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What does Family Embezzlement Look Like? Ask Anthony Calaiaro

Calaiaro Valencik is a successful bankruptcy law firm located in Downtown Pittsburgh. Up until recently, the firm employed an office manager who was the son of one of the partners. Nepotism is not necessarily bad, in and of itself, however far too often there is a closeness, an ethical abuse created by a familiarity outside of what should be proper policy and procedures.  So what does family embezzlement look like?

Anthony Calaiaro is the son of Law Office partner Donald Calaiaro. As office manager, he handled invoices and checks for the law firm as well as general clerical duties.

Anthony did not have signatory authority on the law office business account. Nevertheless, he prepared checks payable to himself by forging partners’ signatures, then forged endorsements and cashed the checks. He stole as much as $827,000 from the firm. No one knows what he did with the money, but it is a pretty safe guess that the 33-year-old did not spend it on ethics books!

The employee carried off the fraud over a roughly two-year period, from 2014 to 2016. How did he go undetected for so long? He falsified the check descriptions to make it appear as though the money was going to legitimate vendors. Therefore, in the check register he put down fake product vendors and service providers.

It has also been reported that as the walls were closing in on his fraud, he stole another $28,000 from an interest account. He did so in order to keep writing checks to himself.

Choices and Consequences

The biggest mystery here is why the theft took so long to uncover. Could it be that none of the other partners wanted to point out at first that they were suspicious of the young man? As suspicions mounted, the Federal Bureau of Investigation and the Pittsburgh Bureau of Police conducted an investigation. It led to an indictment. Anthony Calaiaro was arrested and initially held on $25,000 bail.

The firm has stated to the media: “It has cooperated with federal investigators since April [2016] and its clients didn’t lose money. This internal office matter has had no impact on our clients in any way.” We would disagree. It may have a profound effect on their existing and future clients.

If I am a potential client of Calaiaro Valencik, and I was to learn that fairly substantial fraud resulting in theft was perpetrated by the son of a founding partner for nearly two years, I might have reservations about the firm handling my legal business. It connotes a lack of oversight, of internal controls and more than that, a serious lack of judgment. The consequences of the actions of a partner’s son may extend out far beyond the fraud.  Here’s how family embezzlement takes place.

It may be well and good to view Anthony Calaiaro as a troubled young man “who didn’t know what he was doing,” but given the amount of money methodically stolen and the unethical way he went about stealing it, we can easily build another scenario or several possible scenarios.

Anthony Calaiaro saw an opportunity due to a lack of checks and balances at the firm. There might have also been an atmosphere of “bullying” going on, where the junior partners could not stand up to the senior partner. The son, a.k.a. office manager might have realized that as well. We must also wonder about rationalization.  Family embezzlement begins like this.

How did the 33-year-old rationalize his behavior? Was it as simple as an “ends-means” problem, where he wanted money without working for it? It frequently happens. Was it that in his “mindset” that he felt he could easily cover up his unethical behavior from older employees? After all, he was computer-savvy and the skills of the partners may have been lacking. Was he angry at his father for some reason? This can, and does occur in situations where nepotism runs up against entitlement.  Family embezzlement isn’t that uncommon!

There is, of course, the issue of intense shame and embarrassment. Whether Anthony Calaiaro feels either emotion is difficult to say. The father must be, would have to be, bitterly disappointed in his son. How could he not be? Undoubtedly the father was clueless as to what was going on, as he trusted his son. The “taste” left in the mouths of potential clients cannot be dismissed. The kid has not only ruined his life for the foreseeable future, but the reputation of the father is badly damaged.  Family embezzlement and unethical practices have long lasting consequences.

They will all live with this for a long time.

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Posted by Chuck Gallagher in Legal Ethics and tagged , , ,