He rose to fame as the lawyer who extracted major settlements and pushed for reforms at the Easton and Bethlehem police departments.
Then he came crashing down after a guilty plea to filing false tax returns and a conviction at trial for mail fraud and money laundering.
On Wednesday, May 1, John P. Karoly Jr. can put his crimes behind him. That’s the day his federal supervision ends.
The disbarred lawyer from Allentown continues to inch toward earning the roughly $1.5 million he was ordered to pay back to the Internal Revenue Service and the $500,000 he was ordered to reimburse the charity he defrauded, the Lehigh Valley Community Fund.
Karoly was convicted at trial of using the charity to obtain a tax deduction so he could keep his $500,000. He admitted he filed false tax returns in 2002, 2004 and 2005.
Before he went to prison in July 2010 he paid almost all of the money back to the Lehigh Valley Community Fund and about $500,000 in back taxes, court records say. He was released from prison in 2015 and started on federal probation May 2, 2016.
He’s paid back about $18,000 in restitution since his release from prison. The court set his monthly restitution payment at $292 in 2017.
Court records say he sold five properties and turned over his retirement account to help pay off his restitution. He works as a legal assistant to attorney Robert Goldman, records say.
“Mr. Karoly has made a great adjustment to supervision,” his probation officer Cassie Musselman says in court records.
It’s unclear what became of his share of the $7.9 million settlement he won for the widow of John Hirko, who was killed by Bethlehem police during a raid. Or the $5 million he negotiated for the widow of Jesse Sollman, who was killed in Easton police headquarters. Both cases led to internal police department reforms.
Karoly declined a request to be interviewed for this story. He told lehighvalleylive.com in 2017 he wants to become a lawyer again.
U.S. District Court Judge Edward G. Smith signed off on Karoly’s May 1 release from supervision. Even though his probation will end, Karoly is still on the hook for his restitution, court records say.
“The U.S. Attorney’s office will monitor and collect this debt beyond the period of supervision, taking collection action as deemed necessary,” supervising probation officer Jonathan J. Henshaw wrote in court records.
Rudy Miller may be reached at rmiller@lehighvalleylive.com. Follow him on Twitter @RudyMillerLV. Find Easton area news on Facebook.