By Joseph Ax
NEW YORK, Oct 2 (Reuters) - A former Crowell & Moring
attorney accused of fleeing the country after stealing more than
$10 million in clients' money, which prosecutors said he used to
lead a lavish lifestyle, pleaded guilty on Tuesday.
Prosecutors accused Douglas Arntsen, 34, of embezzling
millions in escrow funds starting in 2009, when he allegedly
began siphoning money into bank accounts he controlled. They
said Arntsen used the money to visit pricey restaurants and
strip clubs, and to buy businesses for himself and his friends
He pleaded guilty in a Manhattan courtroom to several counts
of grand larceny and scheme to defraud before Acting Supreme
Court Justice Jill Conviser and will have to make $10.8 million
in restitution to two clients in addition to serving his prison
sentence. Arntsen, wearing a dark jacket and tan pants, did not
speak except to answer the judge's questions about the plea with
a simple "Yes, Your Honor."
The plea ends a convoluted legal saga that began when
Arntsen flew to Hong Kong in September 2011, two days after he
resigned from the firm and one day after the Manhattan district
attorney's office notified Crowell that Arntsen was the subject
of a criminal probe.
Prosecutors accused Arntsen of fleeing to avoid arrest,
while his defense lawyer, Alan Lewis, has said he was taking a
Arntsen has been held without bail since federal authorities
returned him to the United States in January to face the
Arntsen, who had faced up to 25 years before pleading
guilty, will be sentenced in October.
"He's always indicated his intention to accept
responsibility, and he did today," Lewis said after the court
In a statement, Manhattan District Attorney Cyrus Vance said
Arntsen had betrayed the "sacred trust" between attorney and
"Today's conviction holds him accountable for fraudulent
conduct that violated the law, abused his clients' trust, and
cost them millions of dollars," Vance said.
HONG KONG TRIP
The district attorney's office 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,
according to prosecutors.
Regal's managing partner, William Punch, told Reuters last
year that when he confronted Arntsen about $4 million in missing
funds on Sept. 12, 2011, the lawyer broke down and admitted he
had used some of the funds. Arntsen resigned from the firm that
Regal's lawyer, Bruce Lederman, said at the time that
Arntsen met Punch the following day and made several stops at
banks, withdrawing close to $2 million, which he gave to Punch,
before telling him he had to fly to Hong Kong to retrieve the
rest of the money.
Punch and Arntsen agreed to meet the next day to travel to
Hong Kong together. But Punch and Lederman alerted prosecutors
about the meeting, and police planned to arrest Arntsen.
Arntsen never showed up and instead boarded a plane to Hong
The case bewildered some of Arntsen's colleagues, who
described him to Reuters as a hardworking, good-natured lawyer
whose crimes came as a shock to the firm.
Crowell has already settled three civil lawsuits brought in
connection with Arntsen's fraud, all by real estate companies
claiming the lawyer stole funds from their accounts. The terms
of the settlements with Regal, Aristone Realty Capital and BCN
16th St were not publicly disclosed.
"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.
A graduate of Seton Hall University School of Law, Arntsen
joined Crowell in 2007 from Buchanan Ingersoll & Rooney as part
of a group of finance and distressed-debt attorneys.
The case is People v. Arntsen, New York State Supreme Court,
New York County, No. 01399/2012.
For the prosecution: Assistant District Attorney Sophi
For Arntsen: Alan Lewis of Carter, Ledyard & Milburn.
(A prior version of this story misstated Arntsen's age.)
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