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Misappropriation charges filed against lawyer already facing federal indictment

An Elk Grove lawyer already indicted in federal court for conspiracy to commit mail fraud was charged last month by the State Bar with 36 counts of misconduct in which his victims ranged from desperate clients seeking bankruptcy protection to a legal insurance provider.

Sean Gjerde

SEAN PATRICK GJERDE (#217467), 35, misappropriated more than $80,000 from the beneficiary of a trust for which he served as trustee, engaged in a scheme to defraud a legal insurance provider, repeatedly violated a bankruptcy court order, performed incompetently, failed to return unearned fees, lied on court documents and even forged the names of his partner and a client, according to State Bar documents. Many of the charges involved moral turpitude, dishonesty or corruption.

In one of the bar matters, Gjerde, took over as the trustee for the Wheeler Trust. Over a period of almost two years, he misappropriated more than $84,000 from the trust, whose sole beneficiary was Renee Wheeler. The main asset of the trust was a home in which Ms. Wheeler resided. He transferred the Wheeler home to himself, an act not in the interest of the Wheeler Trust and “to the detriment of Wheeler,” according to State Bar documents, and forced Wheeler out of her home. When he didn’t pay the mortgage payments, a lien was put on the proceeds of the sale, bringing the worth of the house from $135,000 to $7,000.

Gjerde, who had billed himself as an experienced bankruptcy lawyer to clients but told a bankruptcy trustee he was not experienced, was ordered by the court not to take any bankruptcy cases without judicial permission. In violation of that order, he continued to take cases but put fellow attorney James Chandler’s name on the court documents, and still did shoddy or incomplete work the bar alleges. A hearing was set late last month in the Sacramento bankruptcy court on three contempt of court motions to address Gjerde’s violation of multiple court orders.

State Bar prosecutors also said Gjerde hired Daniel Tichy as a partner at his firm, Northern California Law Center, for the specific purpose of concealing Gjerde’s name so that he could continue fraudulent billing practices.

In other cases, Gjerde pocketed fees, refused to return the money when no services were performed and then fabricated an agreement that he sent to the State Bar when the bar asked for details about the cases, according to the charges. He also failed to maintain fees in a client trust account as ordered by the court, told the court he never received fees that he in fact did receive, failed to notify the bar that he was employing a suspended lawyer and overbilled or double-billed one client, according to the charges.

He also is charged with billing ARAG, a legal insurance plan provider, for services he never performed. In June, Gjerde stipulated in a separate State Bar discipline matter to fraudulently billing ARAG and failing to reimburse clients for unearned fees and agreed to accept a 60-day actual suspension. The bar placed a “consumer alert” on Gjerde’s page on its website, warning consumers that he has been charged with major misappropriation of client funds.

Gjerde also is a defendant in a federal case. According to a federal indictment filed last year, Gjerde played a part in an elaborate scheme that defrauded banks and mortgage lenders of $5.5 million by providing false information about loan applicants’ employment and income. The potential homeowners, also in on the scheme, would apply for mortgages and then default on the payments after all involved ― real estate brokers and their employees, a mortgage company employee, the owner of a nonprofit organization ― got their fees and kickbacks. Gjerde used his position as a tax lawyer to confirm, even though the information was false, that he had done the tax forms of the applicants and that their income and years of employment were as stated on the applications. The 48-count federal indictment against 10 defendants includes charges of conspiracy to commit mail fraud and make false statements in mortgage applications.

Gjerde said he is suing the bar for fabricating charges and issued a statement demanding that members of the board of governors and the chief prosecutor be disbarred. “The State Bar and the Feds go on fishing expeditions to target minnows in order to try and capture whales,” Gjerde said. “The minnows, like me, are innocent.”