Wills, Estates & Trusts,
Feb. 12, 2024
2 top firms accused of helping lawyer steal from 28 trusts
The lawsuit says attorneys from the firms knew their client was misappropriating money from the trusts he was responsible for and let it happen.
A lawsuit in Los Angeles claims that two prominent law firms helped cover up misconduct by a lawyer who misappropriated millions from 28 trust accounts he oversaw.
The lawsuit filed on Wednesday claims that Parker Milliken Clark O’Hara & Samuelian APC and Buchalter helped twice-suspended, three times State Bar disciplined attorney Leslie Klein cover up his embezzlement of funds from the trusts.
“This action arises from a crooked trustee’s proven disloyalty, fraud, and theft of trust assets and funds and his counsel’s role in allowing the trustee’s misconduct to continue and efforts to conceal the trustee’s violations,” the complaint read. Jeffrey Winter et al. v. Parker Milliken Clark O’Hara & Samuelian et al., 24STCV03284 (L.A. Sup. Ct., filed Feb. 7, 2024).
The plaintiff trustees are represented by sole practitioners Joshua R. Furman in Encino and Donald L. Saltzman in Los Angeles.
“It’s pretty clear to us that the attorneys knew what was happening and they not only let it happen, they did nothing to stop him and they did everything to delay the case and let him just continue to embezzle money,” Saltzman said in a phone call on Friday.
According to the complaint, the trusts were established by Sam and Vera Menlo, Holocaust survivors who emigrated to the United States after World War II. In the following decades, the Menlos established 28 trusts to benefit their children, grandchildren and future descendants.
After Klein became the sole trustee of the trusts in 1996, the complaint claims, he set about stealing millions of dollars, establishing lines of credit using the trusts as collateral and transferring funds to his personal account.
The lawsuit claims that Klein operated a Ponzi scheme to deplete funds in one of the trusts to pay off financial obligations in other family trusts he oversaw.
“He even attached his personal bank account to an entity he created that was composed of 10 of our trusts, and he used that entity as overdraft protection on his personal account,” Saltzman said, estimating that Klein covered roughly $1.2 million in personal overdraft fees with the money.
In a court-ordered arbitration arising from a lawsuit filed by 24 trust beneficiaries in 2012, Los Angeles County Superior Court Judge Glen M. Reiser determined that Klein embezzled over $19 million from the trusts at issue.
Furthermore, the new lawsuit claimed, Klein intentionally let three life insurance policies funding the trusts lapse, resulting in a loss of $6.27 million.
In 2012, Klein hired Buchalter and Parker Milliken to represent him in his work as trustee, paying them using misappropriated funds from the trusts, the new lawsuit claimed.
“Buchalter and Parker Milliken each had front-row seats to Klein’s egregious wrongdoings and blatant breaches of his fiduciary duties as Klein’s counsel,” the complaint read.
“Even so, neither Buchalter nor Parker Milliken did anything to stop Klein’s wanton theft of trust assets and funds to the detriment of the trust,” it continued.
The lawsuit seeks damages for all actual and general losses, punitive damages and reasonable attorney fees and costs.
No one answered the phone when calls were made Friday to the offices of Buchalter and of Parker Milliken and a media representative for Buchalter.