Lawyer convicted of money laundering
A Pa. lawyer, Mr. Karoly, was convicted of fraud and money laundering.
Prosecutors claimed that the lawyer and his brothers faked a will to collect “a significant portion” of his brother’s and sister-in-law’s multi-million dollar estates after they were killed in a Feb. 2, 2007 plane crash.
Other than that, the U.S. District Judge said that 59-year-old John Karoly Jr. “knowingly and willfully” participated in a scheme to defraud the Lehigh Valley Community Foundation and Dubbs Memorial United Church of Christ in Allentown. Prosecutors said Karoly gave the money to the community group but then had it steered to his church, which sent most of it back to him in the name of a private wilderness foundation he created.
The superseding indictment also alleges that in 2004, Karoly made a $500,000 donation to the Lehigh Valley Community Foundation (LVCF), a non-profit organization in Allentown,Pennsylvania. In December 2005, Karoly created “The Urban Wilderness Foundation,” became its president, and had sole signature authority. Unlike the Lehigh Valley Community Foundation, Urban Wilderness was not a tax exempt charity. According to the superseding indictment, on or about December 6, 2006, Karoly requested that LVCF transfer the $500,000 donation he gave them, to his Urban Wilderness Foundation. By this time, however, Karoly had taken a tax deduction for the contribution to LVCF. When LVCF decided that Urban Wilderness did not qualify as a charity to receive the funds, it is alleged that Karoly circumvented the LVCF process by recommending that the money be sent as a charitable grant to his church, which was a taxexempt qualified organization. The charitable community foundation made grants to the church of approximately $433,569. It is further alleged that Karoly then directed the church to give back to him approximately $383,569 in the name of “The Urban Wilderness Foundation.” The superseding indictment alleges that the funds were not used for charitable purposes but were, instead, used for the benefit of defendant Karoly.
Karoly testified during the non-jury trial in Philadelphia that he believed his money was merely being held “in escrow.” No sentencing date has been set. In July, Karoly pleaded guilty to failing to pay taxes on $5.2 million in income.
http://www.justice.gov/usao/pae/News/Pr/2009/mar/karolyetalrelease.pdf
http://financialcrimeonline.com/archives/13
