Colorado Springs attorney admits converting clients' money to his own use
More than a year ago, Danene Yokeum discovered a $50,000 insurance check intended for her was cashed by someone else, leaving her high and dry after she was seriously injured in a traffic crash that wasn't her fault.
Yokeum's voice quavers as she recounts how the injury robbed her of her home, her car and her job, because she couldn't work. Then, even the insurance payment was snatched away. "I was in shock," she says. "This is people's lives. I don't understand it."
The same thing happened to Shirley Sterczewski after she, too, won an insurance settlement for a traffic crash caused by someone else that left her with a debilitating back injury. But her final $25,000 insurance payment never made it into her account. That's because her signature was forged, she later learned, and the check deposited into someone else's account.
"I'm just barely surviving right now," she says, noting she must rely on her 91-year-old father to make ends meet.
Imagine their shock to find the trail leads to the lawyer they trusted to act in their best interests.
Gregory Chernushin, who built a reputation in Colorado Springs as a respected and prominent personal injury attorney, has won hundreds of cases for his clients during his nearly 40-year career.
But now Chernushin finds himself disbarred for converting payments to himself that should have gone to the very people he was supposed to help get back on their feet.
Besides creating extreme financial hardship for his former clients, Chernushin has plunged himself and others — including banks and insurance companies he allegedly used to defraud clients — deeper into the legal abyss. Even his own attorney who filed his bankruptcy now finds himself facing an ethics complaint.
But that could be the least of Chernushin's worries.
Local law enforcement agencies confirm they're investigating Chernushin in connection with stealing hundreds of thousands of dollars from clients and contractors, a figure some say might be the tip of the iceberg. It doesn't help Chernushin's case that he admitted in July — in writing — that he stole at least $335,000.
"It's a disaster for everybody," says Geoffrey Atzbach, an attorney who represents one of Chernushin's clients.
Chernushin, 64, owns a home at 1515 W. Cheyenne Road, where a Realtor's "for sale" sign declares the property "a home of distinction." Listed at $699,000, the house faces burbling Cheyenne Creek and sports an American flag on the porch. He declined an interview by phone and didn't answer the door at his house. But some of Chernushin's background can be pieced together through public records and newspaper reports.
He graduated from Cleveland State University before earning a law degree from the University of Dayton School of Law and becoming licensed in Ohio in 1977. He acquired his Colorado law license in 1982 — the same year his father, John, a retired shipping clerk and chef who had served in the Army, moved to Colorado Springs, according to a Gazette obituary.
Chernushin and his partner, Kenneth Shakeshaft, focused their practice on cases involving personal injury, litigation, civil rights and ethics. Shakeshaft set up shop in Colorado Springs in 1982, and the partnership with Chernushin was established in 1985.
Shakeshaft & Chernushin advertised widely in local media. And when Chernushin's 1991 marriage in Hawaii to Carol Anne Cannon was announced in the Gazette, he was described as Shakeshaft's partner. The partnership was dissolved in 2003; Shakeshaft didn't return a phone call seeking comment about Chernushin.
Chernushin and his wife owned a home in the Black Forest area until 1995. He apparently was divorced, because on Aug. 28, 1999, he married Andrea Dawn Joy. In December that year they bought the home on Cheyenne Road for $360,000.
The couple attended high-society functions, such as the 2001 Season Opening Gala of the Colorado Springs Fine Arts Center, where they dined on filet of beef and giant prawn and enjoyed dessert, cigars and cognac with such A-listers as Jon and Becky Medved and Bill and Kathy Hybl, according to the daily newspaper's society pages.
Andrea Chernushin served on the board of the Colorado Springs branch of the Juvenile Diabetes Research Foundation in 2008. As owner of Wapiti Publishing Services, she helped educator Nancy Saltzman, who lost her family in a plane crash, publish a book in 2012, according to a post on goodreads.com.
Over the years, Gregory Chernushin has been a regular contributor to the Colorado Trial Lawyers Association political action committee and gave small amounts to candidates, including a $200 donation to Dan May's campaign for district attorney in 2003.
In August 2009, things were going so well the couple paid $275,000 for a two-bedroom condo in Crested Butte.
But disaster struck for the Chernushins when heavy rains pounded the area in September 2013, swelling Cheyenne Creek, which flooded their home. Water stood six feet deep in their basement, Andrea "Andi" Chernushin told a Gazette reporter a year later, adding the incident caused "significant financial personal loss."
In August and September 2014, respectively, the Chernushins filed lawsuits against their neighbor, Juliet Ashton, and against their insuror, Wright National Flood Insurance Company. Ashton, they alleged, installed a metal bridge over the creek in May 2013 that caused branches and debris to back up and divert water and mud to the Chernushin house during the September 2013 deluge. Wright, they claimed, didn't pay enough for the damage, which included mold and deterioration from standing water.
Meantime, Chernushin hired Murphy Constructors of Colorado Springs to fix the damage. But in May 2015, Murphy filed a lien on the Chernushin property for $24,587, following up with a lawsuit on June 19. Ironically, that same day the Chernushins settled the Wright insurance lawsuit for an undisclosed sum.
As for the Ashton case, Chernushin withdrew from that lawsuit in July, and his wife settled the case — also for an undisclosed sum — in October. The Murphy case is ongoing.
In the midst of all that, Northstar Bank, formerly Bank at Broadmoor, foreclosed on Chernushin's office at 1530 S. Tejon St., winning an order for possession on Feb. 28, 2015, court records show.
T-boned by a drunk driver on May 19, 2012, Yokeum, 43, and her two children were injured in the crash. She seemed to have just minor injuries until a week later when she lost the use of her left arm and began suffering severe headaches.
She was referred to Chernushin by a physician and did her homework. "I actually did my research — checked with the Better Business Bureau and called around," she says. "He came highly recommended by all the attorneys in the city. He had been practicing for over 30 years."
After she noticed Chernushin was dragging his feet — it took him two months to get the police report — she checked around and was told by other lawyers to stick with him.
She eventually received two insurance settlements. The first was for $25,000. Chernushin asked her to endorse the check. He then placed it into his account, and wrote her a check. She got her money.
Chernushin then strongly urged her to file suit against her own insurance company for the hefty sum of $500,000. But 18 months later, he told her the case was a loser and recommended she settle for $50,000, Yokeum says.
She and her husband agreed, she says, because they needed money. Her husband had been injured in an explosion at work six months after her traffic crash and hadn't walked since. "So he basically lost his job," she says, "and I haven't been able to work because of my neck injury and headaches."
When the money came through, Chernushin persuaded Yokeum to sign a release allowing him to pick up the settlement check, she says. After that, she didn't hear from him for months, despite her repeated phone calls.
Chernushin finally agreed to meet with her in January 2015. "We showed up and there were boxes in his [office] window and it was like the place was empty," she says. "No one was there. There's a note for UPS to leave packages next door. He just blew us off, basically."
Yokeum reported Chernushin to the Office of Attorney Regulation Counsel, which handles discipline of attorneys for misconduct.
After that, she got a phone call from Marrick Medical Finance, an Englewood firm that funded Chernushin's clients' medical treatment and was paid from judgments and settlements he won for his clients.
Marrick told her Chernushin hadn't paid for her medical care, or that of other clients.
"I find out through the company he's taken everybody's money," she says. "I'm in shock. By then, our house is in foreclosure. I lost my vehicle to the bank. My husband lost his job. I lost my job. My kids are freaking out wondering where they're going to live. It's been a horrible disaster," she says in a shaky voice.
Later, at her request, the insurance company sent her a copy of the settlement check. "That's when we found out he forged my signature," says Yokeum, who only recently found a job. "Why would he do this? I don't understand. A reputable lawyer here in the community. It doesn't make sense. This is people's lives. I want justice."
Shirley Sterczewski hopes Trent King, left, and David Beaty can help.
Same goes for Sterczewski, 60, a former 7/Eleven store clerk who was injured in a traffic crash on Sept. 29, 2012. She sought Chernushin's counsel on the recommendation of her sister.
An MRI showed she suffered a lower lumbar bulge, she says, and a doctor told her that her back is in a "constant spasm."
"I live on Advil," Sterczewski says.
After being awarded a total of $100,000, she received two payments of $25,000 each, she says, and Chernushin kept another payment of $25,000 as his fee. But she's never received the final $25,000 payment.
After her case was taken up by attorneys Trent King and David Beaty of Colorado Springs, they obtained a copy of the final settlement check and found that both Sterczewski's and her father's names had been written onto the back of the check before it was deposited into Chernushin's account, King says.
Trouble was, neither of those signatures belonged to Sterczewski or her dad, whose endorsement was required because he owned the car Sterczewski was driving when it was struck.
"I thought, 'My God. This is crazy,'" Sterczewski says. "My dad is in a home. He's 91. He was livid."
Sterczewski says she barely scrapes by, and can't keep a roof over her head without her father's help, all because of Chernushin. "He literally ruined my life," she says. "I have no money. I have no means of making money right now. I'm still in a lot of pain."
Both Sterczewski and Yokeum have filed lawsuits against Chernushin, the banks that deposited their checks in his account, and insurance companies that issued the settlement checks they never received.
Among the defendants are Northstar Bank of Colorado; Allstate Fire and Casualty Insurance Co.; Allstate's bank, Bank of America; and GuideOne Mutual Insurance Co.
All of those entities disavow any responsibility in court filings, and Northstar and Allstate even want Yokeum to pay their attorney fees, with Allstate alleging her claims are "substantially frivolous, groundless, or vexatious."
But District Judge Michael McHenry doesn't see it that way. He's denied Northstar's motion to dismiss in one case, noting that a civil conspiracy claim is "well pleaded because Plaintiff alleges ... that Defendant Chernuwshin [sic] and Northstar 'agreed by words or conduct to accomplish a goal through unlawful means.'"
King says the banks are culpable. "We believe the banks took a check with a forged signature and did not act as a holder in due course," he says in an interview, "and as a result, they have to pay the clients the money, and they have the right to go after Chernushin if they want."
King and Beaty also have sued Chernushin on behalf of Debora Wooten, 57, who was injured in a Sept. 11, 2010, traffic crash. Wooten alleges Chernushin failed to file her lawsuit within the time allowed by law, and now it's too late.
All three cases are ongoing.
Stephanie Davis has turned to Geoffrey Atzbach for help.
Stephanie Davis, 43, is another former Chernushin client who feels cheated. A single mother with two special-needs children, Davis was injured on the job while working for the state of Colorado in 2003. She finally won a $50,000 settlement in 2013. Of that, Chernushin retained $10,000 for his fees. He then placed the balance in his own trust account, Davis says.
"He would dole out the money over a period of years, but only if you asked," she says in an interview. Davis received $23,800, but when she tried to get the other $16,200 in early 2015, Chernushin couldn't be reached.
"He would always be out of town," she says. "When I said I wanted all my money, he essentially wrote me a bad check. At least five of my checks bounced."
Attorney Geoffrey Atzbach, who's trying to help Davis recover the money, says he's not only angry that Chernushin's actions cast the legal profession in a bad light, he's also upset because how the clients were treated "breaks my heart."
"People have been injured," Atzbach says, leaning across a conference table in his north Colorado Springs office. "They've lost jobs. Lost income. This is to reimburse them for lost jobs, injuries. They've earned it the hardest way possible. By being seriously injured, losing their jobs. This is worse than robbing someone in the street. You don't even know the knife is in you for one year, two years, until the money is gone."
But Atzbach gives Davis little hope.
"Stephanie won't get a penny out of this," he says. Why? Because Atzbach says Chernushin carried out "a calculated plan" that hamstrings his clients' efforts to recover.
Atzbach's specialty is bankruptcy, so when Chernushin filed on Aug. 17, 2015, under Chapter 13 of the bankruptcy code, Atzbach scrutinized the details. He was astonished at what he found.
Chapter 13 enables individuals with regular income to develop a plan to repay all or part of their debts over a three- to five-year period. It also shields their homes from foreclosure and protects debtors from collection actions — but only if they meet certain criteria. One of those is a limit of $383,175 for unsecured debts — those not backed by collateral, Atzbach says.
Chernushin claimed $382,559 in unsecured debts — just $616 shy of the limit. But Atzbach found several legitimate debts that Chernushin had omitted or claimed were "unknown."
Chief among those was $224,526 Chernushin owes Marrick Medical. On July 1, six weeks before the bankruptcy filing, Chernushin signed a stipulation and agreement to his disbarment that specifically cited the Marrick debt, as well as $110,339 owed to four clients, including $21,622 owed to Yokeum. (Davis' and Sterczewski's amounts weren't listed on the disbarment agreement but were listed on the bankruptcy as "unknown" amounts, along with about 40 other clients with "unknown" claim amounts.)
The disbarment agreement noted Chernushin "violated his duty to his clients to safeguard their funds" and "deprived a medical lienholder of payments due to them." It also stated he knowingly converted client and contractor funds to his own use, and cited aggravating factors, including "dishonest or selfish motive, a pattern of misconduct, bad faith obstruction of the disciplinary proceeding ... vulnerability of victims and substantial experience in the practice of law."
Chernushin signed the agreement, in which he agreed to repay those four clients listed and Marrick.
If Chernushin had listed the amount owed to Marrick in his bankruptcy filing, he wouldn't have qualified for Chapter 13, Atzbach says, because the total for unsecured debts would have been too high.
Another questionable part of the Chapter 13 filing was Chernushin's claim he'd received no income for the past three years, though he acknowledged in the disbarment stipulation he'd kept $334,865 intended for his clients and Marrick, Atzbach says.
On Sept. 25, Atzbach filed a motion to have the case converted to Chapter 7, which forces the sale of assets, including a person's home, to pay debts. Chapter 7 doesn't provide bankruptcy protection from liens against property and other types of obligations.
Atzbach's motion calls Chernushin's original filing "untruthful and deceptive" and an effort to further "perpetuate this fraud upon his former clients and to protect his assets from seizure or liquidation."
Three weeks later, on Oct. 13, Atzbach filed a complaint against Chernushin's lawyer, Paul Gefreh, with the state Office of Attorney Regulation Counsel, saying he spoke with Gefreh about the Chapter 13 problems, but Gefreh did nothing. "Mr. Gefreh's actions essentially make Mr. Gefreh a willing partner in this ongoing fraud," Atzbach wrote.
Gefreh, a licensed attorney since 1977, served as a bankruptcy trustee for 31 years but has since resigned that post.
On Nov. 4, Gefreh converted Chernushin's bankruptcy to Chapter 7, which listed Chernushin's debts at nearly $1.5 million, including the Marrick debt, and his assets at $847,628 — most of that represented by his Colorado Springs home and the Crested Butte condo.
Other debts include credit card balances of $155,127, and state and federal taxes totaling $486,293. The filing claimed Chernushin is living on $1,915 per month in Social Security benefits, and listed his monthly expenses at $7,841.
On Nov. 10, Gefreh filed a response to Atzbach's disciplinary complaint, admitting to "a serious error in judgment" and acknowledging the strategy was to "delay the foreclosure on the home," allowing Chernushin to retain proceeds from selling it. "I recognize completely the errors in professional judgment I made in my haste and desire to zealously represent Mr. Chernushin," Gefreh wrote.
Gefreh terminated his representation of Chernushin on Nov. 24, and Chernushin currently is without legal counsel in the bankruptcy. The Regulation Counsel has not taken action on Atzbach's complaint against Gefreh.
So where does all that leave Chernushin's former clients who allege they were defrauded? Atzbach says there are two ways creditors can get money.
First, any creditor can file a claim in bankruptcy court, but if the debt is unsecured, as the client claims are, there's little chance of recovery. That's because the bankruptcy trustee will pay priority claims first, including taxes owed and those secured with collateral.
"If there is any money left after all the priority debts are paid in full," he says, "then the unsecured creditors will be paid on a pro rata basis." Considering the amount Chernushin owes in taxes alone, Atzbach notes, "I think it is unlikely the unsecured creditors will get any money."
Second, creditors can file a lawsuit objecting to the discharge of their debt on the basis of fraud. The hope would be for the judge to rule in their favor, meaning they could pursue Chernushin after the bankruptcy is over as if he never filed for bankruptcy at all.
"The hard part is collecting against someone who is now unemployed, and all his assets have already been sold by the trustee," Atzbach says. "That's a high bar for these people who have already been victimized and, of course, just adds more expense for them.
"It's a classic case," he adds, "of throwing good money after bad. It just puts another legal barrier between Chernushin and the people he ripped off, most of whom don't have the knowledge, money, or time to get around it."
Nevertheless, Yokeum, Sterczewski and Wooten have filed such cases, with the help of King and Beaty, who say they're handling the cases free of charge.
Meantime, the bankruptcy is on hold until July pending the bankruptcy trustee's investigation of Chernushin's business and financial affairs, assets and income, and "the circumstances of the Chapter 7 filing," according to a motion seeking additional time.
Interim Trustee Robertson Cohen says in an interview the Colorado Springs home is listed for sale, and the Crested Butte condo will be listed soon. "A number of subpoenas" have been issued for banks' records and Chernushin's legal case files, he says. Cohen termed the Chernushin case "abnormal" because there doesn't appear to be a clear reason for it, compared to most others that are brought on by some "economic shock," such as a business failure or serious medical issue.
King and Atzbach were among those who showed up at a Nov. 9 bankruptcy creditors meeting where Chernushin was in good spirits but refused to explain himself, they say. He repeatedly invoked the Fifth Amendment against self-incrimination.
When King asked how Chernushin figured he owes Yokeum only $21,622 as stated in the bankruptcy when he actually took $50,000 from her, Chernushin said he deducted attorney fees. "And then I said, 'Then you put the money in your account?' and he took the Fifth again," King says. "For him to think he can steal and then get attorney fees, it's just preposterous."
King says Chernushin admitted during the meeting he hasn't filed tax returns for three years.
When King asked him why, "His words were he was in a funk. My thought is, three years of not paying your taxes, and doing this to clients for at least a year and a half, it kind of sounds more like some sort of plan. This is so egregious."
Aztbach describes Chernushin as "cocky" and "evasive" and "annoyed that we were asking questions. He had zero remorse. He was cool as a cucumber."
Marty Rauer, owner of FasTrak Rehabilitation Inc., also showed up at the meeting. FasTrak had evaluated Chernushin's clients for vocational rehab and expressed opinions as to their ability to return to work, their limitations and future medical expenses.
Owed $7,200, Rauer is in a rather awkward position, because he's known Chernushin for 30 years and considered him a friend.
"After speaking to his staff, I understand I was one of the only people he continued to pay," Rauer says. "They told me he pretty much shut down two and a half years ago and wasn't paying anyone's bills."
Even Chernushin's ex-employee, Janice Cool of Colorado Springs, is owed $3,000 in "claimed wages," according to the bankruptcy.
Rauer says Chernushin was a pleasant man and an excellent attorney who collected guns and Range Rovers. (Chernushin's bankruptcy doesn't list guns among his assets.) At the creditors meeting, though, Rauer found Chernushin to be "surprisingly smug."
"He pleaded the Fifth on so many things," Rauer says. "He was always smiling."
Now, Rauer is having a hard time squaring his friendship with Chernushin with Chernushin's treatment of his clients and creditors.
"There's a huge disconnect in my head," he says. "As a former psychologist, I should be sensitive to picking up on these things. It's almost like being two entirely different people. It's nonsensical to me. At this point, I don't know what to say. I'm completely buffaloed."
Noting he's a "real small stakeholder" in the bankruptcy, Rauer says he sympathizes with Chernushin's clients.
"The people who really got ripped off are people who were hurt and lost their entire claim," he says. "There's no relief for them. I'm not sure they have any way to be made whole in any of this. These are people who are hurt. Some are disabled. To see them taken advantage of when they're already down, that's just kicking them over and over."
Not everyone was left in the lurch when Chernushin's practice folded. Clint Johnson, 42, whose story and that of another client was outlined by KOAA-TV last March, got his money, but it took a relentless four-month pursuit via phone calls, a car chase and his own detective work.
Injured in 2014 on his job as a mechanic, Johnson chose Chernushin based on a Yellow Pages advertisement. After Chernushin won a $16,000 settlement for him, he asked Johnson to endorse the insurance check and he did, Johnson says. Chernushin then deposited the check into his own account, and Johnson later received a check from Chernushin, but it bounced, Johnson says.
Johnson, who says his bank bounced his own checks right and left for insufficient funds, went to Chernushin's office in early 2015 but found it locked and empty. He then visited a business next door and he found out where Chernushin lives.
About that time, Johnson spotted Chernushin walking to his vehicle. "He took off, and I chased him for four or five blocks," Johnson says. "He lost me in a red light, but I knew where his house was, so I went to his house."
Not able to collect, Johnson launched a phone campaign calling Chernushin's home twice a day and his cell phone repeatedly. After promising to wire money to Johnson, Chernushin seemed to disappear. "When he got back to me, he said he was out of the country," Johnson says.
Meantime, Johnson did some research and found Chernushin owned a home in Crested Butte. "I sent him a text and said, 'If you can't pay me, I'm gonna take some of your stuff,'" which included several vehicles, Johnson said. After that, a little at a time, Chernushin ponied up cash — wired via Western Union — and eventually got square with Johnson.
At one point, Chernushin "was actually crying, and I felt sort of bad for him," Johnson says, but he still reported Chernushin to the Office of Attorney Regulation Counsel in March.
"It was a mess," Johnson says. "If I hadn't been persistent, I'd be like the rest of them. I made his life miserable until I got my money."
But Johnson says he was stuck with $3,000 in overdraft charges and bad credit. "I still haven't recovered financially from it. This is a small community," says Johnson, who lives on the Western Slope, "and I still can't write a check, and it's all because of this guy."
Beyond liens, lawsuits and the bankruptcy, the Colorado Springs Police Department confirms Chernushin now is under criminal investigation.
"The detective is still actively working this case," spokeswoman Lt. Catherine Buckley says via email, declining a request to interview the investigator. "Even when the suspect admits to something there is still a lot of investigative work which is necessary for a successful prosecution. With a complex investigation such as this, involving several victims, the case can take longer to investigate."
District Attorney Dan May didn't grant an interview about the Chernushin case, or white-collar crime in general. But his spokesperson Lee Richards confirms the office is aware of the police investigation.
Via email, she calls such cases complicated due to "voluminous records" requiring analysis, numerous witnesses and victims to be interviewed and experts required to analyze documentation.
"The investigation must be completed before a case can be filed," Richards says, "because once a case is filed, the clock starts running on bringing the case to trial. So, we cannot file the case first and investigate it later."
In other words, don't expect quick results.
The last similar case locally was reported to authorities in spring 2013 after Terry Malcom embezzled about $1 million from two mountain water districts. The DA's Office filed charges two years later, and Malcom was sentenced to 18 years in prison on Nov. 30.
Months after talking to law enforcement, attorneys representing Chernushin's former clients are getting antsy. If and when charges are filed, King says, "He may be gone at that point. We're hoping something will come of this, but nothing seems to be happening."
Atzbach, too, met with May and the police detective. "They're working on it," he reports with a sigh.
If charges ever do get filed, and if incarceration does result, Rauer says he'd probably visit Chernushin — if only to ask him, "What were you thinking?"
That is, if Chernushin is ever arrested.
"If I were in his shoes and I had money offshore, I'd be gone," Rauer says. "He'd be crazy to stay in the States."
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