OCTOBER 15, 2004
NIKOLAI TEHIN FOUND GUILTY
San Francisco Plaintiffs' Attorney Convicted on All Fifteen Counts
The United States Attorney's Office for the Northern District of California announced that Nikolai Tehin was convicted on all counts by a federal jury yesterday. Following a six week trial and after deliberating for two days, the jury found Mr. Tehin guilty of nine counts of money laundering and six counts of mail fraud in connection with his theft and misuse of more than $2 million in settlement funds belonging to his clients. The abuses include stealing hundreds of thousands of dollars from settlements that should have gone to three disabled infants in medical malpractice suits.
Mr. Tehin, age 56, of San Francisco, California, and the principal partner in the law firm of Tehin + Partners, was indicted by a federal grand jury on July 31, 2004. He was charged with nine counts of money laundering and six counts of mail fraud. Mr. 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.
U.S. Attorney Kevin V. Ryan said, "As I stated upon the defendant's arrest in this case on July 15, 2003, lawyers owe a duty of loyalty to their clients. Nikolai Tehin was accused --and has now been convicted -- of charges showing that he not only breached that duty in the most egregious way, but also violated federal law to enrich himself at the expense of the people who trusted him. The U.S. Attorney's Office will prosecute anyone-including a lawyer-who abuses his position of trust to illegally benefit himself."
According to IRS Criminal Investigation Special Agent in Charge Roger L. Wirth: "The jury has sent a clear message by finding Tehin guilty on all counts. My sympathies go out to the victims in this case. IRS Criminal Investigation will continue to work with the U.S. Attorney's Office and the FBI on fraud cases in which we can lend our financial investigative expertise."
San Francisco FBI Special Agent in Charge Mark J. Mershon said, "There is no higher call in law enforcement than coming to the aid of crime victims who are victimized again by those they trusted to protect them."
The indictment alleged that 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.
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. In one incident, 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.
The jury found that Mr. Tehin misappropriated funds in connection with the following cases:
Medical Malpractice Cases: In two different cases during 2002, Mr. Tehin 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. Mr. Tehin deposited and stole the entire $1 million without even telling the respective parents of his clients that he had received settlement funds in each of their 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. 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 their settlement funds.
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.
Will Contest: Mr. 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 was convicted on all nine counts for which he was charged - a sum total of approximately $740,000 in funds that he stole from his clients. 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 may be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed at the discretion of the court. Today, the jury will hear arguments on the sentencing guideline factors that will affect Mr. Tehin's sentence.
U.S. Attorney Kevin V. Ryan thanks the Federal Bureau of Investigation, the Internal Revenue Service–Criminal Investigation, and the District Attorney's Offices in San Francisco, Alameda, and Napa counties for their hard work in completing this investigation. He also thanks Miles F. Ehrlich and Mark Parrent, the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Derek Owens and Legal Tech Lori Lucchetti.
A copy of this press release and related court filings may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on http://pacer.psc.uscourts.gov/.
All press inquiries to the U.S. Attorney's Office should be directed to Luke Macaulay at (415) 436-6757 or by email at Luke.Macaulay3@usdoj.gov.