[ by Melanie Gretchen ]

A former Crowell & Moring attorney is the poor man's Allen Stanford.

Douglas Arntsen, 34, was accused of stealing customer money starting in 2009, which prosecutors said he used to lead a lavish lifestyle.  His raison d'etre is where the comparison ends: the amount Arntsen was said to have embezzled ($10 million in escrow funds) doesn't come close to the $7 billion Stanford spent  – or his punishment, following his guilty plea  [see our What Went Wrong story, "Allen 'Ponzi' Stanford Gets Long Prison Sentence"].

Federal Findings and Accusations. Arnsten began siphoning money into bank accounts he controlled, according to prosecutors, which he used to visit pricey restaurants and strip clubs, and to buy businesses for himself and his friends and family.  Before Acting Supreme Court Justice Jill Conviser, in a dark jacket and tan pants, he pled guilty in a Manhattan courtroom to several counts of grand larceny and scheme to defraud.  Prior to entering his plea, he faced up to 25 years in prison.  Sentencing will take place this month.

Federal Sanctions. Going forward, he will have to make $10.8 million in restitution to 2 clients in addition to serving his prison sentence.  Arnsten first found himself behind bars when he flew to Hong Kong in September 2011, 2 days after he resigned from the firm and 1 day after the Manhattan district attorney's office notified Crowell that Arntsen was the subject of a criminal probe.  At issue was whether he was fleeing to avoid arrest as prosecutors said, or whether he was taking a planned trip as defense attorney Alan Lewis argued.  Arntsen has been held without bail since federal authorities returned him to the United States in January to face the charges.

Representation:

• For the prosecution: Assistant District Attorney Sophi Jacobs.
• For Arntsen: Alan Lewis of Carter, Ledyard & Milburn.

The case: People v. Arntsen, New York State Supreme Court, New York County, No. 01399/2012.

For further details, go to [Reuters, 10/2/12].