Milwaukee-Area Attorney Charged in Federal Court with Defrauding Financial Institutions and Clients,Money Laundering, and Filing a False Tax Return
United States Attorney James L. Santelle for the Eastern District of Wisconsin announced that, yesterday, a federal grand jury returned a 33-count indictment charging Sarah E.K. Laux a/k/a “Sarah Kitzke” (age 35) of Mequon, Wisconsin, with 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 5 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 3 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.
According to United States Attorney Santelle: “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.
Special Agent in Charge Shea Jones of the IRS Criminal Investigation St. Paul Field Office further stated: “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.”
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.
The case is being investigated by Special Agents of the IRS Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney Scott J. Campbell is prosecuting the case.
An indictment is merely the formal method of charging an individual and does not create an inference of her guilt. An individual is presumed innocent until such time, if ever, that the government establishes his or her guilt beyond a reasonable doubt.