Former Attorney Pleads Guilty to Fraud Schemes
|U.S. Attorney’s Office April 11, 2013|
KANSAS CITY, MO—Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former Jackson County, Missouri attorney pleaded guilty in federal court today to bank fraud, which involved stealing funds from the Sam and Lindsey Porter foundation, as well as bankruptcy fraud.
Harley Kent Desselle, 62, of Raytown, Missouri, pleaded guilty before U.S. District Judge Dean Whipple to one count of bank fraud and one count of making a false oath in a bankruptcy proceeding. He also admitted that he defrauded the widow of a longtime friend in an investment fraud scheme.
“A disbarred attorney took advantage of his clients, including a grieving mother and a friend’s widow, to line his own pockets,” Dickinson said. “He abused his clients, and he abused the legal system for a client who declared bankruptcy. With today’s guilty plea, he will be held accountable for his flagrant misconduct.”
“Concealing assets in a bankruptcy proceeding is a crime that threatens the integrity of the bankruptcy process and public confidence in that process, especially when the concealment is done by the attorney responsible for assuring full disclosure,” stated Nancy J. Gargula, United States Trustee for Missouri, Arkansas and Nebraska (Region 13). “We are grateful to all of our law enforcement partners in this case and in particular to U.S. Attorney Tammy Dickinson for her commitment to pursuing those who commit bankruptcy fraud and cause harm to consumers.”
At the time of the fraud schemes, Desselle was an attorney in private practice and operated an investment company called New Century Investments. Desselle was suspended from the practice of law in December 2008 and disbarred by the Missouri Supreme Court in April 2009.
Porter Foundation Scheme
Sam and Lindsey Porter were the children of Tina Porter. They disappeared in 2004. Their bodies were not discovered until 2007, when their father admitted his role in their deaths and pleaded guilty to murder. Beginning in 2007, donations were made to a bank account opened at the Bank of Grain Valley under the name of samandlindsey.org Inc. Funds donated to the bank account were intended for use in building a children’s playground.
Desselle charged $2,500 for the initial set up of samandlindsey.org Inc. He began managing the samandlindsey.org Inc., bank account in September 2007. At the time the foundation was established, Desselle told Tina Porter he would take care of everything on the account. He was the only person who could sign foundation checks. Porter asked Desselle, on numerous occasions, for bank statements and/or documents related to the account, but Desselle refused to produce documents and would not disclose the bank account information.
On October 25, 2007, Desselle wrote a $12,000 check drawn on the foundation’s account and deposited it into his law firm trust account. Porter did not authorize the $12,000 check. On October 29, 2007, Desselle wrote a $7,500 check drawn on the foundation’s account, made payable to New Century Investments and deposited into his New Century account. Porter was not aware of and did not authorize the $7,500 check.
When Porter learned of the $19,500 in misappropriations, she insisted that Desselle return the funds to the foundation’s account. Desselle deposited two checks into the foundation account—a $19,500 check with “original investment” listed in the memo and a $2,238 check with “balance of investment with interest” listed in the memo. The $2,238 check actually came from legal fees earned by Desselle in his law practice and/or money borrowed from friends or family members instead of interest earned on the account.
Nunez Bankruptcy Scheme
Desselle acted as the attorney for Christina Nunez in her bankruptcy filing in 2008. Nunez owned a motorcycle that would not have been exempt under bankruptcy law. Desselle directed Nunez to sell the motorcycle and give him the proceeds, which she believed would be placed in the law firm’s trust account and used to pay down debt due her creditors. Desselle told Nunez the motorcycle sale proceeds would be exempt from bankruptcy creditors and not part of the estate.
Nunez sold the motorcycle for $13,500; she kept $500 and gave the remaining $13,000 to Desselle. Desselle used the $13,000 deposited in trust for Nunez for his own personal expenses rather than payment of Nunez’s creditors.
Desselle filed Nunez’s bankruptcy on October 13, 2008. Nunez testified at a subsequent bankruptcy hearing that she never reviewed the bankruptcy petition and never signed the schedules. The bankruptcy schedules submitted by Desselle on Nunez’s behalf did not include the $13,000 he received from Nunez for the sale of the motorcycle.
On May 12, 2009, the bankruptcy court ordered Desselle to refund all the money withdrawn from Nunez’s trust account to the bankruptcy trustee. (Desselle refunded $7,251 but kept the remaining $5,749.) During the hearing, the court stated Desselle was involved in “...numerous acts of malpractice, deceit, and...stealing,” and “...likely falsified all of the bankruptcy schedules and statements and the various documents that had to be filed in order to initiate a bankruptcy filing.”
Clifton Life Insurance Scheme
In addition to the two specific counts of the indictment to which Desselle pleaded guilty today, his plea agreement also acknowledges that he defrauded Nancy Clifton, who received $750,000 in life insurance proceeds in 1996 when her husband was killed in a motor vehicle accident. Desselle, a longtime friend of Clifton’s husband, offered to invest the life insurance proceeds for Clifton in New Century and promised her high yields on the investment.
Clifton received only two investment statements from Desselle, one in 2006 and one in 2007. Those statements were both false and fraudulent. Desselle created both documents to lull Clifton into believing her money was safe. In reality, Clifton’s funds were lost by Desselle several years earlier, between 1998 and 2000.
Desselle made “interest payments” on Clifton’s investments by creating false documents to lull her into believing she was receiving interest payments, when the funds actually came from Desselle’s law firm or from funds Desselle solicited from family members. One of those payments came from the samandlindsey.org Inc. account.
When Clifton read newspaper reports of Desselle’s handling of the Porter foundation account in 2008, she told Desselle to liquidate her investments as soon as possible. Desselle eventually admitted that her investments had all been lost.
Under the terms of today’s plea agreement, Desselle must pay $343,045 in restitution to Nancy Clifton and $5,759 in restitution to the bankruptcy trustee in the Nunez case. The total restitution due is $348,794. The government and Desselle agree to recommend a sentence of 33 to 41 months in federal prison without parole. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by FBI and the U.S. Trustee for Region 13 and the Kansas City Office of U.S. Trustee. Region 13 of the U.S. Trustee Program is headquartered in Kansas City, Missouri, with additional offices in St. Louis, Missouri; Little Rock, Arkansas; and Omaha, Nebraska. The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available online at http://www.justice.gov/usao/mow/index.html.