’ Fund for Client Protection” that was set up to help clients of dishonest attorneys. The fund received applications from 27 of Moote’s former clients and awarded more than $1 million in gifts to 25 of them. The fund doesn’t have sufficient money to pay the full amount of the losses, so those awarded gifts will likely receive about 50 percent, according to a response by the bar association filed in the receivership case.

“The gifts made to Peter Moote’s clients constitute the largest amount ever gifted to any one attorney’s clients in the 50-year history of the fund,” the document states.

It’s unclear how so much money disappeared. Court documents show that Moote’s law firm was very successful, with as much as $10 million in gross income passing through the firm during the six years Moote was misappropriating client funds. The information filed by federal prosecutors states that Moote spent the money he unlawfully transferred from his clients for gambling, as well as typical living expenses and law firm expenses.

Moote’s wife filed a document stating she was unaware that her husband was defrauding clients. She wrote that she separated from him “because his drinking had become progressively worse and he worked literally 18 hours a day.”