Wednesday, November 23, 2011

Ex-Beverly Hills School Employee Convicted By Jury In Felony Conflict Of Interest Case: What Can We Learn From This Case?

A recent conflict of interest criminal case serves as a reminder to employees and consultants (public and private) of the need to seek legal advice before entering into contracts and taking actions that could benefit oneself privately.  In the public sector, there could be conflict of interest charges and in the private sector it could lead to embezzlement charges. Compliance is the key and seeking legal advice upfront is important. 

On November 21, 2011, Karen Anne Christiansen, a former Beverly Hills Unified School District official was convicted by a jury of four counts of felony conflict of interest and taking more than $1.3 million through a building management contract she allegedly steered to herself. The criminal case was prosecuted by the Los Angeles County District Attorney, Public Integrity Division. A very experienced prosecutor, Deputy District Attorney Max Huntsman, was assigned to the case.

The jury took two days to reach a guilty verdict. Once the verdict was returned, the trial judge, Los Angeles Superior Court Judge Stephen Marcus, immediately ordered Christiansen remanded into custody and increased her bail to $400,000.

What happened here? The facts are interesting in that some of the actions Ms. Christiansen and her lawyers took might have forced the government's hand in filing charges against her. Or perhaps her lawyers knew a criminal case was coming and attempted to use civil litigation as a defense. Either way, it was a gamble.

In 2004, Ms. Christiansen was hired by the Beverly Hills School District at a salary of $113,000 per year to be the project manager for the $334 million Measure E Bond.  The allegation was that the secretly negotiated a deal to be an independent contractor through her company Strategic Concepts while performing her employee duties for the school district. Strategic Concepts received the contract and was paid $5.2 million for consulting services between 2006 and 2009. The Beverly Hills School District terminated Strategic Concepts in 2009. 

This case began with civil litigation commenced by Strategic Concepts suing the District for $16 million in damages. The District countersued for $4 million in damages. After the District spent over $1 million on the civil case, the District Attorney's Office became interested, investigated and ultimately filed criminal charges and stayed the civil lawsuit. The conviction in the criminal case will probably be a ground for the District to file a motion for summary judgment. Query as to whether Ms. Christiansen's attorney had fully evaluated her criminal exposure prior to filing a lawsuit and negotiated a comprehensive settlement with the District or decided not to file a civil lawsuit, would the result in this case have been different? 

Sentencing for Ms. Christiansen is scheduled for January 5, 2012 in Department 102 of the Los Angeles County Superior Court in downtown Los Angeles, and she faces a maximum state prison term of eight years. Given that the jury reached a finding that there was an "excessive taking" of $1.3 million, probation may not be an option for Judge Marcus and may be grounds for the higher end of the sentencing range. 

There is a co-defendant in the case as well, Jeffrey Hubbard, 54, the former superintendent of the Beverly Hills Unified School District. He faces three counts of misappropriation of public funds in connection with the case and his case goes to trial next.

Mr. Hubbard – now superintendent of the Newport Mesa Unified School District – was charged in December 2010 with two counts of misappropriation of public funds for allegedly giving Ms. Christiansen more than $20,000 in unauthorized gifts and giving her increases in her car allowance that were unauthorized by the  school board. On Oct. 11, Hubbard was arraigned on a Grand Jury indictment charging him with a new count of misappropriation of public funds. The new charge stems from his alleged direction of a subordinate to give a raise to a female employee without school board authorization. His next court date is December 12 for a pretrial hearing.

We have represented both both private and public employees in criminal investigations or civil lawsuits for "self-dealing" or conflict of interest. Business practices are under greater scrutiny and the laws for public employees are very detailed and complicated. For example, the California Attorney General's Office published a lengthy 136-page Guide to financial conflicts of interest by local and state executive and legislative officials. This is just one small part of conflict of interest laws - and compliance with conflict of interest rules is the best way of avoiding a civil lawsuit, fines or criminal prosecution. 

This case is unusual in that it is a high profile school district and it seems doubtful that Ms. Christiansen did not fully comprehend her criminal exposure prior to filing the civil lawsuit. What seemed like a contract case turned into a criminal case. We have handled many "civil" lawsuits that have criminal implications and therefore become "sensitive" cases that cannot be handled like traditional civil cases. Full evaluation of cases before filing is key to a successful global result.

Posted by Tracy Green, Esq. Please email Ms. Green at or call her at 213-233-2260 to schedule a complimentary 30-minute consultation. 

Any questions or comments  should be directed to Tracy Green, a very experienced California conflict of interest attorney, California self-dealing attorney, California white collar attorney, and California compliance attorney at


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