Tuesday, June 9, 2009
Jailed Former Attorney Steven Krell Pleads Guilty to Tax Crime
By STEVEN M. ELLIS, Staff Writer
Former Studio City attorney Steven Krell pled guilty before a U.S. district judge yesterday to subscribing a false tax return, a result of his failure to report as income almost $1.5 million he embezzled from two clients.
A spokesperson for the Criminal Investigation Division of the Internal Revenue Service said that Krell, 61, admitted embezzling the funds from a trust and a physician from 1997 to 2003 and using the money for his own personal purposes, and failing to report the money on his tax returns for those years.
A former certified public accountant and partner in the accounting firm of Green, Hasson and Janks, Krell helped to manage trust accounts between 1997 and 2003.
During that time, he used his signature authority over bank accounts to embezzle almost $1 million from a trust fund for a 90-year-old woman who was mentally incapacitated. He also stole $400,000 from the physician by falsely representing that he would invest the funds through his firm.
The thefts came to light in 2003 when a business manager became suspicious upon learning that Krell was staying in expensive suites in Las Vegas and gambling at high roller tables.
Krell resigned from the State Bar in June 2004 with charges pending.
A spokesperson for the Los Angeles County District Attorney’s Office said that Krell pled no contest last year to two state counts of grand theft and one count of theft from an elder, and was sentenced in July to one year in prison and seven years probation.
Federal prosecutors filed a one-count indictment on the tax charge against Krell in April.
As a part of his plea yesterday, Krell agreed to file amended tax returns reflecting the proceeds of the scheme, and agreed to tax liability totaling $514,125. He also agreed to liability for a fraud penalty, amounting to 75 percent of the tax due on the embezzled proceeds.
He faces a statutory maximum sentence of three years in federal prison and fines totaling $250,000. U.S. District Judge Percy Anderson set sentencing for Aug. 17.
Based on records of disciplinary actions by the California and Nevada boards of accountancy, Krell at some point signed a stipulated settlement with his prior firm under which he agreed to surrender all professional licenses.
His California CPA license was revoked pursuant to that agreement, after he admitted embezzling the funds.
According to Nevada records, Krell—after signing the stipulated settlement in California—allegedly obtained a Nevada license and serviced clients in that state. Nevada’s accountancy board revoked his license in January 2005.
Krell is a graduate of California State University, Los Angeles and Southwestern Law School. Prior to resigning from the State Bar, he had been a member since 1982.
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