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PIONEER PRESS

Lawyer's Life is Hard Lesson in Ethics

Published Wednesday, January 26, 2005 in the Pioneer Press.

By Dave Beal

Stephen Rondestvedt was sitting on the bumper of his car one day late in 2003, ready to kill himself. He had a $3 million life insurance policy, which presumably would have gone to his family.

Then, "I realized that wasn't the way and something clicked inside me," he said.

Later that day, he confessed to his wife and mother that he had been leading a double life: posing as a successful attorney on the one hand, embezzling from his clients on the other. Then he turned himself in to authorities, was disbarred, pleaded guilty to two counts of mail fraud and, five months ago, began serving a 46-month sentence at the federal prison camp in Yankton, S.D.

Now Rondestvedt has come full circle. Dressed in his prison khakis on Tuesday, he told students at the University of Minnesota Law School, William Mitchell College of Law and at Hamline University law school how to avoid the fate he dealt to himself. He'll tell the story again today at the University of St. Thomas law school.

"Every time a client would call, I lied," he told the U audience, which included U.S. Attorney Thomas Heffelfinger and U.S. District Court Judge John Tunheim, who sentenced Rondestvedt.

"I don't think I had a dream for two years because I don't think I slept long enough,'' he said. "You become a person you despise. You lie to yourself. You lie to your family. You lie to your clients.

"I haven't seen my kids in six months. I haven't seen my family."

Rondestvedt's appearances are part of a white-collar-crime-prevention program sponsored by the Center for Ethical Business Cultures and the law schools at St. Thomas, the U and William Mitchell. In 2003, the center and St. Thomas put on a similar program in which convicted Twin Cities investor George Kline, also in prison garb, told his story.

Tuesday's presentations included comments from convicted attorney Thomas J. White, who was disbarred and is awaiting sentencing for an offense similar to Rondestvedt's. White's case also is a tale of grim lessons: He fell from grace after building up a successful practice specializing in landlord-tenant law and writing a weekly column on housing topics for the Minneapolis-based Star Tribune.

But it is Rondestvedt's appearance that is drawing the most attention, in part because his embezzling has led to by far the largest distribution of funds ever from Minnesota's Client Security Board. The board distributes money from a court-authorized fund, tapping fees collected from all of the state's lawyers to make clients whole once it's proved that attorneys stole their money.

Kenneth Jorgensen, director of the Minnesota Office of Lawyers Professional Responsibility, says the 23 clients who were victimized by Rondestvedt have received all of their money back — $841,000 altogether — thanks to the fund. That amount was more than twice the previous high for any other single attorney's transgressions. Before this payout, the 20-year-old fund had $2.7 million.

Rondestvedt is obliged to pay it all back.

"That's a debt he has that the U.S. attorney's office will have to chase down for 20 years," said Assistant U.S. Attorney Hank Shea, who led the case against Rondestvedt.

Another unusual aspect of Rondestvedt's case is how he cooperated with authorities once he decided to face the music.

In Shea's 15 years as a prosecutor, Rondestvedt's assistance was "essentially unmatched," Shea said, in helping figure out who was victimized and how much was taken.

Rondestvedt, 41, is the picture of a man who virtually had it all and then lost it all.

He told the U audience that he graduated from Osseo High School with straight A's, ranking first in his class, in 1981. Upon graduation, he was voted as the student most likely to succeed.

He graduated with honors from St. Olaf College, got his law degree from Hamline, joined a St. Paul law firm doing insurance defense work and then worked for a Minneapolis law firm. In 1999, he went into practice on his own and bought a home in an attractive Minneapolis neighborhood.

He is married, with three daughters ages 5, 9 and 12.

"I was making six figures a year."

So what happened?

As Rondestvedt explains it, his wrong turn came when he took a $25,000 workers' compensation payment that should have gone to a client and used it instead for a down payment to buy his home. He assumed he could quickly replace the funds and pay the client, but instead he found himself stealing more and more just to keep afloat.

"My whole life became managing which dominoes were falling and what dominoes to lift up in their place," he says.

Today, Rondestvedt is working with prison officials to establish an ethics program for inmates at Yankton. He doesn't know what he'll do when he gets out.

Karl von Reuter, one of Rondestvedt's former law partners, still counts himself as a friend.

"He's optimistic," says von Reuter. "He seems to be taking a lot of positive steps. All that shame can be turned on its head. That's the good news from this."

What's the best advice, from Rondestvedt and White?

If you feel pressure to cut corners in a competitive situation in the legal business or presumably in any business, don't let the problem fester. Find a trusted confidante and ask for advice.

© Copyright 2005 Pioneer Press. All rights reserved.

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