Kansas City lawyers who were partners in business are now partners in crime

A Kansas City lawyer pleaded guilty Friday to conspiring with his former law partner to steal money from St. Luke’s Health System.

Mark J. Schultz pleaded guilty in U.S. District Court in Kansas City to a conspiracy charge.

His former law partner, Alan B. Gallas, pleaded guilty last April to mail fraud and and on Friday was sentenced to one year in federal prison.

Federal prosecutors said in court documents that Gallas had provided “substantial assistance” that led to Schultz being prosecuted.

As a result of his cooperation, prosecutors asked the judge Friday to give to give him a lesser sentence than what is called for in sentencing guidelines.

Gallas, 65, was ordered to pay restitution of $1,224,264. He was ordered to surrender to begin serving his sentence by April 10.

They had been partners since forming the law firm of Gallas & Schultz in 1992.

St. Luke’s Health Systems was one of the firm’s clients.

The firm was tasked with collecting money from patients who were behind on payments to the hospital system.

Money collected by the firm was placed in a trust account, and periodically the money was forwarded to St. Luke’s.

But according to court documents, between 2009 and 2015 Gallas directed that more than $1.2 million collected for St. Luke’s be transferred to the law firm’s operating account.

According to the documents: 62 payments totaling $89,495 were withheld in 2009; 439 payments totaling $132,167 in 2010; 613 payments totaling $79,776 in 2011; 601 payments totaling $211,391 in 2012; 699 payments totaling $266,696 in 2013; 625 payments totaling $227,892 in 2014; and through July 2015, there were 625 payments totaling $216,845.

In his plea agreement filed Friday, Schultz admitted to conspiring to withhold some of those payments from January 2014 to July 2015.

Prosecutors and defense attorneys do not agree on the amount of money involving Schultz, according to the plea agreement, and will argue that point at sentencing.

Gallas is a former president of the Kansas City Metropolitan Bar Foundation.

He voluntarily surrendered his law licenses in Kansas and Missouri and has been disbarred in both states.

Schultz’s law licenses are still active in Kansas and Missouri, court officials in both states said Friday.

This story was originally published February 10, 2017 at 1:13 PM with the headline "Kansas City lawyers who were partners in business are now partners in crime."