MINDEN -- The attorney for a man facing felony embezzlement charges dropped his client after the attorney said he may have been paid with stolen money.
Attorney William Routsis said the money provided to him by Michael Richard Schubarth, 48, may have come out of an embezzled account, according to the East Fork Justice Court file.
Schubarth faces three felony theft charges filed by the Nevada Attorney General's Office after he was accused of bilking two Las Vegans out of $5,000 by promising them home loans. He did business from an address listed in the 900 block of Stephanie Way under the company name of High Desert Financial.
A third charge was added Sept. 9 after a man said he had lent Schubarth $85,000 to open a builders' trust account.
"The account had about $85,000 in it and was down to about $61,000," said Deputy Attorney General John McGlamery. "He had a Visa card and checks issued and started using the money as his own."
Attorney Tod Young was assigned to represent Schubarth after Routsis dropped him. A hearing is scheduled today to confirm the appointment of Young.
Schubarth is being held without bail for failing to appear at an Aug. 29 hearing in Uintah County, Utah. He has been in custody since he turned himself in at the Douglas County Sheriff's Office on Aug. 29, the same day he was due to appear in Utah.
Utah authorities are seeking Schubarth for violating his probation.
"He had not complied with the terms of his probation," said Mark Thomas, a deputy county attorney for Uintah County. "We were notified that he was taking money in a similar matter in Nevada. It was our concern that he would steal money from someone else to make restitution in Utah."
Schubarth did not live in Utah when he started a promissory note scheme that resulted in him owing $274,000 in restitution to 16 people in Utah, Thomas said.
As part of the plea agreement there, the majority of the 31 felony charges were put on hold, if Schubarth followed the terms of probation and completely repaid the victims.
Schubarth did make two payments shortly after his November 2002 sentencing.
One of those payments was in the amount of $10,000 and the second one, made late, Thomas said, was in the amount of $12,000.
"The suspicion was that (the restitution) was not legal," Thomas said. "But I have to preface that by saying I have not done an examination of funds to track that back. It's not like he works for somebody and receives a salary. I'm very suspicious."
In the Utah investment scheme, Schubarth hired people to convince others to invest with him, Thomas said.
Schubarth paid out interest of 10 percent a month, equal to a 120 percent return a year, Thomas said.
"The investment pool dried up. He couldn't pay people out," Thomas said.
Thomas said the county wants to extradite Schubarth to Utah.