Wednesday, November 27, 2002
Bar Panel Urges Disbarment of Local Attorney Convicted of Tax Fraud
By ALLISON LOMAS, Staf Writer
The State Bar Court Review Department has recommended that a Los Angeles attorney convicted of a felony be disbarred.
The panel urged Friday that Mitchell Howard Kreitenberg lose his license based on his involvement in a capping scheme, an improper fee-splitting arrangementm and six-year-long conspiracy to defraud the IRS. Kreitenberg has been on interim suspension since he pled guilty in 1999 to one count of conspiring to defraud the Internal Revenue Service.
In an opinion by Judge Judith A. Epstein, the panel rejected Hearing Judge Robert M. Talcott’s recommendation that Kreitenberg be suspended from the practice of law for six years, stayed, and that he actually be suspended for four years.
Epstein emphasized that Kreitenberg diverted legal fees from a client trust account and intentionally defrauded the government by failing to claim the fees as income for personal gain, and that in doing so he breached his fiduciary duty to his clients.
“Respondent’s misconduct touched on virtually every aspect of his law practice: he repeatedly misused his client trust account for his own purposes; he purchased lawsuits from cappers to generate legal fees; and, he split those fees with his cousin and his non-attorney office manager,” Epstein wrote.
Only four years after Kreitenberg was admitted to practice law, he joined the personal injury practice of his cousin and mentor, Manny Kreitenberg.
Soon thereafter Mitchell Kreitenberg became aware that the firm, called the Law Offices of Mitchell Kreitenberg, was paying for the referral of some, if not all, of his cases, and that that the legal fees were split among his cousin, the non-attorney office manager and himself, Epstein recounted. He knew that these activities were illegal, according to the Review Department, and questioned his cousin, but chose to stay with the firm.
In 1991, the panel found, the three implemented a plan to shield income from the IRS and to pay for the illegal referrals by drawing fraudulent checks against the client trust account using clients’ names as fictitious payees in an amount similar to the client’s portion of the settlement award. Initially the phony checks were signed by clients, the review judges explained, but when clients resisted signing the duplicate checks, the office manager began to forge the signature of the clients named on the checks.
Kreitenberg admitted in a stipulation that in total over 680 phony checks were written during a three-year period, and about $1,64 million in legal fees were withdrawn from the trust account, but not reported to the IRS.
Epstein said Kreitenberg only ceased writing the fraudulent checks and paying cappers when the IRS commenced an audit of his take returns in April 1993.
Mitchell Kreitenberg pled guilty in 1997 to one count of conspiracy to defraud the IRS, his sentencing was delayed until January 1999 while he assisted in the investigation that helped the government successfully prosecute his cousin for his participation in the check-writing and capping conspiracy.
Manny Kreitenberg resigned as a member of the State Bar with charges pending in 1994.
Three character witnesses testified as to Mitchell’s attributes, and approximately 25 good-character letters were presented to the hearing judge. He was described as a good family man and a religious person who was involved in his community.
However, Epstein found the letters to be unpersuasive based on evidence that few of the authors were aware of the specific facts and circumstances surrounding Kreitenberg’s conviction or the full extent of his misconduct.
Epstein also rejected Kreitenberg’s argument that his lack of prior discipline should serve as a mitigating factor. “We give no weight to this mitigating factor,” Epstein said, pointing out that Kreitenberg had practiced law for only three or four years before knowingly engaging in misconduct.
Another lawyer who was suspended following a felony conviction fared better with the Review Department.
The panel Friday recommended that Gregory Scott Bodell’s be reinstated, concurring with former Hearing Judge Michael D. Marcus. Bodell resigned in 1990 with charges pending after he pled guilty to mail fraud arising out of a scheme to defraud insurers.
On review, the State Bar—represented by Deputy Trial Counsel Paul O’Brien—argued that the Review Department should deny Bodell’s reinstatement because he had not sufficiently shown adequate rehabilitation in view of the seriousness of his misconduct.
From 1985 to 1988 Bodell was a principal in a scheme by a group of attorneys known as “the Alliance.” The Alliance has been the subject of several legal proceedings, which found that the group’s members defrauded insurers by charging for unnecessary discovery, billing excessively for services, and appearing for both plaintiffs and defendants under the false appearance that the clients were represented by independent counsel.
Bodell prepared cross-complaints intended to extend litigation, strategized with Alliance members to bring about more litigation, and assisted in the preparation of bills for legal services to be paid by insurers, the reviewing panel found.
Lynn Boyd Stites, Bodell’s employer from 1982 until late 1987, created the Alliance. Bodell attributed his ongoing participation with the Alliance to a sense of personal loyalty to Stites, who continued to employ Bodell as a law clerk even though Bodell failed the bar exam four times before finally passing.
Presiding Judge Ronald W. Stovitz, writing for the panel, said Bodell’s work for the Alliance “constituted an affront to the honest administration of justice,” but did not warrant continuing to bar him from the profession.
Stovitz declared that ample evidence had been admitted during the twelve-day trial, including the testimony of 11 character witnesses, to show that Bodell met his burden to show rehabilitation. The court said that the testimony of eight attorneys offered on the behalf Bodell outweighed negative testimony offered by five witnesses who have had little, if any, contact with Bodell since the misconduct.
Character witnesses testified that since the misconduct Bodell had established himself as a successful law clerk, made important contributions to his church, and was highly sensitive to ethical behavior.
The panel also rejected the argument that Bodell’s delinquency of nearly $458,000 in federal taxes was sufficient to reverse the lower court’s decision. Bodell’s failure to recall forming a partnership with Stites in 1986 also did not indicate a lack of credibility sufficient to affect his showing of rehabilitation since he did not deny committing the misconduct while practicing with Stites, Stovitz said.
Copyright 2002, Metropolitan News Company