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Jailed Lawyer Delivers Warning

Published Thursday, January 27, 2005 in the Star Tribune.

By Neal Gendler

Each time Stephen Rondestvedt stole his law clients' money, he told himself it was the last time.

"One big case will take care of it," he'd tell himself.

By the time he reached the end of his rope, he'd misappropriated more than $843,000, and the one big case turned out to be his own after he turned himself in to federal authorities in September 2003.

Rondestvedt, looking gaunt in too-large federal prison khakis, spoke to more than 250 people at the University of St. Thomas School of Law on Wednesday, his second day of appearances at Twin Cities law schools. His message for students was that it's easy even for smart, successful attorneys to cross the ethical line in pursuit of the trappings of success.

The appearance was sponsored by St. Thomas' law school and Center for Ethical Business Culture, where Assistant U.S. Attorney Hank Shea is executive fellow. Shea was the prosecutor in the Rondestvedt case, which Shea called highly unusual because the attorney turned himself in and then spent weeks helping investigators unravel what he'd done to whom and how.

After nearly four years of taking one client's money to cover for what he'd taken from another, making up one lie to cover up the last one and drinking to dull his fear and calm his shakes, Rondestvedt reached the end. "It was like I was in a dark tunnel, and I didn't see any way out," he said. He sat on the bumper of his car, about to kill himself to trigger a $3 million life-insurance policy.

Suddenly, "something inside of me clicked," and he knew what he had to do. "I called my wife and I said I had some things I needed to reveal. ... I don't think that I've ever done anything more difficult in my life."

The recollection, made under Shea's gentle questioning, brought tears to Rondestvedt's eyes during a talk he said was especially difficult because friends and family were in the audience.

He's almost five months into a 46-month sentence that he's serving at a federal prison camp in Yankton, S.D. At Yankton, he said, "there are about 720 convicts. Unlike most of them, I know every one of my victims." He'd had dinner in their homes, knew all about them and had had their complete trust.

"My father-in-law is one of my biggest victims."

Twenty-four victims' claims against Rondestvedt, totaling $843,339.46, have been paid by the Minnesota Client Security Board, a creation of the Minnesota Supreme Court. The board collects a fee from every licensed attorney to cover such theft of funds. The amount is the most against one attorney in the fund's 20 years of payments, dropping the balance to about $2.2 million.

Rondestvedt owes the claim total to the board, said Ken Jorgensen, director of the Minnesota Office of Lawyers Professional Responsibility. Jorgensen said the board has paid $5.3 million to victims of lawyers' misappropriations. "We've got about 25,000 licensed layers in Minnesota; if we had five or six lawyers disbarred in a year for stealing client funds, that would be a lot," he said. "If it happens once, it's too often, but it's a minute number of people who are creating the problem."

Jorgensen said Minnesota is ahead of many states in preventing such crimes.

"We have very rigorous bookkeeping requirements," he said.Lawyers must certify annually that they're maintaining records of client trust accounts, where all the money that belongs to clients is to be deposited.

Lawyers may not mingle their own funds with client funds, and Minnesota financial institutions send Jorgensen's office copies of client-account overdrafts or non-sufficient fund notices. Sometimes the problem is a simple failure of a deposit to be posted on time. But, he said, "we begin an investigation and look at that transaction and other transactions to make sure the account isn't short. This has been a very effective tool in finding lawyers who are mismanaging or stealing client money," and it's a very strong deterrent.

The Client Security Board pays up to $150,000 per claim, but only for lawyers' theft of funds.

Rondesvedt, who blamed his wrongdoing on a desire to look successful, said, "it's easy to be seduced by 'things,' and, looking back, I was. ... I became a liar. I became a deceitful person. I did things to family members and people that I'll never recover from and that they may never recover from. ... I became a person you would despise -- and rightly so."

© Copyright 2005 Star Tribune. All rights reserved.

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