From The Am Law Daily:

Navin Kumar Aggarwal, a former Hong Kong–based K&L Gates corporate partner, has drawn a 12-year prison sentence after pleading guilty to fraud and money laundering charges stemming from his use of client funds to pay off mounting gambling debts in Macau.

A Hong Kong court ruled Friday that Aggarwal, 47, violated the public trust through his involvement in one of the largest embezzlement schemes in the region’s history, according to a report by the South China Morning Post.
While Aggarwal's nearly $1.1 billion fraud—which he carried out over the course of four years—affected 92 potential investors, two clients, and K&L Gates itself, the SCMP reports most of that sum has been repaid and that the investors and clients involved suffered actual combined losses of roughly $73.7 million.
Aggarwal lured his victims by promising them business opportunities if they deposited money with the firm, then forged their signatures on the way to either diverting the funds to dormant accounts or transferring them to casinos in order to settle his gambling debts. K&L Gates itself has paid more than $10 million back to clients whose escrow accounts were raided by Aggarwal, according to the SCMP, which notes that among those scammed was former Wilkinson & Grist partner Selene Ng Sau-ling.
Graham Harris, a solicitor representing Aggarwal with Hong Kong’s Liberty Chambers who has previous experience helping lawyers facing local legal difficulties, declined a request for comment about his client's decision to enter a guilty plea. The SCMP reports that Harris told the court that his client “is now left with nothing,” save for the “disgrace he brought upon himself.”
Hong Kong bankruptcy court records show that Aggarwal resigned from K&L Gates’s partnership on June 11, 2011, around the time the firm learned of his illegal activity.
“[Aggarwal] engaged in massive defalcations and breaches of fiduciary duty involving thefts of many millions of dollars from [K&L Gates’s] client accounts,” states a bankruptcy judgment dated July 13, 2012. “Most of the monies so stolen appear to have been used to fund the debtor’s gambling activities at various casinos in Macau.”
According to a statement of Aggarwal’s financial affairs filed with the bankruptcy court, as of last year he had personal liabilities in excess of $28 million against assets totaling some $5.9 million. (Kevin Hon of Hong Kong’s Gloria Chan & Co. is listed as counsel to Aggarwal in his bankruptcy proceedings.)
The Am Law Daily reported in August 2011 on K&L Gates’s decision to sue Aggarwal following his arrest on theft and forgery charges. The firm subsequently obtained a nearly $17 million judgment against Aggarwal, although the Hong Kong bankruptcy court’s July 2012 ruling states that K&L Gates “does not appear to have recovered any significant amounts” from its former partner.
That may explain the firm's decision to file suit last year against Hong Kong–based Melco Entertainment, owner of two Macau casinos, in a bid to recover funds misappropriated by Aggarwal, according to our previous reports. Hong Kong court records show that the litigation remains active between K&L Gates and Melco, which is being represented by Mayer Brown. (The Chicago-based Am Law 100 firm has a major presence in Hong Kong thanks to its late 2007 merger with Johnson Stokes & Master.)
Robertsons Solicitors helped K&L Gates conduct an internal inquiry into Aggarwal’s conduct, and the Hong Kong firm has been representing its Am Law 100 client in litigation with Melco and others. A K&L Gates spokesman declined to comment about Aggarwal’s sentencing when contacted Tuesday by The Am Law Daily.
Aggarwal joined legacy firm Preston Gates & Ellis in 1999 and made partner a year later. Seattle-based Preston Gates agreed to merge in late 2006 with Pittsburgh-based Kirkpatrick & Lockhart Nicholson Graham to form what is known today as K&L Gates.
The American Lawyer's annual Am Law 100 rankings show that the 1,720-lawyer firm brought in nearly $1.1 billion in gross revenue last year, while its profits per partner averaged $900,000. During Aggarwal’s time at the firm his annual compensation was roughly $1 million, according to the SCMP.
K&L Gates’s Hong Kong office—which according to the firm's website currently has 18 lawyers—has gone through some turnover since Aggarwal’s arrest in August 2011.
Clifford Ng, the former administrative partner-in-charge of the firm’s local base, was made of counsel before leaving K&L Gates in late 2011 for Boughton Peterson Yang Anderson, the Hong Kong affiliate of domestic Chinese firm Zhong Lun, according to sibling publication The Asian Lawyer. In August 2012, Jones Day hired Hong Kong banking and finance partner Maria Pedersen, a year after she joined K&L Gates from the Washington, D.C., office of now-defunct Howrey.
But K&L Gates, which earlier this year merged with Australian firm Middletons, has been busy of late bolstering its Hong Kong ranks. In May, The Asian Lawyer reported on the firm's hire of White & Case corporate and M&A partner Virginia Tam and litigation counsel Sacha Cheong from Clifford Chance, where she was a senior associate.
Those additions came on the heels of the firm’s hires in March of Hong Kong capital markets partner David Johnson from Allen & Overy and litigation partner Samuel Ngo from Orrick, Herrington & Sutcliffe, where he was of counsel. The Asian Lawyer also reported last year on the defection in Hong Kong of O'Melveny & Myers finance partner Neil Campbell for K&L Gates.
For his part, Aggarwal has insisted that he alone is to blame for the crimes he committed. In a letter made public in court documents written by Aggarwal to David Tang, the managing partner of K&L Gates’s Asia practice, the ex-partner said he was “really sorry about everything” before going on to list the escrow accounts he pilfered from to pay down his gambling losses.
“I know the gravity of the crime committed. I can’t live with this,” wrote Aggarwal. “I don’t know what devil got into me."