It appears that District Attorney Cyrus Vance, Jr. has bagged himself a trophy sized defendant. According to Manhattan prosecutors, former Crowell & Moring attorney, Douglas Arntsen, stole $7 million from clients during part of his tenure in the New York City office of the global law firm. Not yet indicted by a Grand Jury, Arntsen is charged with three separate offenses. Although capable of charging significantly more crimes to a Grand Jury, prosecutors arrested Arntsen for “only” two counts of Grand Larceny in the First Degree (New York Penal Law 155.42) and one count of Scheme to Defraud in the First Degree (New York Penal Law 190.65). A “B” felony that carries a sentence of up to eight and one third to twenty five years in prison as well as a minimum term of one to three years incarceration, Arntsen is facing the most severe or significant white collar crime in terms of degree and potential consequences. While merely an “E” felony, a conviction for Scheme to Defraud still carries a potential state prison sentence of up to four years.
According to Team Vance, Arntsen’s scheme was fairly simple and straight forward. That is, it is alleged that the Crowell & Moring attorney serviced a client, Regal Real Estate LLC, while also servicing himself. It is claimed that Arntsen, who worked at Crowell & Moring for approximately four years, assisted Regal Real Estate LLC in most, if not all, of its real estate transactions. Beginning sometime in April 2010, the Manhattan District Attorney’s Office believes that Arntsen began moving funds associated with a client escrow account into his own personal bank account. These monies related to the sale of Regal Real Estate LLC’s properties. At some point, the law firm recognized the discrepencies in accounting and potential criminal fraud. As a result, Crowell & Moring terminated Arntsen and contact the Manhattan District Attorney’s Office. Likely recognizing what was in store, Arntsen is alleged to have fled to Hong Kong where he was in custody before returning to the United States with the assistance of federal authorities.
Simply put, because the alleged thefts exceeded in their aggregate $1 million, prosecutors charged Arntsen with a “B” felony theft. Should prosecutors ultimately go to the Grand Jury, as noted above, other crimes may be pursued. One such offense would be Falsifying Business Records in the First Degree. The theory for this “E” felony crime would be that with his intent to defraud and steal, Arntsen made false entries in the business records of the banks or the law firm. Alternatively, Arntsen caused false entries to be made. Practically speaking, however, whether or not this offense or others are ultimately pursued, Arntsen has much bigger concerns. According to at least one report, prosecutors are investigating whether another corporate client may have been victimized by Arntsen. Compounding matters, the amount of that theft may also be in the millions.
It will be interesting to see how this case plays out. Will prosecutors present the case to the Grand Jury for an indictment or is the evidence so powerful that Arntsen and his attorney attempt to negotiate a Superior Court Information or “SCI?” In this latter scenario, Arntsen would waive a Grand Jury proceeding and agree to a felony plea and sentence. On one hand he may obtain a better deal should he pursue this route, yet he may ultimately sacrifice any appellate issues and agree to an extremely “stiff” sentence. At some point, if prosecutors seek prison in an amount that is overwhelming (obviously this is a subjective standard!), Arnsten may determine he has no choice but to proceed to trial. One thing to keep in mind, however, is the concern that because there may be different victims and different criminal transactions, a judge would have the ability to sentence Arnsten to consecutive time. For better or worse, Arnsten and his lawyer have ample time to determine the best defensive strategy as he is remanded (held without bail) until his April court date.
Saland Law PC is a New York criminal defense firm. Established by two former Manhattan prosecutors, the New York criminal defense attorneys at Saland Law PC represent those accused of all white collar crimes throughout the New York City region.
To educate yourself about any New York theft and larceny crime, follow the links for the specific offenses above or through any of the websites or blogs below.