WASHINGTON, Sept 21 (Reuters) - Prosecutors in Manhattan
are investigating whether a lawyer from the New York office of
a prominent law firm stole $2.5 million in client money and
fled the country for Hong Kong, according to people familiar
with the matter.
The lawyer, Douglas R. Arntsen of Crowell & Moring, was
arrested and arraigned earlier this week in Hong Kong and is
expected to be extradited to the United States shortly.
Arntsen is suspected of embezzling approximately $2.5
million in funds deposited into an escrow account by a
real-estate client of the firm.
The client, Regal Real Estate, discovered the missing funds
last week and alerted the firm and local law enforcement,
according to Regal's managing partner, William Punch.
The district attorney's office attempted to have Arntsen
arrested last week at a meeting staged on a street corner in
lower Manhattan, but he had already left for the airport,
having apparently received a tip, Punch said.
"He went through this whole convoluted story, he had to go
to Hong Kong to get the money back, and he wanted me to go to
Hong Kong with him," Punch said.
Regal, which is owned by Manhattan landlord Maurice Laboz,
had provided Crowell with around $4 million to hold as deposits
on $40 million worth of real-estate deals.
But money started disappearing last week, when Arntsen
disclosed he was leaving Crowell for a new job, according to
When Punch questioned Arntsen about the missing funds, "he
broke down and told me he had used some of the escrow money,"
RARE PUBLIC EPISODE
On Sept. 13, Punch accompanied Arntsen to a Citibank branch
in New York City, where Arntsen withdrew $1.8 million and gave
it to Punch, according to a lawyer for Regal, Bruce Lederman of
D'Agostino, Levine, Landesman & Lederman.
The two then went to a Wachovia branch, where Arntsen
withdrew $43,000 more, Lederman said. Arntsen said that he had
to go to Miami to get the rest of the money, but then said he
needed to travel to Hong Kong instead, Lederman said.
The staged street-corner meeting was to take place the next
day, Sept. 14.
Crowell told Regal it was investigating the matter, but
declined to comment to Reuters.
In the buttoned-up world of white-shoe law firms, the
episode is remarkable for playing out in public.
"We are waiting and expecting Crowell & Moring to
immediately step up to the plate and replace the stolen money,"
A spokesperson for the District Attorney did not return a
request for comment.
A lawyer for Arntsen did not respond to a request for
(Reporting by Aruna Viswanatha)
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