The Pismo Beach lawyer arrested July 7 on suspicion of embezzlement took money from a Japanese citizen who inherited the estate of a Los Osos resident, according to a police report.
Estate lawyer William Peter Terhune, 56, pleaded not guilty in San Luis Obispo Superior Court on Tuesday to charges of two counts of grand theft by embezzlement and preparing false documentary evidence, court records state.
Terhune allegedly transferred $275,000 to his business account from the estate of Junko S. Hensling, which he had been administrating, according to a report filed by the San Luis Obispo Police Department.
Police discovered that Terhune also had conducted an extensive remodel of his home in 2008 and 2009, but he denied to police using any of the Hensling estate funds for those costs, the report states.
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Hensling was a native of Japan and a resident of Los Osos at the time of her death in December 2007. She willed her estate to a sole beneficiary, Momoko Sasaki of Japan.
Terhune was appointed by the court in July 2008 to administer the estate; Sasaki was prohibited by law from administering the estate herself as a foreigner, according to the police report.
Three members of Terhune’s staff confronted him in October 2009 about missing funds from the bank account belonging to the Hensling estate, police wrote.
Terhune responded that “a business loan he had applied for had not been funded and he needed the money,” adding that he’d return the funds to the account.
But the staff members told police the money wasn’t returned and that Sasaki had no prior knowledge of the withdrawals from the account. The report stated Terhune “admitted he did not have $275,000 in cash to repay the notes.”
When investigators interviewed Terhune last Thursday about the missing funds, he reportedly told them he had lent the money to his own corporation as an investment for the estate.
Terhune claimed the estate was in a special tax situation because a foreign beneficiary was involved, and he sought to avoid capital gains tax losses by issuing the loans.
But police informed Terhune that the estate didn’t have a value of more than $1 million, which would “eliminate any special foreign beneficiary distribution tax issues.”
San Luis Obispo Police Department Detective Eric Vitale wrote that investigators are looking into Terhune’s finances to see if he removed funds from any other client accounts.
Terhune’s public defender, Linden Mackaoui, didn’t return a call for comment Wednesday.
Terhune is in San Luis Obispo County Jail in lieu of posting $1 million bail and is awaiting a bail reduction hearing Monday before Judge Teresa Estrada-Mullaney.