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Disbarred Merrillville lawyer to face second mail fraud trial

April 5, 2017

The federal government will try again next month to convince a jury that disbarred Merrillville attorney Robert Stochel should be found guilty of mail fraud for allegedly embezzling more than $330,000 from a receivership he administered.

Senior Judge Rudy Lozano in the U.S. District Court for the Northern District of Indiana in Hammond has scheduled a two-day jury trial beginning May 1.

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Stochel was appointed the receiver in 1999 for Tip Top Supermarkets Inc., a defunct family-owned Lake County grocery store chain. Beginning in 2001 and continuing until 2012, Stochel plundered the receivership account for his own purposes, withdrawing about $331,840 for his personal use between 2001 and 2006, the indictment alleges.

The government says Stochel later deposited his own funds to pay the receivership’s legitimate expenses while misleading clients and the Northern District of Indiana Bankruptcy Court for years about the account’s solvency. His alleged crimes became clear after other attorneys involved in the Tip Top receivership hauled him into court in 2012 for failing to provide a final accounting after repeated assurances it was forthcoming. Stochel ultimately was found in contempt of the bankruptcy court and charged in the present federal criminal case.

A jury in Lozano’s court deadlocked on the single mail-fraud charge against Stochel in December.

The government alleges Stochel engaged in a scheme to “delay whenever asked for an accounting of the Receivership Account, to prevent the discovery of his depletion of the account, and to lull the Receivership Beneficiaries into a (false) sense of security as to the health of the account.”

Stochel “covered up his theft for nearly a decade, lied to all comers, deceived the court and later defied its orders, and actively obstructed the disciplinary process,” the Indiana Supreme Court wrote in disbarring him in June 2015. The court also found that Stochel owed a former attorney associate about $150,000 in unpaid office expenses.

In disbarring Stochel, justices found nine aggravating factors and none mitigating his violations of the Rules of Professional Conduct. Aggravators included prior discipline for similar misconduct, a pattern of multiple acts of stealing from clients and concealing that theft, failure to acknowledge wrongdoing, and bad-faith obstruction of the attorney discipline process.

Pending before Lozano at IL deadline in the mail fraud retrial is a defense motion to strike part of the government’s indictment. The defense seeks to strike allegations that Stochel’s scheme attempted to lull his victims.

Those accusations “are immaterial and irrelevant to a charge of mail fraud as verbal accusations framed as ‘lulling’ are not actionable under the Mail Fraud Statute,” Stochel’s attorney, R. Brian Woodward of Merrillville, wrote in the motion to strike accusations he claims are inflammatory and “severely prejudice” his client.

Lozano in January denied Stochel’s motion for acquittal that argued the government lacked sufficient evidence to gain a conviction and its indictment fell outside the applicable five-year statute of limitations.

Federal prosecutors oppose Stochel’s motion to strike, and based on Lozano’s prior rulings, the indictment against Stochel appears likely to be presented to a jury again as before. In denying Stochel’s motion for acquittal, Lozano wrote, “a reasonable jury could conclude that the scheme to defraud contained an element of lulling.”

That language, the government contends, is essential to its case.

Stochel, U.S. attorneys argue in opposing his motion to strike, “has failed entirely to demonstrate how the language in question is inflammatory or prejudicial. Since this language delineates the scheme which the government must prove at trial, it is not only not inflammatory or prejudicial, but necessary.”•

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