Disbarred Clearwater lawyer Graham Kligerman is scheduled to plead guilty this month to federal charges of stealing more than $1-million in a multistate equity-skimming fraud.
But he didn't spend the money on himself, his attorney says. Rather, Kligerman, 33, used the money in a desperate attempt to save his sinking law practice.
"This is a story about mental illness, not greed," said Tampa lawyer Dennis Hernandez, who represents Kligerman. "It's important to know that Mr. Kligerman did not keep one penny of the money for himself."
Instead, authorities say, Kligerman gave the money to clients of his legal practice.
It didn't work.
Two years ago, the Florida Supreme Court disbarred Kligerman. In its complaint against him, the Florida Bar said he diverted money from one of his practice's trust accounts.
The Bar's investigation stemmed from Kligerman's representation of Jeanne Shakara in a contract dispute with a Sand Key real estate company.
During the case, investigators said, Kligerman tried to make Shakara believe she was winning her case. He fabricated court orders, forging the signatures of Circuit Judge Crockett Farnell and opposing lawyers. He even gave Shakara $10,000 at one point, pretending it was a payment from the defendants, but it was from his trust account.
Now prosecutors say that at that time Kligerman was involved in a real estate scam with two co-conspirators from California.
Federal prosecutors accuse Kligerman of diverting money from the fraudulent real estate transactions' trust accounts without the knowledge of his co-conspirators.
Over two years, Kligerman acted as the closing agent on 60 fraudulent real estate transactions in which banks were misled into making millions of dollars in loans, prosecutors say.
And without the knowledge of two co-conspirators in California who hired him to oversee the transactions here, Kligerman diverted at least $1-million from trust accounts to himself and unwitting clients of his practice, authorities say.
Kligerman has agreed to plea guilty to one count of conspiracy to commit bank fraud, wire fraud and mail fraud and one count of wire fraud, according to a plea agreement filed in U.S. District Court in Tampa. He is scheduled to enter the plea on Dec. 18.
The conspiracy charge carries up to five years in federal prison and the wire fraud charge carries up to 20. Prosecutors have indicated they will seek substantial prison time.
Hernandez said his client has taken responsibility and is cooperating with prosecutors investigating the two co-conspirators. The downfall of Kligerman's law practice and subsequent troubles are the result of personal problems, he said.
"Mr. Kligerman has sought and received mental illness treatment and has already begun to emerge as a productive member of society," Hernandez said.
The federal complaint states that as part of the real estate scheme, the conspirators used false representations to obtain loans from banks and homes from people facing foreclosure.
The main aim of the scheme, prosecutors said, was to strip the homes - most in Florida, a few in Georgia - of their equity.
The complaint names the two co-conspirators only as the president and principal of ARO Properties Corp. in Mission Viejo, Calif. An attorney for the company contends the transactions would have been sound if Kligerman hadn't stolen the money.
ARO advertised a product called "Fresh Start Lease Backs." The company found homeowners who could not make payments on their mortgages but had a lot of equity in their homes, according to prosecutors.
ARO then found investors to supposedly buy the homes, lease them back to the original homeowners and eventually sell the properties back to them.
But banks were not told the real arrangement of the transactions, prosecutors said.
The banks were not told that the down payments were being provided by the co-conspirators, not the loan applicants.
The down payments that swayed the banks to make the loans came from the equity of the actual homes, prosecutors allege.
Nor were the banks told that the buyers had no plans to live in the homes as their applications claimed.
The buyers were unsophisticated investors with good credit who paid ARO $2,500 to be buyers, according to the complaint. They unwittingly submitted fraudulent loan applications.
The court documents did not detail how Kligerman, as the closing agent, disbursed all the proceeds of the 60 bank loans, and last week federal officials declined to discuss the case further. But the complaint does say Kligerman diverted from $1-million to $12-million in an effort to hide the fact that his law practice was imploding.
Along the way, many of those involved in the real estate transaction suffered, authorities say. Many of the original owners lost their homes and their equity in foreclosure. Buyers were left with ruined credit. Banks were left with unsecured loans on homes with insufficient equity.
As part of his plea agreement, Kligerman has agreed to pay an undetermined amount of restitution to two loan processors, four banks, 53 home owners and 18 buyers.
Prosecutors would not identify the co-conspirators or say whether they may face charges in Florida. They say in court documents that "two or more persons ... came to a mutual understanding to try to accomplish a common and unlawful plan."
ARO attorney David Wiechert, a southern California lawyer who specializes in white-collar crime, would only say that "the program would have worked if (Kligerman) had not embezzled money." But he declined to name the president or principal of ARO or expand on how the program was supposed to have worked.
Jose Cardenas can be reached at firstname.lastname@example.org or (727) 445-4224.