If you’re a con artist trying to hide money through your attorney, make sure you can trust the lawyer who’s holding the cash.
Convicted scammer Richard Neiswonger learned that no-honor-among-thieves lesson the hard way late last month when his former lawyer pleaded guilty to embezzling more than $1 million from the Las Vegas resident and his wife, Shannon.
Robert McAllister, a now-disbarred Denver attorney, used some of the money to fraudulently purchase real estate, according to his May 24 plea agreement. He did try to pay the Neiswongers back, but only by taking money from another client’s trust account and through bankruptcy fraud.
Missourians might remember Richard Neiswonger as a founder of St. Louis-based get-rich-quick businesses S&K Group and MRS who served an 18-month sentence after pleading guilty in 1998 to wire fraud and money-laundering charges. Thirteen hundred victims lost a total of $13 million after paying up to $13,000 each for “business consultant opportunities.”
McAllister’s plea agreement suggests a sentence of 6½ to 8 years; sentencing is set for Sept. 14. McAllister also agreed to pay restitution to the “victims of the offense.” It’s not clear, however, if that means the Neiswongers, who were indicted along with him in July in U.S. District Court in Denver.
The money was funneled to McAllister to get around a Missouri judge’s 2006 order freezing Neiswonger’s assets, according to the grand jury indictment and the May 22 plea agreement of Elizabeth Whitney, who helped McAllister purchase the real estate. The indictment had said the assets were controlled by Shannon Neiswonger. McAllister’s plea agreement makes no mention of the transfer violating then-U.S. District Judge Stephen Limbaugh Sr.’s order.
The resolution of McAllister’s case “does not impact Ms. Neiswonger at all,” said Shannon Neiswonger’s attorney, Jeffrey Pagliuca, of Denver firm Haddon Morgan and Foreman. He declined to comment further. Richard Neiswonger’s attorney, Solomon Wisenberg, of the Washington, D.C., office of Barnes & Thornburg, declined to comment.
The order freezing Neiswonger’s assets stemmed from a civil contempt motion filed by the Federal Trade Commission in 2006. The FTC said Neiswonger helped launch another deceptive business scheme, an asset protection business, Asset Protection Group Inc., a few months before he went to jail. The Neiswongers settled the lawsuit last year when they agreed to give up assets that included a Las Vegas home worth more than $1 million.
McAllister’s plea agreement lays out a money trail from the Neiswongers’ Nevada bank accounts to McAllister’s and Whitney’s bank accounts in Denver; to a title company; and finally through Whitney for a $573,000 down payment on a house in Clark, Colo.
When the Neiswongers began demanding some of the money back, McAllister tried to cover his tracks by giving her $80,000 from another client’s trust account, according to the plea agreement. He eventually admitted to the Neiswongers that he had embezzled the money and agreed to assign portions of his incoming contingency fees in other cases to pay them back. When he filed for bankruptcy, he falsely listed Shannon Neiswonger under a different last name as his largest creditor and assigned $341,000 of a contingency fee to her, the plea agreement says.
Whitney, who lied and said her monthly income was more than $39,000 to get a loan for the property, pleaded guilty to charges including wire fraud and money laundering. Whitney agreed to cooperate with prosecutors in exchange for a recommended sentence of 15 to 21 months, down from about three years.
The charges against the Neiswongers in U.S. District Court in Denver are pending but might be resolved soon. Court filings say they soon are to plead guilty to unspecified charges in federal court in Nevada. Online court records show no case there against Shannon Neiswonger, but an indictment charges Neiswonger and two other men with running the asset protection business the FTC targeted back in 2006.
Richard Hathaway and Christine Kenney of Kansas U.S. Attorney Barry Grissom’s office are handling the Denver cases as special counsel.