35-year-old Mequon attorney federally indicted, accused of defrauding her clients
MEQUON (WITI) — A federal grand jury on Tuesday, December 2nd returned a 33-count indictment charging Sarah E.K. Laux (aka “Sarah Kitzke”) — a 35-year-old Mequon attorney for allegedly defrauding her clients.
Laux was indicted on two counts of bank fraud, nine counts of wire fraud, one count of mail fraud, 20 counts of money laundering, and one count of filing a false tax return.
If convicted of bank fraud, Laux faces a maximum penalty of up to 30 years’ imprisonment, a $1 million fine, and five years on supervised release. If convicted of mail fraud or wire fraud, Laux faces a maximum penalty of up to 20 years’ imprisonment, a $250,000 fine, and three years on supervised release.
The indictment charges Laux with defrauding four different clients to whom Laux provided trust and estates advice and to whose funds Laux gained access through her solo-practice law firm. According to the indictment, Laux defrauded those clients out of more than $2.2 million in funds that Laux then converted to her own use.
Specifically, the indictment alleges that, between 2010 and 2012, Laux engaged in a scheme to defraud Carleen Vogel Guenther and her family’s corporation, Eilcar Corporation, by gaining access to their money and then, through misrepresentations and false pretenses, converting more than $1.6 million of their money to her own use.
The indictment alleges that Laux used that money to buy residential real property and an insurance business and to pay Laux’s personal bills and bills of Laux’s law firm, Laux Law, LLC.
The indictment alleges that Laux also defrauded Associated Bank, N.A., and its subsidiary Associated Trust, N.A., which served as trustee of a trust of which Carleen Guenther was a beneficiary, by falsely representing to those financial institutions that Carleen Guenther needed a distribution from the trust to buy a condominium in a retirement home; causing those financial institutions to distribute the $450,000 for that purpose; and then converting the $450,000 to her own use.
The indictment further alleges that Laux then prepared falsified documents and presented those falsified documents, and made false statements, to Associated Trust and Associated Bank to conceal that Laux had fraudulently converted the $450,000 in distributions from the trust to Laux’s own use.
The indictment also alleges that, during 2013, Laux defrauded two other estate-planning clients, a husband and wife, by embezzling approximately $584,000 of their investment monies after having promised to use their money to buy annuities.
The indictment further alleges that Laux engaged in money laundering transactions using proceeds of these fraud schemes and that Laux also filed a materially false and fraudulent personal income tax return for tax year 2010 on behalf of herself and her husband. According to the indictment, Laux falsely stated that her and her husband’s income for 2010 was $104,249, when in fact the amount was in excess of that amount.
“The Department of Justice places a high priority on prosecuting financial crimes suspected to have been committed by persons who occupy positions of trust, such as attorneys, who abuse their clients’ trust to commit their offenses. This is especially so when the victims of the suspected offense are vulnerable because of age or infirmity and have relied upon their attorney to faithfully protect their financial interests and well being- only to have that trust exploited and abused. Santelle specifically commended the Internal Revenue Service and the Federal Bureau of Investigation for their highly professional and comprehensive investigation of this case,” United States Attorney James Santelle said.
“Attorneys, and especially estate-planning attorneys, hold positions of trust in the eyes of their clients. Attorneys who embezzle their clients’ money breach that trust. IRS Criminal Investigation takes such allegations of attorney embezzlements very seriously and is committed to thoroughly investigating those attorneys who are suspected to have so victimized their clients,” Shea Jones, Special Agent in Charge of the IRS Criminal Investigation St. Paul Field Office said.
The United States is also seeking forfeiture of residential property located in Mequon, Wisconsin, and two businesses – Lasting Legacy, LLC and Family Foundation, LLC – that Laux allegedly purchased with proceeds of her alleged fraud schemes, as well as the remaining proceeds of those alleged schemes.