20 April – LAWFUEL – The Law News Network – The United States Attorney’s Office for the Northern District of California announced that Nikolai Tehin, 58, was sentenced to 170 months in federal prison today by Chief Judge Vaughn R. Walker in San Francisco. Following a six week trial last fall, a federal jury convicted Mr. Tehin on October 14, 2004 on all counts, including six counts of mail fraud and nine counts of money laundering in connection with his theft and misuse of more than $2 million in settlement funds belonging to his clients. The amount of restitution to victims will be determined at a hearing on May 3, 2005. Mr. Tehin is scheduled to voluntarily surrender on June 17, 2005.
Mr. Tehin’s abuses included stealing hundreds of thousands of dollars from lawsuit settlements that should have gone to disabled infants in medical malpractice suits and low-income tenants who sued their landlord for maintaining substandard living conditions. He used this money to fund an extravagant personal lifestyle and to cover the operating expenses of his law firm, Tehin + Partners.
U.S. Attorney Kevin V. Ryan said, “As an attorney, Nikolai Tehin held a position of trust and had a duty to his clients to act ethically and responsibly. He not only breached that duty in the most egregious way, by stealing and misusing his clients’ settlement money for his own behalf, but also violated federal law to enrich himself at the expense of the people who trusted him. Today’s sentence sends a strong message to lawyers in a position of trust to act in an ethical and legal manner or face serious consequences.”
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.
San Francisco FBI Special Agent in Charge Mark J. Mershon said, “The successful investigation and prosecution of Nikolai Tehin illustrates the FBI’s continued commitment to the pursuit of complex and sophisticated fraud schemes. The crimes perpetrated in this case are especially serious given that a prominent San Francisco attorney abused the judicial system to fund a lavish personal lifestyle with settlement funds he stole from his clients, many of whom were chronically sick or disabled children.”
According to IRS Special Agent in Charge Roger L. Wirth: “The IRS is honored to have been part of this investigation and prosecution team. This has truly been a joint law enforcement effort. Mr. Tehin’s fraud scheme was significant and affected those he was supposed to protect. He willfully betrayed the trust of many people.”
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 parents of his clients that he had received settlement funds in their case.
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 substandard 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 any of 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 in which we was charged with laundering a 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.
Mr. Tehin, of San Francisco, California, is the principal partner in the law firm of Tehin + Partners, and was indicted by a federal grand jury on July 31, 2004. He was charged with six counts of mail fraud and nine counts of money laundering. 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 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 prosecuted the case with the assistance of Derek Owens.
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 .
All media 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 .
