Virginia Attorneys Sentenced for Attempting to Extort a Multinational Chemicals Company
Two Virginia attorneys were sentenced today on federal extortion charges for their roles in a scheme to extort a multinational chemicals company by threatening to inflict substantial financial and reputational harm on the company if their demands for a $200 million payment disguised as a purported “consulting agreement” were not met.
Timothy Litzenburg, 38, of Charlottesville, Virginia, was sentenced to 24 months in prison followed by one year of supervised release by U.S. District Judge Norman K. Moon of the Western District of Virginia. Daniel Kincheloe, 41, of Glen Allen, Virginia, was separately sentenced to 12 months in prison followed by one year of supervised release by Judge Moon. Both defendants had previously pleaded guilty to one count of transmitting interstate communications with the intent to extort.
“These two attorneys flagrantly violated their ethical duties to their own clients as they sought to extort a company out of $200 million,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Attorneys who cross the line and abuse their status as officers of the court will be held accountable for their actions.”
“Today’s sentencing should serve as a strong notice to fraudsters that the U.S. Postal Inspection Service will pursue anyone who uses the mail for illegal schemes,” said Delany De Leon-Colon, Inspector in Charge at the U.S. Postal Inspection Service (USPIS) who oversees the Criminal Investigations Group. “Whether it’s a private citizen or a major corporation, Postal Inspectors will never relent in protecting them from those who seek to use the U.S. Mail to further their dangerous scams.”
Litzenburg and Kincheloe previously admitted that in approximately October 2019, Litzenburg approached a company (Company 1) and threatened to make public statements alleging that Company 1 had significant civil liability for manufacturing a purportedly harmful chemical used in a common household product used to kill weeds. Litzenburg and Kincheloe also admitted that after describing the possibility of damaging lawsuits against Company 1, Litzenburg proposed, in sum and substance, that he and Kincheloe enter into a “consulting arrangement” with Company 1 that would create a purported conflict-of-interest that would effectively stop them from representing their clients as plaintiffs in litigation against Company 1. Thereafter, Litzenburg and Kincheloe admitted that Litzenburg, with Kincheloe’s knowledge and agreement, demanded that Company 1 pay Litzenburg, Kincheloe, and others, a total of $200 million in purported “consulting fees.”
Litzenburg and Kincheloe also previously admitted that after making their demand for $200 million from Company 1, they registered a Virginia corporation for the purpose of receiving monies from Company 1, and that they agreed to split the funds from Company 1 amongst themselves and their associates, and to not distribute any of the monies Company 1 paid them as purported “consulting fees” to their existing clients. Litzenburg and Kincheloe admitted that after making their demand for $200 million, Litzenburg threatened Company 1 that they and others would commence litigation that would become “an ongoing and exponentially growing problem for [Company 1], particularly when the media inevitably takes notice” and that such litigation would cost Company 1 and its publicly-traded parent company “billions, setting aside the associated drop in stock price and reputation damage.”
Litzenburg and Kincheloe also admitted pursuant to their guilty pleas that in an email written by Litzenburg, they threatened Company 1 that unless they were paid $200 million, Company 1 would have “thousands of future plaintiffs against [Company 1]” and that “in the absence of a so-called ‘global’ or final deal with me, this will certainly balloon into an existential threat to [Company 1].”
Litzenburg and Kincheloe also admitted that they met in person with attorneys representing Company 1 at a conference center in Charlottesville, Virginia, and during that meeting Litzenburg again threatened to injure the property and reputation of Company 1 and its parent company unless they were paid $200 million pursuant to purported “consulting arrangements,” and that without such a deal there was no way Company 1 “gets out of it for less” than “[a] billion. Yeah. No, I mean, nuisance value, uh, defense lawyer fees, a hit in the stock when this gets filed and served, maybe the press conference, whatever.” Later in the same meeting, Litzenburg and Kincheloe admitted that Litzenburg again stated, in sum and in part, that if they commenced litigation it would have adverse effects on Company 1’s parent’s stock price, which Litzenburg described as “a 40 percent stock loss coming off the top.”
Litzenburg also admitted that, during other communications with Company 1, he told Company 1 that if he received the $200 million in “consulting fees” he would not discuss Company 1 or its parent company with his current clients, and that he was willing to “take a dive” during a deposition of a toxicology expert to deter potential future claims related to litigation against Company 1.
The USPIS investigated the case. Principal Assistant Chief Henry P. Van Dyck and Assistant Chief L. Rush Atkinson of the Criminal Division’s Fraud Section are prosecuting the case.
The Criminal Division’s Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.