I’ve written a lot about the Hess Kennedy debt settlement scam and I even interviewed Daniel Stemer who is mentioned in this article but this recent piece by John Pacenti gives of the latest of the curse that is Hess Kennedy. Even former Hess Kennedy sales referral agents, The Credit Exchange may be on the ropes now as well. Anyway, here is the article by John.
Former Receiver Pleads Guilty to $2.6 Million Fraud, Faces up to 14 Years
Lewis Freeman made some desperate phone calls to friends and family last August.
He needed $1 million.
The attorney-accountant had to hustle to make up for a shortfall in a fraud case in which his Miami firm had been appointed receiver. Freeman had stolen $1.5 million from the receivership of Hess Kennedy, a debt settlement firm closed down by the Florida attorney general’s office. It turned out he had been moving money around from his court-supervised accounts for more than a decade, while pilfering $2.6 million from creditors and victims of fraud.
But then the Hess Kennedy marker came due.
“The scheme fell apart when several courts asked him to make distributions on fiduciary matters, and Freeman was unable to do so because he stole too much money,” Assistant U.S. Attorney Andrew Levi told U.S. District Judge Paul C. Huck.
Levi’s recitation came just prior to Freeman — once one of the most trusted and respected professionals in the South Florida legal community — pleading guilty Wednesday to wire fraud conspiracy.
Huck allowed Freeman to remain free on bond and set a May 19 sentencing date. The 60-year-old Freeman faces 10 to 14 years in prison under federal guidelines. Federal prosecutors said, in total, Freeman moved $6 million in 162 checks among accounts to hide his thefts over the years. “Freeman used the funds he misappropriated to support a lifestyle that was well above his means,” Levi told Huck. “This included paying for expensive clothing, lavish vacations and extravagant home renovations and redecorating.”
The money also was used to promote Freeman’s status in the community through charitable donations, Levi said.
Freeman defrauded up to 250 clients with the help of at least two employees, moving relatively small amounts of money to cover shortfalls in other accounts, prosecutors charged. He also falsified financial reports by omitting checks destined for him, which inflated account balances. The bogus reports ended up being submitted to judges who appointed him.
“Freeman was supposed to safeguard the assets of others,” Levi said. “Instead, Freeman engaged in a scheme to misappropriate funds.”
Joseph DeMaria, a partner with Tew Cardenas in Miami, and Robert Josefsberg, a partner at Podhurst Orseck in Miami, are representing Freeman.
DeMaria said his client is “doing everything right” by accepting responsibility and giving up his law and accounting licenses. Freeman was still listed as eligible to practice Wednesday on the Florida Bar Web site.
“Lew is filled with great remorse. He knows he has disappointed many people, and is painfully aware of the hurt which his family and friends are now feeling,” DeMaria said. “The misconduct that led to today’s guilty plea does not represent the complete story, nor does it speak to the man as a whole.” Freeman cultivated his image carefully; he was well-dressed, often with a joke at the ready. He was trusted by judges who appointed him to high-profile cases when a receiver or trustee was needed to take over a business that ran aground due to bad finances or fraud.
Freeman was responsible for collecting money he could track down to pay creditors or fraud victims.
But Levi said Freeman started stealing in the mid-1990s by taking $700,000 from a client’s retirement account.
He covered his tracks by moving money from his receiverships into a brokerage account. The prosecutor said it’s impossible to know how much money was lost by the client because it was supposed to be invested in the stock market.
Freeman often boasted of his work as receiver in the Unique Gems fraud, a bead jewelry assembly scheme with a buy-in fee of as much as $3,000 that took him to Liechtenstein to recover money. But Levi said Freeman stole $1 million from the victims by cutting 76 unauthorized checks in 1997. The government was ready to prove at trial that Freeman stole from at least four other receiverships, including Power Professional Resources Systems. In that case, Levi said Freeman wrote himself 22 unauthorized checks for about $2 million over seven years, slowly draining the account. Employee co-conspirators helped their boss embezzle money or cover up the thefts are expected to be charged, according to the criminal information filed last month. Both are expected to face charges
Everything came crashing down on Freeman in August.
The Internal Revenue Service also said he owed $4.5 million for allegedly promoting a pre-tax employee parking deduction program with employers. The IRS maintains the parking program was a tax dodge used by nearly 5,000 taxpayers.
And Freeman was scrambling to make up for the missing money in the Hess Kennedy receivership. He turned to friends and family to loan him $1 million. “Ultimately, this was not enough to make up for all the deficiencies his theft had created,” Levi told the court.
Daniel Stermer, one of Freeman’s top accountants, had been appointed receiver in the Hess Kennedy case that has more than $100 million in claims. Levi would not answer questions regarding Stermer, who could not be reached for comment.
Freeman appeared congenial, as usual, in court, wearing a subdued gray pinstripe suit. Even under dire circumstances, he displayed his sense of humor when the judge asked if he had adequate representation.
“I got to give them a plug, your honor,” Freeman said. He shook Levi’s hand after the proceedings.
No family and only one friend was in the gallery to see Freeman plead guilty. The self-described friend, who wouldn’t identify himself, went up to Levi afterwards and said, “Please have mercy on him.”Lawyer Tumbles Down a Rat Hole After He Stole $1.5 Million From Hess Kennedy Receivership by Steve Rhode