A Greenfield attorney and investment advisor, who is under federal investigation for potential wire and mail fraud, may lose her law license in Wisconsin.
Sarah Laux withdrew $584,995.02 from accounts owned by her clients, Harold and Mary Ann Franzen, and used it for herself, according to an Office of Lawyer Regulation complaint filed Wednesday. The victims’ son then reported Laux to the FBI in February 2013. A related investigation by the Internal Revenue Service is ongoing.
The OLR has charged Laux with six counts of misconduct, including misappropriation of client money, misrepresentation to clients and forging documents. In addition to asking the state Supreme Court to revoke Laux’s law license, the OLR is asking for an order to pay back the stolen money.
Laux graduated from Marquette Law School in 2004. Her law license is currently active, according to the State Bar’s website. She is listed as the registered agent for several businesses in Wisconsin, including Laux Law LLC, Family Foundation Planning LLC and Lasting Legacy LLC.
Laux did not immediately return a message left at her office Friday. Attorneys representing her also did not immediately return phone calls.
In January, the IRS executed search warrants at two banks in an attempt to collect more than $634,000 Laux supposedly misappropriated in her dealings with the Franzens. Court documents show, however, that they were only able to recover about $106,000. According to the IRS’ warrant, it is working with the FBI to investigate Laux.
An IRS spokesman said he could not comment on its investigations.
According to the OLR complaint, the Franzens hired Laux in 2012 for estate planning. The couple had more than $2 million in investments, and Laux recommended they purchase annuities from Phoenix Life Insurance Co. and American Equity.
Laux created an entity named HMFF Investments LLC for the couple, listed herself as the company’s registered agent, according to the complaint, and told the Franzens they would own the annuities.
She then created a checking account and money market account under HMFF investment’s name, and put about $2.2 million of the Franzens’ money in those accounts.
According to the complaint, Laux withdrew $500,000 from the checking account in the form of cashier’s checks in March 2013. She used the money for personal or business reasons.
Harold Franzen died in April 2013, according to the complaint. His son, Mark Franzen, inquired about the annuities, and Laux told him and Mary Ann Franzen that she purchased three annuity contracts for $750,000 and that the money the Franzens gave her was being held by Phoenix and American Equity and would not be available until a hold period was over.
Mark Franzen called both companies, according to the complaint, which told him that no such hold exists and that they do not hold customer money until annuities were purchased.
When Mark Franzen then demanded to see the annuity contracts, Laux gave him three fake documents with policy numbers that were under her name.
Eventually, Laux came clean, according to the complaint, admitting to Mark Franzen that she took hundreds of thousands of dollars, committed fraud and did not purchase $750,000 in annuities.
Still, after admitting this, she withdrew an additional $84,995.02 from the accounts, effectively zeroing them out. She also forwarded an application to Phoenix with Mary Ann Franzen’s signature for an annuity. Mary Ann Franzen denied signing the application.
According to the complaint, Laux did not respond to the OLR’s inquiry, asserting her Fifth Amendment rights.
The state insurance commissioner’s office revoked Laux’s insurance license in January and ordered her to pay restitution to the Franzens. It also ordered her to pay a $600,000 forfeiture – which represents the amount she allegedly profited from stealing from the Franzens – and $32,000 for violating 32 insurance laws.
Laux filed a writ of certiorari in February, but Dane County Circuit Judge Richard Niess denied review.
Laux has not paid any restitution to the Franzens, according to the OLR complaint. It was not immediately clear if she had paid any of her forfeitures.
Documents from the insurance commissioner’s office show Laux also was investigated for a complaint filed by Julie Guenther in December 2010. In that case, Guenther accused Laux of purchasing annuities without her permission. However, documents for the annuities had Guenther’s signature on it.
Guenther and others filed a civil suit in Milwaukee County last year, and that case is pending before Judge Paul Van Grunsven.
OLR director Keith Sellen said he couldn’t discuss whether Laux is under investigation for any other potential wrongdoing. Follow @eheisigWLJ