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MCLE Self-Assessment Test

Pismo Beach attorney accused of
$300,000 embezzlement

The San Luis Obispo superior court assumed jurisdiction over the law practice of a Pismo Beach attorney who was arrested last month on suspicion of embezzling nearly $300,000 from an estate he handled. WILLIAM PETER TERHUNE [#129210], 56, was booked on suspicion of embezzlement and taking more than $200,000. He was being held on $1 million bail.

Law enforcement officials said they have possibly identified additional victims.

Terhune’s website says he specializes in estate planning, wills, probate, conservatorships and public benefits planning. He was admitted to the State Bar in 1987.

William Peter Terhune

Terhune was the attorney and administrator of the estate of Junko S. Hensling, whose sole beneficiary resides in Japan. Hensling died in 2007. Terhune sold the estate’s primary asset, a piece of property in Los Osos, for $257,839 in 2009 and deposited the proceeds in the Hensling bank account, bringing its balance to $276,210. According to the State Bar’s petition, he initially transferred about $220,000 of that money to his business account, without the authorization of the probate court, for his personal use.

When his paralegal discovered that the funds were missing and questioned Terhune, he told her he took the money because he was unable to obtain a small business loan. He subsequently took another $55,000 from the estate, leaving a balance of about $1,200. In total, he misappropriated approximately $275,000.

When the probate court ordered Terhune to explain why the estate was not closed, he requested continuances. A final accounting is due in September.

After the beneficiary complained to the bar, Terhune submitted a written response to an investigator, denying the misappropriation “without equivocation.” He also wrote that the estate’s assets “have been held and maintained for the benefit of the estate and will ultimately be distributed to and for the sole benefit of (the beneficiary).”

Terhune claimed the estate funds were invested in high-earning investments and provided copies of what he said were 19 promissory notes payable to the administrator of the estate. The notes amounted to loans to himself with interest to be paid six months after demand.  But according to a declaration by a bar investigator, “it appears that demand would have to be made by (Terhune) as administrator.”

Terhune admitted to his paralegal that he created promissory notes to conceal his misappropriation. He also claimed there were tax issues that were delaying the close of the estate.

When questioned later by a bar investigator at his office, Terhune reiterated his claims of high-interest investments and said the court was aware of the tax issue.

The court acted after the bar petitioned it to take over Terhune’s practice. The bar can take over the files, notify his clients and provide an opportunity to collect their files, and freeze Terhune’s bank accounts.