In the Matter of Mitchell Howard Kreitenberg (2002)
4 Cal. State Bar Ct. Rptr. 469 (Review Dept.)
Overview
This conviction referral matter arose from respondent’s guilty plea to conspiracy to defraud the Internal Revenue Service in violation of 18 U.S.C. § 371. The Review Department determined that respondent’s six-year participation in a capping and fee-splitting scheme, coupled with misuse of his client trust account and the forgery of client signatures, constituted acts of moral turpitude warranting disbarment.
Summary of Facts
Admitted in 1983, respondent joined his cousin’s personal injury practice in 1987. Shortly thereafter, he knowingly participated in illegal capping and fee-splitting arrangements involving non-attorneys. The misconduct escalated in 1990 when respondent, his cousin, and their office manager devised a deliberate scheme to conceal legal fee income from the IRS.
The scheme operated as follows:
- Settlement funds were deposited into respondent’s client trust account.
- Legitimate disbursements were made to clients and medical providers.
- Instead of properly withdrawing earned fees, respondent drafted duplicate “phony” trust checks in clients’ names.
- Client signatures were either obtained under false pretenses or forged.
- Over 680 fraudulent checks were issued, diverting approximately $1.64 million in legal fees.
- The diverted funds were used to pay cappers and were not reported as income.
Respondent earned approximately $250,000–$300,000 annually during the conspiracy. The misconduct ceased only after the IRS initiated an audit in 1993. Respondent later pled guilty in federal court and received probation, home detention, and correctional center confinement.
Charges and Moral Turpitude Finding
Although 18 U.S.C. § 371 is not a crime involving moral turpitude per se, the Review Department found moral turpitude under the facts and circumstances because respondent:
- Misappropriated client identities
- Authorized or permitted forged signatures
- Used his trust account as a vehicle for fraud
- Concealed income from the IRS
- Engaged in intentional dishonesty for personal gain
The court emphasized that deceitful misuse of a trust account strikes at the core of professional responsibility.
Aggravating Factors
- Pattern and Multiple Acts: Six years of ongoing misconduct.
- Significant Financial Gain: Hundreds of thousands of dollars annually.
- Harm to Clients: Betrayal of fiduciary trust and exposure to potential IRS scrutiny.
- Direct Nexus to Law Practice: Trust account misuse was central to the scheme.
- Delayed Acceptance of Responsibility: Full admission occurred years after investigation began.
Mitigation Evidence
- No prior discipline (minimal weight due to short unblemished practice period).
- Character testimony from colleagues and friends.
- Psychological treatment and therapy.
- Eventual cooperation with federal authorities.
- Expressions of remorse.
The Review Department found mitigation present but not compelling enough to outweigh the seriousness and duration of the misconduct.
Sanctions Table
| Category | Details | Court’s Evaluation |
|---|---|---|
| Nature of Conviction | Felony conspiracy to defraud IRS (18 U.S.C. § 371); trust account misuse; forged checks | Acts of moral turpitude under facts and circumstances |
| Duration of Misconduct | Approximately 6 years (capping, fee splitting, fraudulent trust withdrawals) | Extended duration significantly aggravated discipline |
| Financial Scope | ~$1.64 million diverted; $250,000–$300,000 annual personal income | Large sums heightened severity |
| Client Impact | Use of client names without consent; forged signatures; fiduciary betrayal | Serious harm to trust in legal profession |
| Aggravation | Pattern of misconduct; personal enrichment; nexus to practice; delayed candor | Substantial aggravation |
| Mitigation | No prior discipline; therapy; character testimony; cooperation | Present but not compelling |
| Federal Criminal Sentence | 5 years’ probation; correctional center; home detention | Not controlling for State Bar discipline |
| Final Discipline | Disbarment | Reinstatement required to demonstrate rehabilitation |
Holding
The Review Department rejected a stayed suspension and recommended disbarment. It concluded that reinstatement proceedings—not a stayed suspension under Standard 1.4(c)(ii)—were necessary to adequately protect the public and maintain confidence in the profession.
Key Takeaways
- Misuse of a client trust account combined with tax fraud almost invariably results in disbarment.
- Extended schemes involving forged client signatures are treated as severe breaches of fiduciary duty.
- Character evidence must demonstrate awareness of the full misconduct and fitness to practice.
- Federal probation does not limit the State Bar’s independent disciplinary authority.