Embezzlement charges land Arcadia lawyer in jail

An Arcadia lawyer charged a year ago with 19 counts of misconduct by the State Bar was arrested last month on embezzlement charges for allegedly misappropriating more than $350,000 in client funds. RONALD NORTON GOTTSCHALK [#50625], 66, is charged with two counts of grand theft by embezzlement and faces two years in prison on each count.

According to Deputy District Attorney Renee Cartaya of the Justice System Integrity Division, Gottschalk allegedly pocketed $240,000 in settlement monies belonging to nine victims he represented in a civil lawsuit. He also is accused of stealing about $118,000 from a victim who hired him to manage the estate of a deceased relative.

Gottschalk pleaded not guilty and was ordered to appear for a preliminary hearing Oct. 26.

The bar filed misconduct charges in five client matters in November 2008, including the cases that led to Gottschalk’s arrest.

In a class action and several personal injury matters, Gottschalk represented a group of clients who took an herbal supplement intended to treat prostate cancer. The supplement, known as PC-SPEC, was recalled from the market, and the owners of the company were accused of selling dangerous products to the public and pleaded no contest to misdemeanor charges.

Gottschalk received $400,000 in settlement funds for nine clients in the PC-SPEC case. They received no money but Gottschalk convinced them to advance $240,000 for costs of further litigation. The bar accused him of misappropriating that money.

The clients sued him to recover the funds.

In the same matter, the bar accused Gottschalk of filing meritless claims, failing to maintain respect for the court and seeking to mislead a judge. After two other attorneys withdrew from the class action, Gottschalk filed a motion to be appointed lead counsel. When the judge denied the motion, Gottschalk added the judge as a defendant in the personal injury cases “in order to delay the proceedings,” according to the bar charges.

He subsequently made a series of false allegations against two judges, including a charge that one had a financial interest in the outcome of the case. He sought recusal of all Los Angeles superior court judges, and when the matter was transferred to San Diego, he threatened to seek the recusal of the entire superior court bench there.

In the estate matter, Gottschalk took over a probate that was opened largely to distribute settlement funds from a lawsuit filed against a nursing home by a woman who later died. The attorney who originally represented the elderly woman’s niece sent Gottschalk a check for $112,335.65, payable to the niece. The attorney withheld an additional $5,100 to cover further potential disbursements.

The bar charged that Gottschalk withdrew $100,000 from the estate by signing the niece’s name to a withdrawal slip without her consent. He moved the money from the estate account to his client trust account “in order to prevent the California Department of Health and Human Services (DHHS) … from attaching the funds,” the bar charged. Medi-Cal held a lien for more than $166,000 for the woman’s medical bills. Gottschalk also cashed the $5,100 check and deposited it in his trust account. He converted $105,102 into cashier’s checks payable to himself, the bar charged. Neither the estate, the niece nor DHHS received any funds.

Gottschalk had also convinced the niece to attempt to attach a property owned by the decedent’s ex-husband, from whom she had been divorced for 30 years. He then challenged the judge in the matter, claiming “organized crime” had penetrated the probate court and referring to the estate as “the Sopranos” in the court.

According to the bar’s charges, he also falsely asserted he was being assisted by former law enforcement officials experienced in organized crime in southern California and said the entire Los Angeles County bench should be recused because the supposed investigation involved all the judges.

The matter was transferred to another court.

Gottschalk made a series of false claims that a judge found “baseless and designed to delay matters.”

The bar also charged Gottschalk with misconduct in two family law matters. One client paid him a $10,000 advance fee and $5,000 for costs, but he later demanded an additional $50,000 to pursue the case. The bar charged that he threatened his client’s elderly parents with incarceration for filing false allegations of child abuse against the client’s ex-husband if they did not come up with the $50,000.

He also allegedly told his client to falsely claim she had paid $45,000 to a previous attorney. He told the court that lawyer was facing disbarment and that his client had filed a malpractice case against her. Those statements were false.

He was accused of charging another client an unconscionable fee when he billed her for $25,000 in a case she essentially handled herself. The client both paid Gottschalk and worked for him as a paralegal.

The bar case against Gottschalk was abated prior to trial pending resolution of a confidential proceeding. Gottschalk has denied all the charges and accused the bar of denying his rights and targeting him for political reasons. He sued the board of governors, the bar court and various bar prosecutors and has made two unsuccessful attempts to disqualify judges.

Nonetheless, says Paul O’Brien, a bar deputy trial counsel, “We believe public protection demands that Gottschalk be enrolled ‘not entitled to practice’ at the earliest possible moment.” O’Brien and investigator John Noonen, whom O’Brien praised for his dogged pursuit of the case, also were sued by Gottschalk.