A plea deal without a prison term leaves questions unanswered about disgraced former bankruptcy trustee Robert Steinberg, who admitted to embezzlement.

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TACOMA — A former federal U.S. bankruptcy trustee has pleaded guilty to felony embezzlement in an unusual plea deal that saw him sentenced to less than a day in jail for a crime that carries a 10-year maximum prison sentence.

Making the agreement even more unusual is that 64-year-old Robert Steinberg did not have to take the deal at all. The crime he admitted to occurred in 2002, well beyond a six-year statute of limitations, meaning the government could not have prosecuted him at all without Steinberg’s consent.

The deal required U.S. District Judge Ronald Leighton to agree to the joint sentencing recommendation of “credit for time served,” which consisted of the few hours Friday that Steinberg was fingerprinted and processed as a felon by the U.S. Marshals Service.

Steinberg pleaded guilty and was sentenced in a brief hearing Friday that left a lot of questions unanswered.

Nor did it resolve all of Steinberg’s legal troubles. He’s named in a so-called “qui tam” whistle-blower lawsuit alleging he took illegal kickbacks from real-estate agents for letting them handle bankruptcy-related property transactions and that he sold bankruptcy properties to “straw buyers” who flipped them for a profit, part of which went back to Steinberg.

The government has declined to intervene in the lawsuit and has not prosecuted Steinberg for any of those allegations.

In a qui tam action, an individual sues on behalf of the U.S. government and is allowed to keep a percentage of any damages recovered. The government can intervene, but if it declines, the plaintiffs can carry the lawsuit themselves, then keep a larger portion of damages.

The criminal case against Steinberg began in 2009 when the whistle-blowers — whose 2006 bankruptcy was overseen by Steinberg — took their concerns to the U.S. Office of the Trustee in Seattle, which examined dozens of his cases, one of which led to the criminal case.

The office removed him as a trustee and has declined, through the Executive Office of the Trustee in Washington, D.C., to discuss the findings of its investigation.

No explanation

None of this explains why Steinberg entered the plea deal at all, since the crime he admitted to — writing himself nearly $50,000 in checks from a bankruptcy estate while acting as the court-appointed plan administrator — occurred a decade ago.

Assistant U.S. Attorney Thomas Woods acknowledged Steinberg’s cooperation when he presented the prison-less plea agreement to the court Friday, even as he acknowledged the seriousness of the crime — theft by an appointed officer of the court.

Trustees are appointed by bankruptcy judges to oversee the finances and reorganization — or liquidation — of assets of bankruptcy estates.

“He is willing to make restitution and, more importantly, he waived the statute of limitation and allowed the charges to be brought,” Woods said, in explaining why the court should accept the deal.

Afterward, Woods declined to say how the agreement was reached. Leighton, the judge, said Steinberg “probably doesn’t need a lecture from me. I’m sure he’s heard from his conscience over and over again.”

“Almost every day, you hear about some member of the executive or legislative branch stubbing their toe or some other part of their anatomy,” Leighton said.

“It doesn’t happen very often here” in the judicial branch. “You will carry that burden with you. This has got to be a very painful day.”

Steinberg wrote a check for $51,991.32 in restitution and paid a $3,000 fine.

He declined to comment after the hearing. His attorney, Peter Offenbecher, said only “Judge Leighton was correct.”

The plea did not sit well with the whistle-blowers, Paramajeet and Sunita Malhotra, who continue to litigate their lawsuit even though the U.S. Attorney’s Office has declined to join.

They unsuccessfully attempted to intervene in the criminal case and derail the plea deal.

Prosecutors argued that the Malhotras’ allegations, “no matter how serious or well-founded,” were not part of the conduct that was charged.

Kickbacks alleged

The Malhotras claim that Steinberg had overseen their 2006 bankruptcy, in which he forced them to sell a number of properties. They claim he received kickbacks from the real-estate agents and did not report the income or the conflict to the court.

Documents filed in the case indicate that at least two real-estate agents have acknowledged making unreported payments to Steinberg.

Woods argued that the Malhotras and their attorney, Angelo Calfo, were attempting to influence the U.S. Attorney’s Office to bring charges that would include the allegations they’ve made against Steinberg, “which would give them significant leverage in their civil suit” and potentially mean they would only have to prove damages.

Calfo, a former federal prosecutor, doesn’t deny it. However, with the criminal plea a done deal, Calfo hopes the government will reconsider joining the Malhotras’ case as it proceeds.

It would mean less money for his clients if they prevail, but would lend the resources of the Department of Justice in pursuing the case, he said.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com