Kenneth G. Reidenbach
A local attorney was convicted in federal court Wednesday of bilking three bankruptcy clients of more than $93,000.
Kenneth G. Reidenbach, of Lititz, was found guilty on nine counts, including bankruptcy fraud and conspiracy to commit fraud, according to prosecutors.
Reidenbach, 60, faces maximum penalties of 45 years in prison and a fine of $2.25 million.
The jury deliberated for about three hours, over two days, before returning a verdict Wednesday at 10 a.m.
"The gist of this case was about being honest with the clients and honest with the (bankruptcy) court," said Assistant U.S. Attorney David Ignall, who prosecuted. "Reidenbach defrauded both clients and the court."
Reidenbach, 60, and his former partner, Herbert "Hesh" Henderson, 47, of Elizabethtown, both were charged last year in the embezzlement scheme.
They once shared an office at 36 E. King St. in Lancaster city.
Henderson left the office after criminal incidents regarding the first client, officials said. He was suspended from practice after pleading guilty to four charges last month.
Reidenbach continued to practice up until trial.
Reidenbach's sentencing has been set for May 2. U.S. District Court Judge James Knoll Gardner, who presided over the trial in Allentown, will order sentence.
Henderson was a federal witness at Reidenbach's trial, which began on Nov. 14.
He testified that Reidenbach directed him to file petitions in bankruptcy court even knowing the funds on the documents were missing, Ignall said.
Reidenbach also took the stand, for two days, denying some allegations and saying he didn't recall other events, Ignall said.
Even though Ignall produced documents with Reidenbach's signature, Reidenbach said he had no recollection of signing them.
The alleged crimes were outlined by Ignall and in a federal indictment released in December 2010.
Between August 2003 and January 2006, according to documents, the two attorneys allegedly advised the first clients to hide "more than $50,000 in cash," and then allegedly "conspired to keep the cash for themselves."
The clients, a married couple, lived in Lancaster and owned a number of rental properties. The couple sold four of their rental properties, netting a total of $51,489 in proceeds.
The attorneys instructed the couple to transfer the proceeds of any sales to a trust account controlled by Reidenbach, according to the court documents.
When the couple went to that escrow account, the money was gone.
After Henderson left the office, Reidenbach ran a similar scam with a second client, netting $39,900.
Regarding a third client, Reidenbach lied to the court about how much he received for representation. That scam netted $3,300.
The attorneys will likely be ordered at sentencing to pay back the money.
