Fugitive Lawyer Moser Charged With Stealing Clients? Money

Fugitive Little Rock lawyer Keith Moser was indicted March 5 on four criminal counts related to the alleged theft of at least $500,000 in client trust account funds, and an IRS agent’s affidavit suggests that Moser may have stolen almost $1.7 million from his clients.

Federal agents have seized almost $518,500 that Moser allegedly deposited in a Memphis bank on Nov. 21, according to a seizure warrant issued Feb. 27.

At least three clients reached by Arkansas Business, the Little Rock sister publication of the Northwest Arkansas Business Journal, have reported that more than $700,000 is missing from their trust accounts.

“Mr. Moser was already accused of helping at least one of his clients to knowingly cheat on his taxes,” U.S. Attorney Bud Cummins said in a statement. “Others probably relied on his poor advice unwittingly and may suffer monetary harm as a result.

“Now, it is evident that he stole money from clients in a desperate effort to save his own skin — and in some cases it amounted to the client’s life savings.”

The IRS criminal investigation division and other agencies are currently tracking Moser.

“Based on what we have seen out of Mr. Moser so far, I doubt he will be any better at being a fugitive than he was at being an attorney, so he may turn up,” Cummins said.

The charges against Moser, who was last seen on Feb. 11, suggest that he may have been planning to flee as early as Nov. 17 — shortly after he agreed to plead guilty to a federal tax fraud charge that was subsequently transferred from Little Rock to U.S. District Court in Detroit.

Moser was scheduled to plead guilty in Detroit on Feb. 17 to the tax fraud charge and two unrelated charges of conspiracy to launder money and obstruction of justice. His wife, Valerie Moser, said that he had agreed to a 10-year sentence. But he never showed up for court.

Moser’s Little Rock attorney, Chuck Banks, told the judge that he didn’t know where his client was. No one elese claims to have heard from or seen Moser since early February.

Banks was unavailable for comment.

Moser is accused of an unlawful monetary transaction and transporting stolen money — he allegedly took $500,000 out of his client trust account and deposited it in a Memphis bank. Two charges of mail fraud, which carry the most serious penalties, are related to letters he sent promising to pay clients 5 percent interest if they would leave their trust funds in his account.

IRS Special Agent Dan Elliott filed an affidavit based on his investigation of Moser’s activities before and after his disappearance. According to the affidavit, Moser’s law firm’s client trust account should contain $1.7 million “but has a current balance of $15,097.45.”

It also includes the following description of Moser’s activities before and after his disappearance:

– On Nov. 17, he directed his office manager to write a check on the client trust account payable to Metropolitan National Bank of Little Rock in the amount of $500,005. He personally took the check to Metropolitan and used it to purchase a $500,000 cashier’s check payable to Excalibur Investments Inc.

He told his office staff to record the distribution as a payment to a particular client who was not named in the affidavit. The client has denied any knowledge of such a payment.

– On Nov. 21, he personally opened an account at National Bank of Commerce in Memphis in the name of Excalibur Investments Inc. and deposited the $500,000 cashier’s check in the account. He also deposited a life insurance check for $28,064.93 that had been written to a 91-year-old client.

– Moser withdrew $100 from the account on New Year’s Day through an ATM in Little Rock. The only other transaction on the account was a $9,500 withdrawal that he made by cashing an Excalibur Investments check in person at an NBC branch in Memphis on Feb. 11. According to Moser’s wife, Valerie Moser, that was the Wednesday that he packed two suitcases and said he was leaving for Detroit, where he was scheduled to plead guilty the following Tuesday.

Credit card records indicate that he traveled into Tennessee that day, according to the affidavit. He had also cashed a check for $9,500 on his business account at Metropolitan National the day before.

The size of Moser’s withdrawals appear designed to avoid the federal reporting requirements that are required on bank transactions of more than $10,000.

Elliott’s affidavit also described some of the clients whose trust funds are missing: a retired couple who left $900,000 from the sale of their family farm on deposit with Moser; a client who borrowed $600,000 to buy a farm and left the money with Moser while the sale was delayed by a lawsuit; and an elderly widow who trusted Moser with more than $100,000.

Clients Speak Out

A former partner of Moser’s, lawyer Scott Fletcher of Little Rock, said three of Moser’s clients have come to him alleging a total of $732,000 is missing from their accounts. One client claims $16,000 is missing; another, $250,000; and a third, $466,000.

Fletcher said he’s looking into the matter, but nothing has been confirmed yet.

As government officials are trying to track down Moser, a steady stream of jilted clients have made their way to the courthouse to sue Moser and his dissolved law firm for a variety of claims ranging from breach of contract to fraud.

Another of Moser’s former law partners, Barry Jewell, is bracing himself for more lawsuits.

“I think [Moser’s former clients are] trying to pull me in because Keith’s gone,” Jewell said. “I’m going to end up getting sued by several of Keith’s clients. It’s frustrating, guilt by association.”

Jewell has his own lawsuit pending against Moser and their former firm in an attempt to audit it. Jewell alleged in his 2003 lawsuit that Moser and Fletcher each collected more than $150,000 for work performed at the firm that never passed through the firm’s general account.

Moser and Fletcher have denied the allegation. And Fletcher filed a counterclaim against Jewell alleging fraud, negligence and breach of contract.

Lawyer Bruce Tidwell of Little Rock, who is representing a client who has sued Moser and the firm over the handling of a trust account, said he is unsure what Moser’s absence means to the case.

“But I don’t necessarily think that’s going to be the end of the case,” Tidwell said.

Lawyer Timothy Dudley of Little Rock, who has sued Moser and Jewell on behalf of a client, said Moser’s disappearance may hurt his client’s chances of collecting.

Still, he said, he’ll push forward with the case because Jewell is still around.

Sales Pitch

The Jewell & Moser law firm — renamed Jewell Moser Fletcher & Holleman in the late 1990s — specialized in tax law and promised its clients huge savings on their tax bills. A revealing 1997 letter in which Fletcher outlined the firm’s sales pitch was filed in court documents as part of a 2000 case involving the law practice.

According to the “personal and confidential letter” Fletcher sent to Van W. Eberhard of Eberhard Enterprises Inc. of Little Rock in June 1997, about 95 percent of the firm’s business was dealing with tax laws. In the five-page letter, Fletcher said the firm represents clients throughout the United States and in other countries.

“Some of our foreign clients are royalty,” Fletcher wrote.

Fletcher said he was confident that the firm’s proposed tax plan would save Eberhard “an enormous amount of both income and estate taxes … We believe we can develop a plan that will eliminate all income taxes.

“However, even if we cannot eliminate all income taxes, we will eliminate virtually all income taxes. We are talking about eliminating millions in income taxes and millions in estate taxes,” the letter said.

He boasted in the letter that the firm has saved one unnamed client $2 million in taxes and $3 million in estate taxes.

The firm developed its techniques and used them only in connection with “extremely affluent clients or extremely large transactions,” Fletcher said.

Part of the plan calls for the firm to establish entities to change the ownership from an individual or a corporation to a tax-qualified plan while not violating state or federal law.

“It is an extremely aggressive approach,” Fletcher said. “However, it is also very beneficial to our clients who do not mind taking a little risk by ending up in some ‘gray’ areas of the law.”

Angry Clients

Moser used a similar sales pitch on Geraldine Reshel of Jacksonville, whose husband had won $3.5 million in the Florida lottery in 1994. Less than a year after hitting the jackpot, Charles Reshel died of cancer, leaving 20 annual payments of $175,000 to his widow.

In 1996, during a conversation with her tax accountant, he recommended she see Moser who might reduce her income taxes, according to a lawsuit Reshel filed Feb. 13 against Moser, Jewell and the firm, in Pulaski County Circuit Court.

When Reshel met Moser, according to her complaint, he promised to save her money. Moser’s plan was to form a corporation, which would receive the lottery money then pay Reshel an annual salary using about half the lottery proceeds, according to the suit.

The rest of the money would go into a tax-qualified pension plan.

“Moser explained that this structure would shelter one-half of each year’s lottery winnings from income taxation for a yearly tax savings of $39,422,” Reshel said. “Based on this approach, Moser represented that the corporation would receive refunds of taxes withheld by Florida lottery officials equal to $24,179 per year and that Mrs. Reshel would receive another $12,649 per year.”

Reshel hired Moser to handle her tax filings. But something went wrong.

Between 1997 and 2002, neither Moser nor anyone from his firm filed tax returns for the corporation. To make matters worse, no one deposited money into Reshel’s pension plan account — even though the firm filed returns with the IRS “falsely representing that proper deposits were made each year,” Reshel said.

Reshel also said her signature was forged on the returns.

The first hint of trouble surfaced in 2001, according to the suit, when Reshel’s tax refund check was late. Moser told her the money would be coming but was tied up because of government delays, she alleged. She said she accepted Moser’s offer to give her $120,000 from his own account to hold her over until the tax check arrived.

Sometime after receiving the money, she learned about the problems with her account. As a result of Moser and the firm not making the proper filings and pension plan deposits, Reshel claims to have lost $749,000. She also owes the IRS more than $150,000 in penalties and interest payments.

She is asking for more than $900,000 in damages.

“I never met that client, never spoke with that client,” Jewell said.

Another lawsuit was filed against Moser and the firm in September by Marilynn McRae Houston, the trustee of the Mary S. Pemberton Trust.

Moser represented the Pemberton Trust in a sale of equipment to the Jimmy B. Sims Farms Inc. of Scott in August 2001 for $2.1 million.

The money from the proceeds was then deposited in the client trust account maintained by Moser’s firm.

After the sale, Moser issued $1.49 million to the five beneficiaries of the Pemberton Trust. But the beneficiaries also wanted a financial statement regarding the sale, which they allege Moser refused to release.

Finally, the trustee hired another lawyer and an accountant to do the work. After the beneficiaries received the financial closing statement, they were surprised to discover $104,000 had been paid to Moser’s firm to handle the sale, the lawsuit said. The beneficiaries also learned $43,000 of the money belonging to the trust had been deposited into the law firm’s client trust account.

Moser and the firm denied the allegation in court filings.

The Breakup

The 11-year partnership between Moser and Jewell came to an end in August 2002. Fletcher said Moser & Jewell hired him in the fall of 1991.

Fletcher said he decided to leave the firm when he was contacted by the FBI in the Michigan investigation that eventually led to charges being filed against Moser; a client, Dan F. Whitt of Maumelle; and Whitt’s son, former stockbroker David Whitt of Little Rock.

Fletcher, who had left the firm by the end of July 2002, said he’s never been the target of an investigation.

Dan Whitt has pleaded guilty on a federal charge of conspiracy to commit money laundering. His sentencing is scheduled for March 30. David Whitt pleaded guilty to wire fraud and was sentenced in January to 15 months in federal prison.