Dizzying $9 Million Suit Against Attorney

HOUSTON (CN) – An attorney and his wife swiped $9 million from his employer through fraudulent billings, spent the money on so many goodies they had to rent storage units to stash it all, then took it on the lam, the employer claims in court.
     Tadano America Corp., a crane manufacturer, sued Susan Cardenas Chiofalo aka Susan Cardenas dba Seidner & Virdone LLP and Maio & Cardenas LLC, in Federal Court.
     Cardenas is married to Anthony Chiofalo, Tadano America’s former lawyer, according to the complaint.
     “On June 7, 2012, Cardenas and Chiofalo were both charged with aggregate theft in excess of $200,000.00, a first degree felony, for stealing approximately $9 Million from TAC,” the complaint states. “Cardenas was arrested, entered a not guilty plea, and posted bond. Chiofalo, in contrast, remains a fugitive and continues to evade arrest and personal service of process.
     “TAC filed a civil action against Chiofalo on June 8, 2012, in Harris County District Court. The Harris County District Court issued a Temporary Restraining Order and a Temporary Injunction regarding the use or disposal of any assets that were owned and/or controlled by Chiofalo and/or ‘his agents, servants, employees, attorneys and other persons in active concert or participation with him’ until a trial on the merits. Cardenas received copies of the Temporary Restraining Order and Temporary Injunction through her criminal defense counsel. Despite the explicit terms of the Orders, Cardenas continued to spend, dispose of, and move money traceable to TAC’s checks,” according to the complaint.
     It adds: “On Monday, November 12, 2012, the Harris County District Court entered an Interlocutory Default Judgment against Chiofalo.”
     TAC claims Chiofalo is a fugitive, and that Cardenas bought a one-way ticket to New York with a June 8 departure “for the purpose of joining Chiofalo and fleeing not only Texas but the United States.”
     But before she could leave, she was arrested and the Harris County District Attorney’s Office charged her with stealing more than $200,000, TAC says.
     TAC claims the couple turned to crime after rekindling a high school romance.
     “Cardenas and Chiofalo met while in high school in New York City in the 1970s,” the complaint states. “Cardenas and Chiofalo rekindled their relationship in the fall of 2006. The relationship culminated with Chiofalo moving in with Cardenas during the summer of 2007. Cardenas, who has a Ph.D. in Educational Administration, was teaching at Texas Women’s University in Denton, Texas at that time.
     “While living with Cardenas, Chiofalo began looking for a job in Texas.
     “Chiofalo was also in the midst of a contested, costly divorce and child custody proceeding in New York. Cardenas was not only aware of Chiofalo’s divorce, she actively participated in his defense by giving testimony in Chiofalo’s support.
     “While his divorce was proceeding, Chiofalo, between April 2006 and February 2007, filed three different voluntary bankruptcy petitions under Chapter 13 of the United States Bankruptcy Code.
     “The first was filed in the Southern District of New York, while the second and third petitions were filed in the Central District of California. In the first petition, Chiofalo estimated his assets to be between ‘$0 to $50,000.'”
     TAC says it hired Chiofalo in January 2009 as general manager of its legal affairs and human resources departments, with a starting salary of $110,000.
     However, “because of a series of insults, racially based slurs, threats and other patterns of unsavory conduct that Chiofalo committed during his divorce proceedings” New York suspended his law license for two years in October 2010, TAC says.
     Knowing the suspension would affect his job with TAC, Chiofalo and Cardenas “agreed to remain silent” about his disciplinary problems, TAC claims.
     TAC says Chiofalo became an officer of the company in April 2010, though it later found out he was never licensed to practice law in Texas.
     “Despite Chiofalo’s ongoing financial difficulties, issues with his New York law license, and protracted battle with his ex-wife, Chiofalo and Cardenas were married on June 27, 2010, in Santa Fe, New Mexico,” the complaint states.
     TAC claims that even after it hired Chiofalo, due to his divorce and child custody problems, he continued on a “downward financial spiral” and began the scheme with Cardenas.
     “Given their long-term relationship and marriage, by the fall of 2010, Cardenas was well aware of Chiofalo’s true financial condition,” the complaint states. “In an effort to fund their lifestyle, pay attorney’s fees, and continue to battle Chiofalo’s ex-wife regarding child custody issues, the couple used Chiofalo’s position at TAC to begin making numerous unauthorized transfers of funds from TAC’s accounts to fictitious entities and accounts that they controlled. Chiofalo and Cardenas would then use TAC’s money to fund purchases and/or make expenditures for their individual and mutual benefit.
     “The scheme was first tested in November 2010. The couple conjured up a Texas law firm named ‘Seidner & Virdone, L.L.P.’ (‘Seidner-Texas’). Seidner-Texas executed an ‘engagement letter’ and requested a $25,000 retainer be mailed to its business address at 5802 Oakmoss Trail, Houston [Spring], Texas 77379, the couple’s rental home. Based on Chiofalo’s representations that the retainer was for legitimate legal services for TAC’s benefit, TAC remitted a $25,000 check payable to ‘Seidner-Texas’ which was mailed to 5802 Oakmoss Trail.
     “At the time of these transactions, there was another law firm, also named Seidner & Virdone, LLP, which was located in New York (‘Seidner-New York’). Chiofalo retained Seidner-New York to represent him in his individual capacity regarding the remaining property and child custody issues in his divorce. TAC’s checks to Seidner-Texas were actually deposited into accounts held by Seidner-New York at Citibank, N.A., including an ‘IOLA’ account No. XXXXXX3601. Chiofalo and Cardenas personally benefitted from the deposit of TAC’s checks into accounts held by Seidner-New York. TAC remitted three (3) separate checks to Seidner-Texas totaling $141,725.44 between November 2010 and March 2011. In short, TAC footed the bills for the divorce and child-custody proceedings.” (Parentheses and brackets in complaint.)
     TAC claims the couple took their fraud to new levels by creating another fictitious law firm “Maio & Cardenas LLC” in the spring of 2011.
     “Chiofalo and Cardenas created the ‘law firm’s’ name by combining the maiden name of Chiofalo’s mother (‘Maio’) and Cardenas’ last name. Chiofalo named himself ‘Maio’s’ sole managing member and registered agent. ‘Maio’s’ address in the Texas Secretary of State’s records is 13707 State Highway 249, Houston, Texas, which is a commercial mailbox store in a northwest Houston strip mall,” the complaint states. (Reference to exhibit omitted.)
     The complaint continues: “After creating ‘Maio,’ another series of false invoices for legal services that ‘Maio’ purportedly provided TAC were submitted to TAC for payment. The false invoices and other documents were also used as a pretext to order checks drafted on TAC’s bank account that were payable to ‘Maio’ for the fictitious legal services. Chiofalo then mailed, or directed his TAC subordinates to mail, checks payable to ‘Maio’ to 5802 Oakmoss Trail, Houston [Spring], Texas 77379, the couple’s rental home. Chiofalo first deposited the ‘Maio’ checks into bank accounts that he owned and/or controlled under ‘Maio’s’ name. Money in the ‘Maio’ accounts was then dispersed in one of two ways: (i) Chiofalo would make transfers of money from ‘Maio’ accounts into various accounts that Chiofalo and/or Cardenas held jointly, and/or (ii) checks would be written directly from the ‘Maio’ account to pay for the couple’s personal expenses. In the alternative, Chiofalo and/or Cardenas personally benefitted from the deposit of TAC checks payable to ‘Maio’ that were fraudulently drafted on TAC’s accounts.” (Parentheses and brackets in complaint.)
     TAC claims it wrote 37 checks to Maio, totaling $8.8 million, which the couple shuffled through their accounts.
     “Money that Chiofalo and Cardenas obtained through their Maio entity provided the couple with funds to live well beyond the means of an unlicensed in-house ‘lawyer’ who had been suspended from the practice of law in New York and part-time college professor,” the complaint states.
     With the stolen money, TAC says, the defendants bought a Lexus SUV, a new Toyota truck, a new $609,000 house in Spring, $21,000 worth of furniture for it and paid the $2,900 monthly lease for their rental house.
     “The couple’s scheme to defraud and use TAC funds was so blatant that their Oakmoss rental home was overrun with stacks and piles of boxes and packages addressed to ‘Maio & Cardenas,'” the complaint states.
     “The interior of their rental home was so crowded that it resembled a museum more than a residence. The couple’s millions of dollars in purchases were funded by TAC money paid to ‘Maio’ and others including, but not limited to, items such as airline tickets, luxury hotel rooms, premier event and sport tickets, designer clothing, collectibles, artwork, one-of-a-kind sport memorabilia, vintage comic books and movie posters. TAC funds were also used to purchase items through online sources such as Heritage Auctions, eBay, PayPal and Ticketmaster. The couple’s purchases were paid for my check, credit card, internet based payment sites and wire transfers from accounts they controlled.
     “In addition to the Oakmoss home, the couple opened, paid for and maintained a series of storage units using TAC-sourced funds. The storage units were also bursting at the seams with boxes, packages and other items the couple purchased during their scheme.”
     TAC claims that after its board began questioning Chiofalo about its escalating legal fees, he created more phony documents to show that Maio was a real law firm.
     “Chiofalo also created a resume for ‘Maio’s’ principal named partner, ‘Michael Maio,'” the complaint states. “Chiofalo’s fiction of a resume purports, among other things, that ‘Michael Maio’ is a highly renowned ‘Super Lawyer,’ a member of seven (7) different State Bars, and responsible for billion-dollar jury verdicts in high profile business litigation matters with multinational companies. ‘Michael Maio’s’ resume is actually a collage of facts plagiarized from the biography of one East Coast attorney that is combined with the online photograph of a West Coast attorney.”
     During the Harris County District Attorney’s execution of a search warrant of the couple’s rental home on June 7, they found “checks and other records regarding Maio, Seidner and other fictitious entities” and forged bills from Maio & Cardenas, TAC says.
     TAC sued Chiofalo for theft the next day in Harris County Court.
     Then, in violation of a temporary injunction issued by the Harris County District Court, Chiofalo transferred $100,000 from a Maio account to Cardenas’ Wells Fargo account, TAC claims.
     On May 17, before the search warrant and first lawsuit, TAC says, Chiofalo transferred $500,000 from a Maio account to an account held by his mother in New York.
     “In a further effort to shield their illegally gotten gains, TAC money was also shifted into an account Cardenas controls for the benefit of her minor child from a prior marriage,” the complaint states. “Similarly, Cardenas withdrew, spent and dissipated those funds for her personal benefit.”
     All in all, TAC says, the couple stole more than $9 million from it.
     It seeks damages for conspiracy, conversion, Texas Theft Liability Act violations and fraud.
     Cardenas moved to Las Cruces, N.M. in August, TAC says, “thereby removing not only her physical presence but personal property outside the jurisdiction of Texas.”
     Given Cardenas’ move, and the fact that TAC’s money could be lost or moved outside the court’s jurisdiction, TAC says, it also seeks an injunction to stop her, and Maio, from transferring or spending its money.
     TAC is represented by Houston attorney Philip Hilder.

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