Rare emergency suspension issued by Supreme Court

Merrillville attorney Robert E. Stochel spent a few nights in jail after a judge found him in contempt for his evasiveness, but so far he’s avoided criminal charges despite allegedly stealing hundreds of thousands of dollars from clients and a former associate.

“This is a serious felony. Why he’s not in jail, I don’t know,” said William Tobin, a South Holland, Illinois-based attorney who represented an alleged victim. Tobin said Stochel also owes him money. “The evidence is absolutely a slam-dunk.”

An attorney since 1978, Stochel has not been charged for the alleged thefts, but his career may be finished because of the allegations and his refusal so far to answer for them.

The Indiana Supreme Court on Feb. 6 granted an immediate emergency interim suspension against Stochel stemming from multiple Supreme Court Disciplinary Commission complaints against him. Stochel did not formally respond to disciplinary charges alleging that he stole at least $230,000 from a receivership fund over a period of a couple of years and then continually hid his embezzlement for almost a decade.
 

Stochel

Separately, Stochel also is accused of draining the lawyer trust account days after leaving the association he shared with another Merrillville attorney.

Precisely how much Stochel may have stolen from the receivership is unknown because he controlled and allegedly manipulated the books of the account he is accused of depleting. Stochel did not return messages seeking comment.

Thefts date to 2002

Tobin represented Maurice Schwartz, who with his brother, Alan Schwartz, jointly owned Tip Top Supermarket Inc. The Gary corporation was formed in 1959, but it dissolved in 1998 and went into receivership. Stochel was appointed successor receiver in 2000.

At that time, the Tip Top receivership account held $330,187, according to the disciplinary commission. Money in the fund was to be used to pay creditors and settle accounts as the business wound down, with the remainder distributed to the owners after expenses.

“On or around 2002, Stochel began withdrawing funds … and using said funds for his own personal purposes,” according to one of several commission complaints. “By March 31, 2004, the balance … was negative eighty-five cents.” Dozens of withdrawals were made for various amounts over the period of a little more than two years.

But Tobin and attorney Alan R. Lipton, who represented Alan Schwartz, had no idea.

The commission paints a picture of Stochel stringing along Tobin and Lipton with false assurances. Stochel allegedly falsified accountings presented to the lawyers and to the court, including one report in which he said the receivership contained more than $500,000 in assets available for distribution years after it had been depleted. For years, the commission says, Stochel misled parties, repeatedly replying to their inquiries by telling them he was close to wrapping up his administration of the receivership.

Lipton, who now practices in San Jose, California, declined to comment for this article.

“After misappropriating the entire cash balance of the receivership estate, Stochel began paying the legitimate expenses of the receivership that came due by first depositing money … and then issuing checks,” according to a disciplinary complaint. The commission alleges Stochel operated the receivership this way as a “zero balance” account for about 10 years.

Along with creditors and clients who lost money, Tobin says he never received his fees that were to come out of the receivership’s assets. He said the total loss could be about $350,000 because of additional income that flowed to the receivership during Stochel’s administration from the sale of assets, from interest and from other proceeds. The estimated losses don’t include fees for Tobin and others who never received distributions to which they were entitled.

“It’s really difficult to state that with any certainty because the records don’t exist anymore,” Tobin said of the total loss attributable to Stochel. “All the people in the receivership case basically got screwed.”

The unraveling

“When (Stochel) started ignoring court orders to produce this or produce that, without an excuse; when it became obvious he was stalling and he wasn’t going to produce a final account that meant anything, that’s what pushed me over the edge,” Tobin said.

In April 2012, Lipton and Tobin hauled Stochel into court, and a judge ordered an audit of the receivership over Stochel’s objections. Stochel was directed to pay $12,000 for it, according to commission records.

“Stochel wrote the auditor one or two checks that were returned for insufficient funds,” a discipline complaint says. This led to a contempt of court hearing in June 2012, but Stochel didn’t show. When asked about his failure to appear during a disciplinary commission deposition, he said, “I was at home consuming gin.”

The disciplinary record indicates that after a warrant was issued for his arrest for failure to appear, Stochel “unsuccessfully attempted to commit suicide by taking a large number of sleeping pills and consuming alcohol.” After a brief hospitalization, he was booked into the Lake County Jail. The commission notes, “The court sentenced Stochel to 30 days, but he was released after only a few.”

Even before this, Stochel had been on thin ice.

He had shared office space with Merrillville attorney Thomas Hoffman, but their association dissolved around the end of October 2011. According to commission records, Hoffman claimed Stochel owed $150,000 in office expenses.

Less than a week after leaving, Stochel drafted a $30,000 check on the former joint trust account he shared with Hoffman, though no more than about $5,600 belonged to Stochel or his clients, according to the commission. The check left less than $3,000 in the trust account.

Hoffman also declined to comment for this article.

The Indiana Supreme Court ordered a rare emergency suspension based on the commission’s request.

“In light of the considerable amount of funds stolen by Stochel and the extent and nature of his furtive conduct, the commission believes that Stochel’s clients, the public, or the administration of justice will be placed in probable and substantial detriment if he is allowed to continue practicing law” pending further disciplinary proceedings, the commission argued.

Tobin and other attorneys familiar with the matter say they don’t understand why Stochel has not been criminally charged. A spokeswoman for the Lake County Prosecutor’s Office said no complaints regarding Stochel had been referred to the office by any law enforcement agency.

Tobin said Lipton grew suspicious of Stochel before he did, though they both realized in 2012 his oversight of the receivership had serious problems.

Lipton described in a disciplinary commission exhibit “pestering” Stochel for three years with an “almost weekly peppering of emails and telephone conversations and letters” seeking a final accounting of the receivership.

Tobin said Stochel had been a respected attorney, serving as a director in the Lake County Bar Association as recently as 2011. Stochel had represented clients in dozens of cases in federal court before the Northern and Southern Districts of Indiana and in scores of cases in state courts. Many of those cases remain open.

“I had cases with him and against him, and I’ve known him for 25 years,” Tobin said. “I think lawyers tend to trust one another until you give them a reason not to.

“I really had no indication he was dishonest at all.”•