Resigned To His Fate

The Ohio Supreme Court accepted the disciplinary resignation of an attorney convicted of insurance fraud.

The Blade had the story of the criminal case from 2008

A former Toledo lawyer convicted of conspiracy charges in a multimillion-dollar insurance scheme was sentenced yesterday in U.S. District Court in Toledo to 11 years, three months in prison.

Darrell Crosgrove, 47, of 5853 Cresthaven Lane, was found guilty by a jury June 3 on one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering.

He was convicted of participating in a scheme to cheat real estate agents and appraisers by promising them malpractice insurance if they joined a trade organization.

Also found guilty for their roles in the scheme were former lawyer Douglas Ritson and the mastermind of the scheme, Mark Haukendahl.

Yesterday, Judge Jack Zouhary said the scheme the men devised lasted several years and bilked “hundreds, if not thousands, of real estate agents” nationwide.

He refuted Crosgrove’s contention that his involvement in the plan – between 2001 and 2003 – was one of good faith.

As part of the sentence, Judge Zouhary ordered Crosgrove to pay $2,896,432 in restitution. Crosgrove previously forfeited $92,200 in a bank account in Monroe.

“The jury found you did act in bad faith,” the judge said. “They found that not only did you make some bad choices, but you did some bad things.”

Authorities said the conspirators created organizations called the Noble Group and American Real Estate Association to falsely sell insurance to as many as 4,500 real estate agents and appraisers. Throughout its existence from 1997 through 2004, the men bilked more than $11 million from their victims.

The real estate association operations were shut down in 2004 by a federal judge in New York presiding over a civil lawsuit brought by the U.S. Small Business Association. Charges were brought against the three men as part of a five-year investigation by the IRS and FBI.

Haukendahl, who pleaded guilty to money laundering, mail and wire fraud, and tax evasion charges in July, 2007, is serving a nine-year federal prison sentence and is responsible for the total restitution of $11.7 million.

Ritson pleaded guilty in December, 2006, to conspiracy to commit mail fraud and was sentenced Oct. 20 to one year in prison. He was convicted of serving as the organizations’ attorney from 1997 to 2001.

Assistant U.S. Attorney Seth Uram said Ritson’s cooperation with authorities led to a consideration at his sentence. He added that Ritson’s cooperation likely caused Haukendahl to return from the Dominican Republic where he was living at the time charges were filed against him.

While working for the real estate organizations, Crosgrove falsely represented to the thousands of members that there was insurance coverage available to them if they were sued by a home buyer for negligence.

He then created a false identity of “John Thomas” and continued to act as counsel for the groups under the fictitious name.

Defense attorney Deborah Rump noted yesterday that Cosgrove did not live an extravagant lifestyle and said that his use of a fictitious name in some of his dealings was similar to the actions of IRS agents or debt collectors.

Judge Zouhary pointed to the use of a fictitious name as proof that Crosgrove “understood it was illegal.”

Mr. Uram said the government will try to collect restitution from the men when they are released from prison.

He added that any money collected will not make whole the hundreds of real estate agents and appraisers who lost their reputations and businesses as a result of the scheme.

(Mike Frisch)