TO: Beverly Hill Police Department
FROM:Attorney for Dr. Arnold Klein
DATE: December 7, 2010
FILE #:
RE: Theft/Embezzlement
Victim/Reporting person: Dr. Arnold Klein
Date of Occurrence: January 2007 through August 2010
Related reports: Beverly Hills Crime Report - 09-0940
Summary:
Dr. Klein is a dermatologist in Beverly Hills. Dr. Klein has operated a medical
office in Beverly Hills since the 1970's.
In 2007, Dr. Klein hired Muhammed Khilji as his accountant. Mr. Khilji oversaw
accounts payable and receivable for the office. Khilji directed employees who handled
the accounts payable and receivable. He was also responsible for preparing payment
for Dr. Klein's personal expenses, including mortgage payments, payroll for house staff,
car payments and credit card payments.
Jason Pfeiffer began working for the Dr. Klein as a research assistant in 2007.
He began to spend time in the office and assist in the office. He eventually became the
office manager in early 2009.
In mid-2010, it was brought to Dr. Klein's attention by friends and some staff that
there were concerns about how his finances were being handled by Khilji and Pfeiffer.
In September of 2010, upon returning from a trip, Dr. Klein attempted to use his
Klein Memoranda
December 14, 2010
Page 2
American Express Card for a nominal purchase (approximately $5). The card was
denied. In the next few days and weeks Dr. Klein learned that his finances had been
substantially depleted. He learned that several loans had been taken out without his
knowledge. He learned that over $3 million had been transferred from his retirement
account without his knowledge.
A forensic accounting was performed of all of Dr. Klein's accounts. Officer
records as well as bank records were utilized in the forensic accounting. While the total
amount of loss is believed to be substantially greater, there was $1.3 million of possible
unauthorized payments/transactions involving Muhammed Khilji and Jason Pfeiffer
identified in the forensic accounting. (See attached accounting)
Questionable transactions related to Khilji totaled over $500,000.00.
Transactions without supporting documentation totaled $124,000.00. Among the
transactions was a $50,000.00 wire transfer from one of Dr. Klein's bank accounts to a
bank account in Khilji's name. A number of transactions were for reimbursement of
telephones (according to the Quickbook memo) in the amount of $4,000.00. Other
transactions with invoices appear to involve "double billing." Additionally, Khilji admitted
to giving Pfeiffer an unauthorized loan in the amount of $32,000.00.
Questionable transactions related to Pfeiffer total more than $250,000.00. It was
discovered that Pfeiffer opened a "paperless" American Express Card account in the
name of Dr. Klein, without the Dr.'s authorization. The card was possessed by Pfeiffer
and the invoices were sent directly to him by electronic mail. The debt accumulated on
the credit card was paid through Dr. Klein's bank accounts without his knowledge.
Additionally, Pfeiffer made numerous unauthorized transactions charging Dr. Klein's
American Express card. It was also discovered that Pfeiffer was receiving up to
$4000.00 in cash each month above his regular salary, such payment being authorized
by Khilji. This was done without Dr. Klein's knowledge.
Khilji, as the accountant, and Pfeiffer, the office manager, controlled all of Dr.
Klein's assets. Changes were made to bank accounts, giving Khilji and Pfeiffer
signature authority over Dr. Klein's accounts. Additionally, several "power of attorney's"
were created giving Khilji and Pfeiffer control over all of Dr. Klein's finances. With the
creation of the control of the assets by Khilji and Pfeiffer, several irregular and unusual
transactions occurred.
Two "hard money" loans were executed involving Dr. Klein's residence on
Windsor Avenue in Los Angeles, and his house in Laguna Beach. Dr. Klein was not
aware of the loans until the forensic accounting was conducted. He believes that his
signature is either forged or was obtained under false pretenses. He did not authorize
the loans totaling $3.2million.
Klein Memoranda
December 14, 2010
Page 3
Dr. Klein's retirement accounts with Ameritrade were depleted of more than $3
million dollars. The individuals managing his retirement accounts (Klein's former CPA's
- who sold their practice to Khilji)received authorization forms, but never spoke directly
with Dr. Klein. The transfers/withdrawals from the retirement accounts began as early
as December 2008. Dr. Klein did not authorize Khilji or Pfeiffer to remove the money
from his accounts.
Dr. Klein's Laguna property was listed for sale with a real estate agent. Initially,
Dr. Klein had a "pocket listing" with a agent. However, the listing was to be withdrawn.
Khilji never informed the agent and had her change the listing to a public listing. The
agent had several public showings of the property, following the instructions given to her
by Khilji. When Dr. Klein visited the property, all signs related to the showings were
removed. Additionally, Khilji contacted a second agent to list the property and had
asked for a percentage of her commission if the property sold. Dr. Klein was unaware
that the property was still being listed for sale and he did not give Khilji authority to
continue the listing.
Dr. Klein's will was changed making Khilji and Pfeiffer the executors of his estate
upon his death. All relatives of Dr. Klein were removed as beneficiaries of his estate.
There are a numerous documents with questionable signatures alleged to be Dr.
Klein's signature, including checks, bank authorizations, powers of attorney, codicils to
wills, etc. Dr. Klein is adamant that he either did not sign the documents or that he was
unaware of the document that he was signing.
Several witnesses have been interviewed regarding the loss. We will continue to
interview additional witnesses as they are identified. We will provide documentation as
requested.
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