Saratoga Lawyer, Associate Accused Of Defrauding Investors Out Of $1 Million
SAN FRANCISCO (CBS SF) – A Saratoga lawyer and an associate from Kentucky have been indicted by a federal grand jury on charges of conspiring to defraud investors of more than $1 million.
John Jason Gentry Mullins, 59, who also maintained an office in San Francisco, and Bradley Howell, 31, of Louisville, were indicted under seal by a federal grand jury in San Francisco last Thursday.
The indictment was unsealed by U.S. Magistrate Sallie Kim of San Francisco after Mullins' initial court appearance and arraignment on Monday.
Both Mullins and Howell are charged with one count of conspiracy to commit wire fraud and nine counts of fraudulent wire transfers of a total of $1.19 million of client funds into Mullins' or Howell's bank accounts in 2013 and 2014.
The indictment alleges that Mullins and Howells promised clients that they could obtain millions of dollars' worth of financial instruments such as bank guarantees and standby letters in return for much smaller down payments.
The men allegedly said Mullins would act as the escrow agent for the down payments and would keep the funds in his attorney-client trust account. The allegedly fraudulently transferred funds were those down payments, according to the indictment.
Mullins is additionally charged with two counts of transferring $210,000 in illegally obtained funds from his bank account to a title company in November 2013. The indictment alleges that during that month, Mullins used three clients' funds to buy a condominium.
At Monday's hearing, Mullins pleaded not guilty to the 12 counts and was released by Kim on a $100,000 unsecured bond. Kim will hold a further bond hearing on Thursday.
Howell made an initial appearance in federal court in Louisville on Monday, according to Acting U.S. Attorney Brian Stretch.
Both men are due to appear before U.S. District Judge Susan Illston, the trial judge assigned to the case, in San Francisco on Oct. 2 for a status conference.
State Bar of California records show that on Sept. 11, the California Supreme Court ordered Mullins disbarred, effective on Oct. 11.
A State Bar Court judge recommended the disbarment in February after Mullins failed to respond to charges that he misappropriated entrusted funds, did not maintain entrusted funds in a trust account, and violated his fiduciary duty under common law.
Mullins was previously ordered inactive and not eligible to practice law in 2014 when he failed to respond or participate as the State Bar disciplinary case proceeded.
If the two men are convicted in the federal case, the wire fraud conspiracy and wire fraud charges each carry a potential sentence of up to 20 years in prison. The two counts charging Mullins with transferring illegally gained funds each carry a maximum 10-year sentence.
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