NY lawyer pleads guilty to stealing $10 million from clients

Reuters News
Posted: Oct 02, 2012 8:17 PM
NY lawyer pleads guilty to stealing $10 million from clients

By Joseph Ax

NEW YORK (Reuters) - A Manhattan corporate lawyer pleaded guilty on Tuesday to stealing more than $10 million in clients' money, which prosecutors said he spent on pricey restaurants and strip clubs and to buy businesses.

The plea ends a year-long legal saga that began last September when Douglas Arntsen flew to Hong Kong - a day after the Manhattan district attorney's office notified his law firm, Crowell & Moring, that he was the subject of a criminal probe.

Prosecutors later accused Arntsen, 34, of embezzling millions in escrow funds starting in 2009, when he allegedly began siphoning money into bank accounts he controlled.

Arntsen has been held without bail since federal authorities returned him to the United States in January to face the charges. Prosecutors accused him of fleeing to avoid arrest. His lawyer, Alan Lewis, has said Arntsen was taking a planned trip.

On Tuesday, Arntsen pleaded guilty in a Manhattan courtroom to several counts of grand larceny and scheme to defraud. He will be sentenced in October and faces 4 to 12 years in prison.

"He's always indicated his intention to accept responsibility, and he did today," Lewis said after the court appearance.

In a statement, Manhattan District Attorney Cyrus Vance said, "Today's conviction holds him accountable for fraudulent conduct that violated the law, abused his clients' trust, and cost them millions of dollars."

Prosecutors launched an investigation last fall after one of Arntsen's clients, Regal Real Estate, was unable to account for the money in its escrow accounts.

Regal's managing partner, William Punch, told Reuters that when he confronted Arntsen about $4 million in missing funds on September 12, 2011, the lawyer broke down and admitted he had used some of the money. Arntsen resigned from his firm that day.

Two days later, he boarded a plane to Hong Kong.

Arntsen's former firm has settled three civil lawsuits brought in connection with Arntsen's fraud, all by real estate companies - including Regal - that claimed the lawyer stole funds from their accounts.

"We regret the harm caused by Douglas Arntsen to our clients and our firm and are pleased Mr. Arntsen has acknowledged his crimes with a guilty plea," said Crowell managing partner Ellen Dwyer in a statement.

(Editing by Edith Honan and Cynthia Osterman)