Friday, September 26, 2008

Attorney in PA Indicted for Will Fraud

On September 25, 2008, the U.S. Attorney's Office for the Eastern District of Pennsylvania issued a Press Release entitled "Allentown Attorney and Two Others Indicted for Fraud Involving Couple Killed in Plane Crash" (PDF, 2 pages) that announced the formal criminal indictment of a Pennsylvania lawyer, his son, and a physician on federal fraud charges arising from alleged forgeries of wills.

The Indictment, available online (PDF, 9 pages), identified federal law violations under 18 U.S.C. §371 (conspiracy to commit wire fraud - 1 count), 18 U.S.C. §1343 (wire fraud - 2 counts), and 18 U.S.C. §2 (aiding and abetting) involving various of the named defendants.

Reporter Matt Birkbeck published an article entitled "Feds: Karoly faked wills" on September 26, 2008, in The Morning Call (Allentown, PA), which reported the underlying circumstances and the alleged criminal behavior:

Two weeks after his brother Peter and sister-in-law were killed in a plane crash in February 2007, John P. Karoly Jr. learned he wasn't named as a beneficiary in their wills.

Karoly, a high-profile Lehigh Valley lawyer, requested a delay in probating the wills, claiming Peter and his wife, Dr. Lauren Angstadt, filed updated wills in 2006 that gave John Karoly a significant portion of their multimillion-dollar estate.But the new wills were fraudulent, according to a federal grand jury in Philadelphia, which on Thursday indicted Karoly, 58, his son John ''J.P.'' Karoly III, 28, and Dr. John J. Shane, 72, charging them with taking part in a carefully crafted scheme to defraud the estates of Peter Karoly and Angstadt by using the phony wills. * * *
The prosecuting U.S. Attorney was quoted in the article:
''The defendants conspired in a fraudulent scheme to forge the wills of Peter Karoly and Lauren Angstadt in order to unlawfully benefit from their tragic deaths,'' said acting U.S. Attorney Laurie Magid in a prepared statement.

''Their actions were not only illegal, they subverted the true intentions of the victims.''

Karoly, his son and Shane were each charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and aiding and abetting after a 19-month investigation by the U.S. attorney's office in Allentown and the FBI.

If convicted, each faces up to 45 years in prison and a $750,000 fine. * * *
I referenced the original dispute among family members and the surprising, subsequent involvement by the Federal Bureau of Investigation in prior postings:

An article entitled "Attorney John Karoly indicted on charges he faked millionaire brother's will" posted September 25, 2008, by The Express-Times (Lehigh Valley region, PA), identified the other subjects of the indictments, in addition to John P. Karoly, Jr.:
Also named in the indictment are John J. Shane, a doctor who often provides expert testimony for Karoly at trial, and Karoly's son, John P. Karoly III. The younger Karoly works in his father's South Whitehall Township law office.

Each is charged with single counts of conspiracy and two felony counts of wire fraud, according to federal authorities. * * *
The charges were denied in a statement prepared by Robert Goldman, the attorney representing Mr. Karoly, who was quoted in that article:
"While there may be some who were angered by Mr. Karoly's successful lawsuits against errant police officers and now cheer the announced charges, the broader community will see the case for what it is," Goldman said.
"To make the ultimate issue blatantly clear, the individuals charged in today's indictment are not guilty and will vigorously defend against the allegations."
For a similar Associated Press news report, see: "Feds: Pa. lawyer faked will after brother's death" (09/25/08) by Maryclaire Dale, published by The Times-Leader (Wilkes-Barre/Scranton, PA).

A related civil suit over the disputed wills remains pending in the Orphans Court Division, Court of Common Pleas of Northampton County, Pennsylvania. That will contest was commenced by two of Karoly's sisters, Kim Karoly Luciano and Joanne Karoly Billman, who claimed that John P. Karoly Jr. created a will to replace one Peter Karoly had drawn up in 1985.

Such allegations in the past generally were examined in civil actions brought by parties with standing to sue. To the extent criminal behavior was uncovered, referrals were made under state criminal laws to a local district attorney to be heard in a common pleas court.

Regardless of the outcome in this case, its prosecution alone could be trend-setting in a progressive way that could heighten prosecution of elder abuse generally.

To date, this case involves application of federal fraud and conspiracy laws, investigation by the FBI, examination & prosecution by the U.S. Attorney's Office, with anticipated resolution in a federal court.

This case could become a template for future prosecution of other cases involving intentional fraud in the preparation of testamentary documents offered for probate or for claim.

Update: 04/07/13:

The Orphans' Court Division of the Court of Common Pleas of Northampton County issued a ruling that the contestants to the wills did not meet the required burden of proof to overturn the questioned wills. No federal charges were pursued by the Justice Department on such matters. See: PA EE&F Law Blog posting Karoly Estates Will Forgery Case Ruling (04/07/13).