Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Wednesday, September 10, 2014

Judge Gives Nine Year Sentence for Insider Trading

Martoma

On Monday, Judge Paul Gardephe handed down one of the longest prison sentences for insider trading.  Mathew Martoma, the portfolio manager who worked for an affiliate of Steve Cohen’s SAC Capital Advisors hedge fund firm, was found guilty of obtaining material non-public information about the development of an Alzheimer’s drug from a doctor and trading the information to make more than $200 million in profits.  The judge sentenced Martoma to nine years and ordered that he pay back the $9 million he received in bonuses for himself. 

The evidence accrued against Martoma was large, including the testimony of an 81-year-old doctor.  Although some lawyers and reporters were baffled by Martoma’s decision not to settle the case, some suggest his ability to obtain a good settlement was hindered after it was discovered he had been expelled from Harvard Law School for doctoring his transcript to make up better grades. 

See Nathan Vardi, Mathew Martoma Sentenced to Nine Years For Insider Trading, Forbes, Sept. 8, 2014.

September 10, 2014 in Estate Planning - Generally, Malpractice, New Cases, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Friday, August 15, 2014

Attorney Sentenced for Embezzling from Elderly Woman

Elderly financial abuse

As I have previously discussed, financial abuse of elders has been deemed “the crime of the 21st Century.”  On Thursday, a Fairfax County attorney was sentenced to six years in prison for embezzling nearly $500,000 while he was entrusted to care for an elderly woman and her estate. 

James Kincheloe, 67, was convicted of a single count of embezzlement in which he entered an Alford plea (he did not admit guilt but acknowledged prosecutors had enough evidence for conviction).  Judge Jane M. Roush ruled that Kincheloe must repay more than $483,000 to the estate of Pearl Buckley, a Fairfax City resident who passed away in 2009. 

Prior to Ms. Buckley’s death, Kincheloe entered into an agreement with her to manage her personal affairs at a rate of more than $9,700 a month, which is three times Ms. Buckley’s income. 

See Justin Jouvenal, Attorney James Kincheloe Jr. Gets Six Years for Embezzling from Elderly Woman, The Washington Post, Aug. 14, 2014.

August 15, 2014 in Elder Law, Estate Planning - Generally, Malpractice | Permalink | Comments (0) | TrackBack (0)

Friday, June 27, 2014

Lawyer in Tax Fraud Conspiracy Sentenced 15 Years

Money money money

Paul Daugerdas, a former partner at the defunct law firm Jenkens & Gilchrist, has been sentenced to fifteen years in prison in what prosecutors are calling the largest criminal tax fraud in U.S. history. 

Daugerdas, who once ran the law firm’s Chicago office, was found guilty by a New York federal jury on charges including conspiracy, tax evasion and mail fraud.  It is alleged that Daugerdas obtained $95 million dollars from a scheme which involved fraudulent tax deductions or benefits exceeding $7 billion and $1.63 billion lost in U.S. tax revenue. Prosecutors say Daugerdas devised and supervised the promotion of fraudulent tax shelters over almost two decades.   

U.S. district judge William Pauley ordered Daugerdas to forfeit $164.7 million and pay $371 million in restitution jointly with other co-conspirators.  The judge described him as being at “the apex of tax shelter racketeers.”

See Reuters, Former Law Firm Partner Gets 15 Years Prison for Record US Tax Fraud Scheme, The Guardian, June 25, 2014. 

June 27, 2014 in Income Tax, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Attorney Pleads Guilty to Fraud Scheme

Niew

Jamal and Leda Khoury thought they were investing their life savings wisely when they transferred $2.3 million into their attorney’s escrow account to buy commercial real estate property three years ago.  Yet within hours of the cash transfer, their attorney, Kathleen Niew, was stealing from the supposedly secure account to invest in her own scheme. 

Over the course of several weeks, Niew wired millions of dollars to mining investors in places such as Singapore, expecting to make huge profits for herself.  The mining companies failed miserably and Niew never earned a dime.  By the time the Khoury’s realized something was wrong, their retirement was completely gone. 

On Wednesday the couple watched as Niew pled guilty to ten counts of fraud.  Under federal sentencing guidelines, Niew faces up to eleven years in prison, but the judge is free to sentence her whatever he deems appropriate. 

See Jason Meisner, Former Attorney, Radio Host Pleads Guilty in $2.3 Million Fraud, Chicago Tribune, June 25, 2014. 

June 27, 2014 in Estate Planning - Generally, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Tennessee Probate Scandal Continues

GavelAs I have previously discussed, Tennessee attorney John E. Clemmons is serving a prison term after admitting to stealing $1.3 million from conservatorship clients. Now, Paul Gontarek, the victim’s court-appointed attorney, is suing the Metro government claiming that the probate master negligently failed to monitor the reports filed, and not filed, by Clemmons. The government is claiming immunity from the claims and asking for dismissal of the case. The family of one of the victim’s is calling for criminal charges to be brought, claiming that they believe the failures by the probate court was not negligent, but criminal in nature.

See Walter F. Roche Jr., Metro Sued in Probate Court Scandal, The Tennessean, June 19, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

June 27, 2014 in Malpractice, New Cases | Permalink | Comments (0) | TrackBack (0)

Friday, May 23, 2014

Judge Rules Attorney Forged Two Wills

Scales of justice

Former Robeson County Attorney Hal Kinlaw has been linked with forging two wills.  Judge Mary Ann Tally, in Robeson County Superior Court, ruled in favor of petitions submitted by Jessie McFadyen Tolar, who requested that the wills of her mother, Louise McFadyen, and father, Robert McFadyen, be “removed and set aside” and authentic wills be put in their place. 

According to the petitions, Kinlaw would not have received anything of value in either of the forged wills.  Kinlaw resigned as Robeson County attorney in June 2013 after it became public that he is being sued by BB&T for almost $18 million in unpaid loans. He had been the county’s attorney for more than 20 years.  Although he has officially resigned his position, County Manager Ricky Harris confirmed that Kinlaw is still on the county payroll, receiving a monthly stipend of $5,000. 

See Bob Shiles, Ex-Attorney For County Linked With Forged Wills, Robesonian.com, May 21, 2014. 

May 23, 2014 in Estate Planning - Generally, Malpractice, Wills | Permalink | Comments (0) | TrackBack (0)

Sunday, May 18, 2014

Estate Planning Attorney Faces Forfeiture

Fraud 1

Estate planning attorney, Sarah Laux, is not only facing civil fraud, theft claims, and a disbarment action, but now she must also defend herself against the IRS, which seeks forfeiture of one of her Mequon homes on grounds it was purchased with proceeds of illegal activity.  Despite Laux’s documented and admitted forgeries surrounding the millions of dollars belonging to clients and her father’s law practice, she still has not been charged criminally. 

In a sworn affidavit, IRS Special Agent Park Jones asserts Laux purchased the property with proceeds of wire fraud and money laundering.  The forfeiture action came days after the state Office of Lawyer Regulation filed a complaint against Laux over her handling of $2 million that belonged to a retired couple.  The state agency’s complaint alleges six counts of professional misconduct, for comingling clients’ funds, and “conduct involving dishonesty, fraud, deceit, or misrepresentation.” 

See Bruce Vielmetti, Despite Fraud and Theft Claims, Mequon Lawyer Faces No Charges, Milwaukee Journal Sentinel, May 15, 2014. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

May 18, 2014 in Estate Planning - Generally, Malpractice | Permalink | Comments (0) | TrackBack (0)

Monday, May 5, 2014

Stolen Estate Funds Discovered After Attorney’s Death

TheftA Baltimore attorney, Charles Kountz, is suspected of emptying the estate of one of his client’s father. The missing funds were not discovered until after the attorney died. The Roberts family hired Kountz to handle their father’s estate. After the estate’s debts were paid off, a large amount of the remaining $235,000 was expected to be divided between the four heirs of the estate. The family waited two years for the distribution, and then Kountz died. The family was then informed that there was no money left in the estate. The missing funds seem to have gone to Kountz, who wrote himself checks from the estate, and at least $100,000 went to settle the estate of another client. The family is currently attempting to recover the missing funds through the Maryland Bar Association's Client Protection Fund.

See Barry Simms, Family Loses Loved One; Inheritance Disappears, WBALTV, May 1, 2014

May 5, 2014 in Estate Administration, Malpractice, Professional Responsibility | Permalink | Comments (0) | TrackBack (0)

Friday, May 2, 2014

Disbarred Attorney May Have Appropriated $6 Million

1398833064000-rodney-matheson

Before her death at age 94, Eleanor “Dorothy” Thomas of Tempe may have made a huge mistake when she hired probate attorney Rodney M. Matheson to handle her estate.  About $1.2 million of her estate that was supposed to go to a University of Arizona cancer research fund never made it.

Last year, Matheson, 69, was disbarred and then arrested.  He is accused of misappropriating as much as $6 million.  He is also accused of orchestrating an elaborate shell game by taking money from estates to satisfy a court order to pay $800,000 to the Mayo Clinic.  A friend of Thomas said she recommended Matheson to all of her friends in her retirement community, telling them how thrilled she was with Matheson that he didn’t even charge her. 

See Jim Walsh, Disbarred Attorney Accused of Stealing from Probate Clients, AZ Central, Apr. 29, 2014.

Special thanks to John R. Becker, Esq. (Becker & House) for bringing this article to my attention.

May 2, 2014 in Current Affairs, Estate Administration, Malpractice | Permalink | Comments (0) | TrackBack (0)

Friday, April 25, 2014

Huguette Clark Investigation Comes to a Close

Huguette-Clark-007

After managing the $300 million fortune of Huguette Clark, attorney Wallace Bock and accountant Irving H. Kamsler fell under suspicion.  Her second will, written weeks after her first, left each advisor $500,000 while leaving out her distant relatives.

The district attorney has now closed the investigation into how her estate was handled.  A neurologist testified in the investigation that the copper heiress seemed alert when he visited with her six months after signing the second will.  Bock and Kamsler will not be receiving any money, however, after a settlement combined elements of the two wills.

See Lydia Warren, No Charges Filed Against Huguette Clark’s Attorney or Accountant as Investigation into Reclusive Heiress’ Finances Closes, Daily Mail, Apr. 24, 2014.

April 25, 2014 in Current Affairs, Malpractice, Wills | Permalink | Comments (0) | TrackBack (0)