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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Tuesday, December 3, 2019

Disbarred Attorney Admitted He Embezzled Millions of Dollars from Charitable Trusts and Filed False Tax Returns

Assistant U.S. Attorney Joseph J.M. Orabona (619) 546-7951

NEWS RELEASE SUMMARY December 3, 2019

SAN DIEGO – Former trustee and disbarred attorney, Earl Nelson Feldman, pleaded guilty in federal court today, admitting that he used his position of trust to steal millions of dollars from several charitable trusts, which he spent on personal expenses rather than donating to charities. In executing his scheme to defraud, he covered his tracks by filing false tax returns with the Internal Revenue Service.   

Feldman entered his guilty plea before U.S. Magistrate Judge William V. Gallo. Feldman pleaded guilty to wire fraud and filing false tax returns. 

According to his plea agreement, Feldman was the trustee of several charitable trusts as early as 1996. He was also an attorney and Certified Public Accountant (CPA) licensed in the State of California. As early of January 2012 and continuing up to and including April 15, 2015, Feldman made more than $1.6 million in unauthorized wire transfers and withdrawals from the bank accounts of the charitable trusts under his control. To conceal his theft of trust funds, he filed false and fictitious tax returns with the IRS that inflated and falsely reported the amount of charitable gifts allegedly made by him as trustee of the charitable trusts. In lieu of making these authorized gifts, Feldman misappropriated trust assets for his own personal expenses, including but not limited to: paying his personal mortgages; paying taxes on properties he owned; making his personal federal and state tax payments; purchasing personal vehicles; paying contractors working on his personal residence; transferring funds from the charitable trust accounts to his personal brokerage account; and paying his personal credit cards.

In total, Feldman admitted he stole approximately $1,648,531.40 from the charitable trusts. Since his fraud was uncovered, Feldman has repaid approximately $1,547,444.16. As part of his plea agreement, Feldman agreed to repay the remaining balance of the restitution in the amount of $101,087.24 to over fifty individual charities. At the hearing, Feldman informed the court that he had written the check for the remaining amount of restitution and intended to deposit it today with the clerk of the court. 

In addition to his embezzlement scheme, Feldman admitted in court that he also filed false tax returns. He failed to report the money he embezzled on his tax returns for tax years 2012 through 2014. Feldman admitted that he owes the IRS more than $575,000 in federal income taxes. At the hearing, Feldman informed the Court that he had written the check payable to the IRS for the total amount of taxes due, with interest, and that he intended to mail the check to the IRS today.

“As trustee and an attorney, Mr. Feldman had significant authority and control over the management of the charitable trusts’ assets,” said U.S. Attorney Robert Brewer. “Rather than faithfully exercise this important duty, Mr. Feldman embezzled millions of dollars for his own personal benefit and filed false tax returns to conceal his crime. As he admitted in court today, Mr. Feldman violated the law, the canons of his profession, and the important trust of his clients.”

“Mr. Feldman violated his fiduciary responsibilities and abused his position as trustee by stealing over   $1.6 million from charitable trusts, spending the funds to benefit himself, and then filing false tax returns on behalf of the trusts to mislead the IRS and conceal his fraud,” said Ryan L. Korner, Special Agent in Charge of IRS Criminal Investigation. “Mr. Feldman’s greed victimized dozens of charities because the funds he stole were designated to be gifts to numerous other charitable organizations. As a Certified Public Accountant, Mr. Feldman knew better, and IRS Criminal Investigation will use our forensic accounting expertise to ensure he is held accountable.”

“Earl Feldman had a license to practice law and accounting, but instead used these licenses to steal from those who trusted him,” said FBI Special Agent in Charge Scott Brunner. “Feldman abused his position and defrauded clients of over $1.6 million dollars. Fraud, particularly committed by those who hold positions of trust, will be investigated and brought to justice by the FBI.”

Feldman is scheduled to be sentenced February 28, 2020 at 9:00 a.m. by U.S. District Judge Cathy A. Bencivengo. At the conclusion of today’s hearing, Feldman was released on bond.

DEFENDANT                                   Criminal Case No. 19CR4892-CAB

Earl Nelson Feldman                          Age: 76

SUMMARY OF CHARGES:

Count 1 – Wire Fraud (18 U.S.C. § 1343)

Maximum Penalties: Twenty years in prison; $250,000 fine

Count 2 – Making a False Tax Return (26 U.S.C. § 7206(1))

Maximum Penalties: Three years in prison; $250,000 fine

INVESTIGATING AGENCIES

Federal Bureau of Investigation

Internal Revenue Service – Criminal Investigation

         

Topic(s): 
Financial Fraud
Press Release Number: 
CAS19-1203-Feldman
Updated December 3, 2019