San Francisco Plaintiffs' Attorney Indicted Today on
Mail Fraud and Money Laundering Charges
For Embezzling Settlement Funds From Clients

Nikolai Tehin, a San Francisco plaintiffs' attorney who was recently suspended from practice by the State Bar, was indicted by a federal grand jury today on broadened charges of mail fraud and money laundering in connection with his theft and misuse of more than $2 million in settlement funds belonging to his clients. 

Mr. Tehin, age 56 of San Francisco, California, and the principal partner in the law firm of Tehin + Partners, was indicted on six counts of mail fraud, in violation of 18 U.S.C. §1341, and nine counts of money laundering, in violation of 18 U.S.C. §1956 and §1957.  Tehin had previously been arrested on a criminal complaint filed on July 14, 2003, which contained one count of mail fraud and one count of money laundering.

According to an affidavit filed by an FBI agent in support of the criminal complaint, it is alleged that during 2001 and 2002, Mr. Tehin secretly converted to his own personal use more than $2 million in settlement funds belonging to his clients.  He used this money to fund an extravagant personal lifestyle and to cover the operating expenses of his law firm, Tehin + Partners. 

The complaint alleges that Mr. Tehin operated a fraud similar to a Ponzi-scheme in which Mr. Tehin used settlement funds received on behalf of one client to pay off other clients whose settlements he had already stolen.  The affidavit also describes one incident in which Mr. Tehin sent a fraudulent billing statement to a client, falsely charging her thousands of dollars for expert witnesses who never did any work on the client's case, along with travel expenses unrelated to her case.

According to the affidavit filed with the complaint, Mr. Tehin misappropriated funds in connection with the following cases:

The Vintage Ranch Tenants.  In 2000, Mr. Tehin was retained by Legal Aid of the North Bay to represent a group of over 100 low-income tenants, many of them Latino farm workers in Napa, California, who had sued the owners of their apartment buildings for maintaining sub-standard living conditions.  At the time, this was the largest case in California history brought by tenants against a landlord for failing to keep rental housing in safe and habitable conditions. 

In early 2001, Mr. Tehin settled the Vintage Ranch lawsuit for $2 million.  After attorney's fees and costs, the clients were entitled to approximately $1.3 million.  According to the complaint, however, within just two months of receiving the final settlement check in the case, Tehin had actually stolen and spent the entire $2 million on unauthorized personal and business expenses before any of the Vintage Ranch plaintiffs received any of their settlement funds. 

According to the criminal complaint, for many months following the settlement, Mr. Tehin's Vintage Ranch clients complained repeatedly about how long it was taking for them to be paid.  Ultimately, tensions increased to the point where nearly a dozen of the unpaid clients marched in front of Mr. Tehin's office building, in San Francisco's Financial District, holding signs with slogans such as: "Taking Money from the Poor, Shame on You Nick Tehin and Pam Stevens" and "Bank Records Don't Lie, You Took Our Client Trust Fund."  

When the Vintage Ranch clients did ultimately receive their money, they were paid not with their own settlement funds, but with funds belonging to other clients of Tehin + Partners.

Medical Malpractice Cases.  The complaint and indictment also describe two different cases during 2002 in which Mr. Tehin allegedly stole hundreds of thousands of dollars in settlement funds he had secured on behalf of disabled children he was representing.  The victims in both of these cases remain unpaid to this day.

One case involved a $250,000 settlement obtained on behalf of a newborn who sustained severe neurological injuries during the delivery as the result of alleged negligence by physicians and hospital staff.  A second case involved a $1 million settlement Mr. Tehin had secured on behalf of two infant children with cystic fibrosis.  According to the criminal complaint, Mr. Tehin deposited and stole the entire $1 million without even telling the parents of his clients that he had received settlement funds in their case. 

Will Contest.  The indictment also alleges that Tehin stole more than $240,000 in settlement funds he had obtained on behalf of two half-sisters who had sued to recover funds at issue in a contested will.

Money Laundering.  Mr. Tehin is also charged with laundering a total of approximately $740,000 in funds that he stole from his clients.  According to the indictment, Mr. Tehin laundered the funds by paying off certain clients with settlement funds belonging to other clients, and by using the funds to pay for the mortgage on his Pacific Heights house and repairs to his yacht. 

Maximum Penalties.  The maximum statutory penalty for each count in violation of 18 U.S.C. §1341 (mail fraud) is five years in prison and a fine equal to twice the amount of the defendant's gain from the offense, plus restitution to the victims.  The maximum penalty for each count in violation of 18 U.S.C. §1956 is twenty years in prison and a fine equal to twice the amount of laundered funds, plus restitution. The maximum penalty for each count in violation of 18 U.S.C. §1957 is ten years in prison and a fine equal to twice the amount of laundered funds, plus restitution.  However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court.  An indictment simply contains allegations against an individual and, as with all defendants, Mr. Tehin must be presumed innocent unless and until convicted.

Mr. Tehin is scheduled to be arraigned on the new charges on Monday, August 4, 2003 at 9:30 a.m. before Judge Bernard Zimmerman.

The prosecution is the result of an investigation by agents of the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation Division.  Miles F. Ehrlich is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Tech Lori Lucchetti.