Published June 27. 2012 4:00AM
Trustees of an estate defrauded by former Norwich accountant F. Robert LaSaracina have filed a lawsuit against LaSaracina's one-time attorney.
In the suit filed this month in New London Superior Court, attorney Kathryn Guinan, trustee for eight Kauppinen family trusts, and Ken and Heather Korsu, trustees for a ninth Kauppinen trust, allege that attorney Mark Block knew or should have known that his client, LaSaracina, was mishandling trust funds while acting as the estate's trustee.
LaSaracina is serving a federal prison term of more than five years, having pleaded guilty last year to charges of wire fraud and failure to pay taxes.
Block, who declined to comment on the suit Tuesday, represented LaSaracina up until April 2011, when he withdrew from several cases involving allegations of fraud and default on his client's part.
At the time, Block cited a potential claim that he had a conflict of interest.
The suit against Block also names as a defendant his Norwich law firm, Block, Janney & Pascal.
The plaintiffs fault Block for his role in LaSaracina's applying for and receiving a $1.3 million bank loan that was secured by trust-owned property in Stonington. While acting as the attorney for LaSaracina and the trusts, Block reviewed the loan application and trust documents and "ascertained" through a title search that LaSaracina had failed to pay taxes on the property and had defaulted on at least one previous mortgage on the property, the suit claims.
LaSaracina obtained the loan from Chelsea Groton Bank, using it to pay off previous obligations.
"No portion of the $1.3 million in proceeds was applied by Block or LaSaracina to any trust account …," the suit says.
The plaintiffs claim Block "owed the obligation to the trusts, office of the trustee and the named, intended and/or foreseeable beneficiaries of the trust … to exercise that degree of care and skill and learning required of Connecticut attorneys …"
In an earlier suit, Fredrik Holth, a New London attorney who succeeded LaSaracina as trustee of the Kauppinen trusts, alleged that Chelsea Groton was negligent in granting LaSaracina the $1.3 million loan. Superior Court Judge William Bright ruled for the bank, finding it had no obligation to investigate LaSaracina's handling of the trust before approving his loan application.
Fredrik Holth died last August. His son, attorney Thor Holth, filed the suit against Block as well as a pending appeal of Bright's decision.
While the suit against Block indicates the amount in demand is more than $15,000, a probate court judge ruled in 2010 that LaSaracina owed the trusts $4.2 million.