Minneapolis lawyer admits embezzling $2M

  • Article by: PAUL WALSH , Star Tribune
  • Updated: June 8, 2010 - 8:22 PM

Michael S. Margulies, once a partner at Lindquist & Vennum, used part of the money to fix up his mansion.

A onetime partner in one of the Twin Cities' best-known law firms pleaded guilty Tuesday in federal court to embezzling about $2 million from his clients and the firm of Lindquist & Vennum, using part of the money to fix up his St. Paul mansion.

Michael Scott Margulies, 56, of Minneapolis, was fired March 15 after an investigation found that he had established a phony business through which he stole clients' money. Further investigation found that he'd submitted false expense reports for dinners, according to officials at the law firm.

He was charged with wire fraud two weeks ago and pleaded guilty in Minneapolis before U.S. District Judge David Doty.

In his plea agreement, Margulies admitted that from 1994 to this year, he stole the money through fraudulent expense reports and invoices, as well as forged checks.

Margulies, who had been practicing law for 32 years, faces a maximum penalty of 20 years in prison. A date for sentencing has yet to be scheduled.

He was released pending sentencing and was required to surrender his passport.

Margulies worked at Lindquist & Vennum from 1987 until he was fired after the firm discovered the embezzlement this year. He specialized in real estate law.

His bosses became suspicious after learning that he had double-billed a client. When the client alerted Margulies, he delayed repaying them, said Daryle Uphoff, the law firm's managing partner.

At the time Margulies was fired, he also agreed to be disbarred. He resigned from his long-held seat on the St. Paul Planning Commission and from the board of the Children's Theatre Company of Minneapolis.

Margulies primarily used the money for extensive renovations at 516 Summit Av., a historic brick mansion in St. Paul that he shared with his wife until their divorce last year, according to a Ramsey County District Court lawsuit filed last month by a development firm that was among his clients. The 5,100-square-foot home is now for sale for $1.75 million.

Star Tribune staff writer Rochelle Olson contributed to this report.

Paul Walsh • 612-673-4482

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