Saturday, February 11, 2017

Now-Disbarred Central Florida Attorney Admits Fleecing Clients Of Over $2.7 Million; Among Victims: Single Mom Of Child Born w/ Severe Brain Damage, Widow Whose Husband Died In Car Crash, Local Mom & Pop Businesses

In Orlando, Florida, the Orlando Sentinel reports:
  • The disbarred Longwood attorney accused of embezzling more than $2 million from her clients on Tuesday [January 24] pleaded guilty in Orlando federal court.(1)

    Julie Kronhaus, 52, was indicted and arrested in September, accused of 18 counts of wire fraud and bank fraud. She pleaded guilty to two counts of wire fraud and one count of bank fraud and is to be sentenced April 24. She could be sent to prison for more than 50 years, but federal sentencing guidelines suggest something far lower — several months.

    During negotiations with federal prosecutors, Kronhaus confessed that she embezzled more than $2.7 million from her clients. She was a lawyer-accountant with an office near Winter Park and specialized in trusts and estates.

    In court she said, “I took money from my client trust accounts and used it for my own benefit.”

    Among the people who say their money disappeared: the single mother of a Lake County child born with severe brain damage; a Casselberry widow whose husband was killed in an automobile crash; and Orlando-area mom-and-pop businesses.

    Many of those victims were in court Tuesday to watch the plea.

    They first went to the authorities in 2014, the year the Florida Bar stripped Kronhaus of her right to practice law. The state of Florida later took away her accounting credentials.

    She began stealing from her clients in 2009 and was still doing it in February 2015, after she’d been disbarred, according to paperwork filed by the U.S. Attorney’s Office.

    She spent much of the money on personal expenses, the government alleges, including “substantial payments to … American Express.”

    She essentially operated a “Ponzi scheme,” the government alleges. If one client demanded payment and his account was empty, she dipped into another’s.

    When she ran out of their money altogether, the government alleges, checks started bouncing. That’s when clients realized something was wrong and went to law enforcement and the Florida Bar.

    The government alleges she also operated “a check kiting scheme” that defrauded Bank of America out of $425,000.

    It’s not clear whether any of Kronhaus’ clients will be repaid. The U.S. Attorney’s Office is asking for restitution but acknowledges that it couldn’t find all the money she stole or the property she bought with it.(2)

    In December, her husband, Lake County cardiologist Kenneth Kronhaus, filed for divorce. The couple own a $900,000 house in a gated community off Markham Woods Road in Seminole County.
Source: Disbarred lawyer pleads guilty to $2.7 million fraud.
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(1) See generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession (while Professor Miller's essay is over a quarter-century old, it appears that his observations maintain their vitality to this day):
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.
    ***
    The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(2) The Clients' Security Fund was created by The Florida Bar to help compensate persons who have suffered a loss of money or property due to misappropriation or embezzlement by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

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