The former assistant and boyfriend of a South Bay financial trust manager was indicted by a federal grand jury in San Jose today on fraud charges in connection with the alleged theft of $17 million from his former boss’s clients. Leo Joshua Kennedy, 60, of Danville, was indicted on 10 counts of wire fraud. Kennedy was formerly the controller of Backhouse Fiduciary Services of Campbell, of which Christine Backhouse is president. U.S. Attorney Melinda Haag said the indictment alleges that Kennedy stole $17 million from trust accounts managed by the company.
Kennedy is due to make an initial court appearance before U.S. Magistrate Paul Grewal in San Jose on Nov. 20, Haag said. Haag spokesman Jack Gillund said Kennedy has not been arrested and is not listed as a fugitive. He said he had no other information about the case and said the indictment is not yet publicly available. Haag said the indictment alleges that while working as an accountant for Backhouse Fiduciary Services, Kennedy transferred funds from various trust accounts to pay for his personal investments and living expenses.
If Kennedy is convicted, the maximum penalty for each wire fraud count is 20 years in prison. Reached at her company’s office in Campbell this afternoon, Backhouse said, “On the advice of counsel, I have no comment.” Backhouse’s current civil lawyer, Frank Doyle, could not be reached for comment. Her former lawyer, Andrew Watters, said in July that Backhouse confronted Kennedy, her then-employee and boyfriend, about the alleged theft when she discovered a discrepancy in her records on Feb. 7.
Backhouse immediately ended her professional and personal relationship with Kennedy, Watters said. Watters said in July, “Ms. Backhouse remains devastated that someone she trusted for so many years could cause so much damage.” The attorney said Backhouse was committed to trying to recover the missing funds by cooperating with the FBI’s investigation and hiring a firm of fraud specialists to pursue a civil lawsuit.