Aaron Tonken is expected to plead guilty to federal charges next month
Officials at the Westside Waldorf School on Fourth Street are hoping their civil lawsuit against celebrity fundraiser Aaron Tonken will gain momentum now that he plans to plead guilty to federal charges of fraud.
The U.S. Attorney’s Office charged Tonken, 37, on Friday with mail and wire fraud for allegedly setting up elaborate charity fundraisers and keeping profits for himself. Lawyers on both sides said Tonken is expected to plead guilty and receive an unknown sentence less than the 10-year maximum.
Meanwhile, a separate civil lawsuit filed against Tonken in March by the State of California Attorney General’s Office is ongoing. Officials from the Waldorf school, one of the organizations that signed onto the state’s lawsuit, said they hope the resolution of the federal charges will reinvigorate their case.
The local, 170-student private school was forced into an economic crisis nearly three years ago after Tonken arranged for a major donation from the Cynthia Gershman Foundation that never fully came to fruition, officials said.
“We’ve not gotten the money,” said Jeffrey Graham, former board president and finance committee member at Waldorf. “We’ve been hanging in the background, hanging on their coattails, waiting to see what happens.
“It continues to amaze me that a person would bait and switch organizations that are here to serve our public benefit,” he added.
Tonken, who has offices in Beverly Hills, allegedly brought two donors to the school in January 2001 — Cynthia Gershman, a trustee of the Cynthia Gershman Foundation who signed a pledge to Waldorf for $650,000, and Loren Arbus, who agreed to put on four annual fundraisers.
Waldorf then paid Tonken $25,000 for consultation services and began expansion and relocation plans for the private school. When Gershman’s first $120,000 check came through, everything seemed to be going well, and officials hired more teachers and brought in an administrator at $80,000 a year to find a new home for the school and oversee its move, school officials said.
But Tonken’s reliability came into question shortly after the first annual fundraiser failed to generate any revenue.
Waldorf put up $65,000 as a “good faith” deposit, which Tonken was supposed to return after the event, along with any additional revenue generated by the fundraiser. But officials said Tonken lagged on returning their deposit — and the event’s vendors, saying they had not been paid by Tonken or Arbus, came after the school.
Tonken eventually returned the school’s $65,000 by depositing money into its bank account from a third party. But no extra revenue was ever brought in by the event, Graham said. And shortly after the event fell apart, Gershman withdrew her “irrevocable pledge,” which sent the school further into an economic tailspin. Gershman didn’t provide any reason for the change of heart, Graham said.
With the money suddenly gone, the school, which charges about $12,000 in annual tuition, laid off temporary workers, cut back on services, asked vendors for grace periods and sought loans to cover expenses. It had originally hoped to use the money to help it find a permanent location for the school.
Waldorf officials recently arranged for a three-year extension of their lease to stay in the Fourth Street property until money can be raised to move. In order to negotiate the market-rate lease, Waldorf had to raise $60,000, which was matched by donations collected by their landlord, St. Augustine’s By-the-Sea Episcopal Church.
The Waldorf school is just one of many organizations and individuals Tonken allegedly defrauded, prosecutors said. Among them are fundraisers with Diana Ross, Milton Berle and the cast of the television program “Ally McBeal.” Those events are attached to the criminal case, to which Tonken is expected to plead guilty.
And in the state’s civil suit, prosecutors allege Tonken took more than $1.7 million from Waldorf, charities supported by former President Bill Clinton, comedian Whoopi Goldberg, and actors Michael J. Fox and Michelle Pfeiffer, among others.
The civil lawsuit, which seeks a permanent injunction barring Tonken and the other defendants from fundraising or disbursing donations, is for $1.7 million in general damages, civil penalties of at least $350,000 and unspecified punitive damages.
Named as defendants in the case are Tonken, Aaron Tonken & Associates, Cynthia Gershman, lawyer Kevin Clarke and Los Angeles resident Robert Freedman. A motion by Freedman to have him removed as a defendant in the case is scheduled to be heard today, said Tom Dresslar, a spokesperson for the Attorney General’s Office.
Dresslar said lawyers are in the process of gathering evidence against Tonken, and a trial is scheduled for September 2004.
In the meantime, lawyers for Tonken said he has been consumed entirely by his legal affairs.
“He’s not doing fundraisers,” said Alan Rubin, one of Tonken’s lawyers. “He’s at the moment coping with the legal situation. And right now that’s taking all of his time, and hopefully at some point he’ll get through this, and he’ll resume his life.”
Asked if Tonken acted intentionally to defraud or if he was a victim of bad bookkeeping, as lawyers had once suggested, Rubin said, “He’s pleading guilty to a crime, and the charges have certain intent elements, but certainly he regrets his involvement in this activity that got out of hand despite his best efforts to control it. And now he’s trying to make things right.”
“... He regrets his involvement in this activity that got out of hand despite his best efforts to control it. And now he’s trying to make things right.” — — ALAN RUBIN Lawyer for Aaron Tonken
Originally published in the Santa Monica Daily Press print edition on November 19, 2003. Read the original PDF.