Pismo Beach attorney arrested for grand theft

July 8, 2011

William Peter Terhune


UPDATE: The San Luis Obispo Police Department says investigators have possibly identified additional victims as a result of searches conducted Thursday at Attorney William Peter Terhune’s Pismo Beach office and home.

Terhune is facing charges of embezzlement and excessive taking of over $200,000. Bail was set at $1 million. He is scheduled to be arraigned July 15 at 4 p.m.

Client trust accounts and Terhune’s office bank accounts have been frozen. Client’s needing more information can contact California State Bar Investigators at (213) 765-1731.

ORIGINAL: A Pismo Beach law practice was seized by the State Bar of California Thursday and the attorney was arrested for allegedly stealing more than a quarter-million dollars from a client’s estate.

Law enforcement officers took William Peter Terhune, 57, away in handcuffs as officials from the State Bar began combing through his practice’s records and files.

Terhune is accused of stealing nearly $275,000 from the estate of Junko S. Hensling of which he was the attorney and the administrator. The estate’s sole beneficiary lives in Japan and does not speak English.

Terhune has been an active member of the San Luis Obispo community. According to his website he is a past chairman of the San Luis Obispo County Bar Association’s probate section, and a former director of the association’s board. He was also previously on the board of directors of the San Luis Obispo Chamber of Commerce and the president of the San Luis Obispo Downtown Business Improvement Association.

In the State Bar’s petition to take over Terhune’s law practice, it details 19 bank account transfers from the estate’s account to the attorney’s private business account made between May 2009 and March 2010, according to documents CalCoastNews obtained from the State Bar.

Terhune allegedly dwindled down his client’s account from nearly $300,000 to an ending balance of $1,278, taking out from $4,000 to $30,000 at a time, and sometimes more than once a day.

The estate’s beneficiary says she has not received a single penny.

Even after the attorney was confronted by his paralegal, who discovered the missing funds, Terhune admitted he took the money because “he was unable to get a small business loan,” but he continued to steal money for five more months, according to the State Bar’s petition.

Also at issue is the fact that Terhune has requested and been granted several time extensions to file a final accounting of the Hensling Estate, as required by the courts. Investigators claim Terhune has been lying about the status of the estate to hide the fact that he was using its assets for his own personal use.

As of Thursday evening the attorney was still in county jail so he was unable to respond to the allegations against him.

Terhune has said, in writing, that the funds from the Hensling Estate bank account “were invested over time in various loans as evidenced by promissory notes that will produce a much greater rate of return on the estate’s funds,” the petition says.

The State Bar contends the notes were created only after the misappropriation of funds was discovered and may contain fraudulent dates. Even so, Terhune did not have the probate court’s approval to make the transfers.

The attorney’s former paralegal filed a complaint to the State Bar on behalf of the Japanese beneficiary.

Earlier this year in a response to the complaint, Terhune denied the allegation that he had “misappropriated the funds” and said that all assets of the Hensling Estate “have been held and maintained for the benefit of the estate and will ultimately be distributed to and for the sole benefit of Momoko Sasaki.”

An order filed with the San Luis Obispo County Superior Court on Thursday gives the State Bar of California permission to retain all of Terhune’s file’s, redirect his phone lines to the state bar, suggest clients find a new attorney and with client permission – file motions and other pleadings.

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The paralegal should be applauded. Speaking of para legals. Can anyone help me with this situation. towards the end of our litigation (after 7 years) Attorney Robert Grigger Jones produced TWO letters (just last year in fact) and strangely this was the first time in 7 years we were seeing these letters. The first one is dated September 17, 2003 and was drafted by Linda Cooper. admitting the 1st Amendment is NOT in his possession. Strange because Jones insisted in his 2006 affidavit the 1st Amendment was signed in his offices on september 19, 1997. This letter has Jones asking for a copy of the 1st Amendment because he “doesn’t have a signed copy or the original trust” We are pretty confident the letter was probably drafted by Mr. Jones and more than likely recently drafted using old stationary that had Ms. cooper’s name as the Legal Assistant. I have been trying to locate Ms. Cooper All I have is an address in Playa Del rey. Does anyone know Ms. Cooper?

And secondly the other letter (again showing up only a year ago) is dated September 10 1997 and this letter is supposedly drafted by Cindy S Hemming also listed as paralegal on the stationary. However no signature for Ms. Hemming It is not signed. and this is the letter that according to Jones accomapnied his famous 1st Amendment asking my father to sign it in Hawaii (contradicting the other 1st Amendment Jones told everyone was signed three days later in his office in California (that is the one with the fraud and forged signatures) If anyone knows how I can contact these women please contact me I have utilized every database possible and the Cindy Hemming one I can’t find.




I have the utmost respect for CCN. Their reporting is clearly the best here on the Central Coast. As far has Mr. Terhune is concerned, it is imperative to stay unbiased. The facts will not come out fully until it goes to trial and the all facts and circumstances from both sides are aired to a jury. If the allegations are true, Mr. Terhune needs to be held to account! If there is misunderstanding or overzealous prosecution a person’s reputation should not be destroyed based on innuendo and partial information.

Who was the judge in the probate action who provided extensions on Terhune’s filing of an accounting? Does anyone know?

If this guy ends up in the slammer he will be very popular. Lawyers are well liked. He can probably double his money in a year or less. And be protected at the same time. I do feel very sorry for his family and him. He must be pretty upset right now. How about the person he stole the money from? If anyone needs money it’s someone that just went through a horrible experience. God Bless them all in their pain and distress.

After reading all of the ‘allegations’, I do feel some degree of relief that he never went into public office.. I hear that the ‘salary’ is what gets you into the high stakes game.

BTW folks… deeply dishonest folks never ‘look dishonest’… if they did, well, they wouldn’t be so successful.

Did he run for public office?

He seemed to be “pedigreeing” himself for it…

“Terhune has been an active member of the San Luis Obispo community. According to his website he is a past chairman of the San Luis Obispo County Bar Association’s probate section, and a former director of the association’s board. He was also previously on the board of directors of the San Luis Obispo Chamber of Commerce and the president of the San Luis Obispo Downtown Business Improvement Association.”

That and if he was starting to steal, well, that only helps with any Public Office post, does it not? At least in this town.

“Just speculation or opinionating on info”

“I am subject to be naive & ignorant on somethings”

“I am not perfect nor necessarily correct, just uninformed”

Opportunity and the power/ ability for starters, underlying may be greed/ dishonesty, need/ desparation.

I believe the chaos, fear of hard, complex times and the difficulty of adjustment has struck us all, the poor and rich, the good and the bad, the young and the old, the religious and the agnostics and “people change”.

The younger Terhune is a now different Terhune, after all this a new Terhune will derive.

The most important priorty (to me and all that matters to me) is to reward the paralegal and get the victims recovered.

The greatest agony from the Gearhart, Madoff and all the other scammers was the victims not recovering and rescuers unrewarded (The attorney made out good).

Hmmmmm sounds like another attorney up the road I know named Robert Grigger Jones He lied on the stand last year during the evidentiary hearing………..actually stated our Dad didn’t have a good relationship with us What a liar. You haven’t lived until you look an attorney sitting on the stand…straight in the eye and listen to him lie to a judge. Everyone thinks just because someone is an attorney they would never violate the law or commit fraud and forgery. What say you Grigger Jones? How did that 1st Amendment with the proven forged signatures come to be in your office?


Oh that’s right we filed a criminal complaint with Atascadero PD three years ago and the DA Jerret Gran sent us a letter stating they didn’t have enough evidence. The forensics report confirming teh signatures were forged, our stepmother Elizabeth Meek admitted on the stand last year the signatures were not her’s or our fathers. And yet Mr. Jones is free to take advantage of other families (which he has already) Check out this You Tube video and let us know what you think


It isn’t over yet.


I don’t think it will be too much longer befor somebody manages to get Grigger off the streets. He has his dirty hands in way too much of the public’s affairs including our Water Company.

How long has Gran worked for the DA? I met a guy in Cambria many years ago named Gran. He was very short. He had a car detailing business. Maybe he decided to make a lateral job move into the whitewashing business.

Finally justice might be served against this crook! I wish someone that worked in his office would have stood up when we were dealing with him. I hope we might have some recourse against him, so thank you to the paralegal for standing up and doing the right thing!

The victims can contacct the attorneys insurance company and file a claim for malpractice. The lawyers office won’t tell you so you need to send a letter requesting the information A week later call to see if they received the letter. Wait two weeks and if they still won’t respond by phone or mail then make a note of this and go to the California State Board and contact the agency that handles insurance claims. Tell them what is going on and hopefully they can find out who the insurance company is. HOLD on to the letter (you have sent Return receipt requested) and file that with your claim for malpractice.

I knew peter. He was such a nice guy. I think he came upon hard times which compelled him to go

astray. Bad move. I thought he was much smarter than that. I feel sorry for him and his wife. I also feel sorry for the person who was embezzled.

The paralegal should be offered a high-paying job by a local attorney. You don’t miss out on a person with the skills, professionalism and ethics of this person. I’ve interacted with this paralegal (as well as the other paralegals in the firm) happily for years as a client of Peter Terhune’s office.

As to Peter…get the man into an MRI tube and check for brain tumor or anything else that might cause significant change in personality/impairment of judgement. This is not the Peter I knew.

I agree completely that the whistle blowing paralegal should be rewarded for her honesty and integrity, not to mention her bravery! That his assistant and the other paralegal stayed on to the end and then supposedly “helped” the Bar find more evidence of other client’s he’s robbed only reinforces my belief that they were knee deep in his muck all this time, enjoying the illicit rewards right along with him, (I hear the count is up to nearly a cool million now). There is no way they did NOT know and were not a part of what was happening, particularly when the whistle blower left; Peter’s assistant handled all of his bank accounts and his remaining paralegal handled all the “doctored” reports and extensions filed with the probate examiner.

Oh, and you don’t need an MRI to diagnose drug abuse, a simple hair analysis will do. This is not the Peter I knew years ago either, but then again we’ve all seen what addictions can do to one’s moral compass, not to mention their personality!

Justice For All? Are you insinuating that Attorney terhune committed these crimes because he was addicted to a substance? I hope not. That is the lamest excuse ever. If he is addicted to anything it is money and plain and simply he was caught with his hand in the cookie jar. It would seem to me Mr. Terhune doesn’t have the same good ole boy friends like Robert Grigger Jones – Wade McKinney – Kelly Gearhart – Jay Miller etc or he would be home having a laugh. Happy to say those I just mentioned are not laughing over the fact that the Pe Ji Ho ta Indian Casino or ANY Indian casino will ever have their name on it.

People don’t commit crimes to this degree because of “drugs”. It is GREED

Thank you, writer. Embarrassed to admit that my first reaction was a selfish and vindictive “I KNEW it!” Then I thought of the clients affected directly by the embezzlement, or those having to retrieve their files, sort out their situations, and look for a new attorney while dealing with the sense of loss at having trusted someone capable of this.

Hours later, I still can’t get past seeing Pete’s mug shot. Reflecting back on the time that I have known him, I wonder how he got from the young law school graduate that would go out of his way to help anyone- more than 20 years ago- to this. Confident, energetic compassionate and trustworthy, not a hint of sleaze. After communicating with him on an almost daily basis for five years in the 80’s, I would never have guessed that this is where he would be today. Lately, however, several people have had concerns. While some of the old Peter that we knew was still there, he has recently seemed like a different person. Sad to see that it has come to this.

A very unfortunate situation for all.

Thank you Justice and Outtathere very much for your comments that may provide clues about this Peter Terhune, who is not the Peter Terhune that I too knew several years ago while working closely together on a small nonprofit board. I loved Peter; everyone loved Peter. Many of my friends are long time clients of his. I was shocked by these allegations and feel just sick about it, and have had great difficulty understanding this situation. Your comments help a lot – hearing that those who know him now have noticed changes recently, which could be explained by something such as an addiction. I don’t know how else to make sense of this. This is so, so sad, in so many ways, for so many people.

Perhap’s this is the first time that Peter had control of an estate where the beneficiary was from another country and didn’t speak English or herhaps just the first time that he has been caught? No doubt, he saw this as an easy slam dunk and maybe he wasn’t alway’s the honest guy that you thought he was? It’s my expierence that we get better and less selffish as we get older, rather than suddenly careless.

Yes, of course it is possible that he wasn’t the honest guy that everyone thought he was; I don’t deny that possibility, and feel sick at the thought of it. But given that all commenters who actually knew Peter share the same perspective, and those who are still close to him have been concerned about recent changes.that they have observed, the addiction explanation (or possibly a health issue) is the only one that really makes sense to me so far. It certainly doesn’t make sense that this is the first time in 30 years of practice that he’s had an opportunity to do something like this; a truly crooked person would have been ripping people off for much longer. Yes, it is possible that it is the first time he’s been caught. The investigation should answer these questions. It would be nice if people would withhold judgment until the the investigation is complete. (I will note Cindy that I did not hear judgment in your comment – just questions).

With regard to changes in personality and judgment, there can be physiological explanations. I know of several people who underwent big personality changes following various events beyond their control: removal of a brain tumor in one, head injury in another etc.

I will note also that I am not trying to excuse anything that Peter has done wrong. My heart goes out to his victims, which would include his wife and all those close to him who will feel betrayed by this, in addition to those whom he actually harmed financially. I’m just trying to make sense of a truly bewildering and distressing situation.

I don’t have to judge this situation BBTB, the facts in this article speak for themselves. Your friend “systematically misappropriated” $298,800 of funds that were entrusted to him. It would appear that additional funds from other accounts are also under question. I’ve never heard of an illness that causes a person to manifests this type of symptoms but I can empathize with your confusion and why you’re reaching for an explanation other than the obvious. I’ve trusted people who I knew well in my lifetime and have been disappointed when they did things that I would have bet my life on, that they would never do. It hurts and it leads us to question our own good judgment about those who we trust, the closer they are and the better we know them the more devastating it is when the truth knocks on our door. It happens.

Cindy, when my grandmother’s behavior changed after her third stroke, nobody suggested that she’d had dementia all of her life.

When Kelly Gearhart made headlines on this website, nobody asked what happened. People who had known him for 20 years or longer wondered how he was able to defraud so many people for so long. The series of articles showed that KG was an arrogant jerk who had gotten away with fraud his entire life. Nothing changed with Kelly, he just finally got caught.

Twenty five years ago, if Peter said he would have a contract ready by Friday, it was done by Wednesday. If you left a message, he called you back. If he said he would have a check for you at 9:00 a.m. you could pick it up at 8:00 and it would clear. Paperwork was done properly and professionally, and submitted on time. He never avoided anybody and never made excuses. The past few years, his behavior had changed to the point that many of us wondered “What happened to Peter?”

Nobody commenting here has suggested that this was typical behavior for Peter twenty years ago. Several have stated that this was not the Peter that they knew several years ago. If you have first-hand knowledge of something that would have indicated this type of behavior 25 years ago, I’m sure that you would have already shared it with the rest of us.

As with BBTB, I’m not suggesting that his behavior is acceptable. My family has been affected by his actions, and we are not looking forward to going through the process of retrieving our files, finding a new attorney, determining our losses, etc. I feel for the other families or individuals whose lives have been affected by his actions.

But because this is so unlike the person that we used to know, it is only natural for us who know him to ask “What happened?”

Outtahere, If you hadn’t read about the details surrounding Peter’s arrest in the press, would you currently be wondering what is wrong with Peter? That is other than noticing that he is a bit older, slower and not quite the cracker jack that he was 10-15-20-25 years ago?

Up until Kelly Gearhart was caught, he was considered by many, including our City Council and Chamber of Commerce to be a reliable, honest and generous guy who could save Atascadero’s blighted Main Street with all his development prowess. Local’s who knew him since grade school where left holding the bag, so was his step-mother (who had been in the family for 35 years). It was quite a shock to everyone and it had been going for many years before he was exposed.

I don’t know what’s wrong with Peter, as sad as it is, one thing for certain is that he is far too functional to be suffering from onset dementia or the like. Of course, if we learn that some of his clients received a pleasant surprise, like a large unanticipated deposit that was directed into their bank accounts via Pater’s office (during one of his off moments), well I’ll eat my words, yes I will.

Cindy, we’re just going to have to call this one a draw.

Above, I stated my concern about changes in Peter over the past few years.

Meanwhile you figured him out just from reading this article- kudos to you on that!

I also stated that I was on to Kelly Gearhart when we met twenty years ago, as were many who commented in the series about him. His public downfall was not “a shock to everyone” as you stated.

Nobody has defended KG on this site. Nothing about his behavior or business practices changed from 1987 to 2007. He simply ran out of suckers to fleece, his house of cards collapsed, and he skipped town trusting that the DA would never go after him for the measly $100 million plus that he stole.

Comments from People Who Have Known Peter For Decades- even those like me who have been affected by his actions- are about their concern for how his behavior and business practices have changed over the past few years.

If I only knew about Peter from this article, then my insights might have been as keen as yours. But I probably would not have commented.


I keep thinking about this unfortunate situation. I recall that the last two times I spoke to Peter over the phone, once earlier this year and once last year, I was struck by the noticeable negative change in his personality.

I don’t excuse his unethical behavior, just as you do not, but I keep thinking that there’s something organically, physiologically wrong with the man.

There’s another medical possibility to consider, although I risk name calling and questions as to my own sanity for bringing it up, but what if Peter has Lyme disease? Lyme (neuroborreliosis) can cause significant psychiatric aberrations.


Lyme, caused by the Borrelia spp. tick, is endemic in the SLO County area and our four surrounding counties, as well as all the way up and down the Pacific Coast. SLO county hasn’t officially admitted endemic status yet, but it’s only a matter of time.

I happen to know, through sheer happenstance, a statistically significant number of diagnosed local “Lymies.” Three more diagnosed in the last three weeks. There is a a characteristic facial expression, greyness and look of exhaustion that is a hallmark of this disease. As I look at Peter’s mugshot, I see that look. Sure it could be exhaustion alone, guilt, alcoholism, brain tumor, psychosis, meth, or whatever, bur it bears examination. Lyme can indeed cause extreme behavioral change.

People in SLO have been infected while gardening. Backpackers and hikers are prime tick targets.

I don’t like mixing issues, nor am I on a Lyme crusade. This is a politically-charged disease. I just want Peter to get a fair deal, just as much as I want his clients to get a fair deal. I too was one of his clients, and this just doesn’t make sense. Peter was not a sleaze.

I am a client and also find this situation sad and perplexing. It also concerns me that my confidential files, financial information and documents are now in others’ hands –who knows where or how many people are handling them, or when I will get them back.

When I saw the mug shot, it was quite shocking. I knew him to be quite friendly. He now looks defeated and depressed. From what I have read about the allegations (making 19 withdrawals, sometimes a few in one day), it almost seems like this might have started as a small loan he made to himself (e.g., a justification with an intent to pay it back)…but perhaps once he crossed that line it became easier to dip into it, borrowing more until it became difficult to pay back? It is noteworthy that he did not do a straight transfer of all 275K into his personal account. I also wondered about addiction—but he didn’t appear to be on drugs to me. Sometimes, though, people have a gambling habit or other type of financial drain. Just a hypothesis; no one will really know until the accountants go through the money trail. They will also investigate his properties (in state and elsewhere), his debts,and spending behaviors to see if there are circumstances that created financial difficulties. Things often have more than one cause (e.g., perceived need, perceived opportunity,) Sometimes a certain combination of variables line up and bad decisions are made. If this is the case, the consequences are going to be disastrous. To lose everything –freedom, financial wealth, reputation, etc. Even if he were to have a good defense or some sort of explanation, the fact is that his business is based upon credibility, and his is now damaged. He has been arrested, and although everyone is innocent until proven guilty, his shell shocked clients are unlikely to come back. Sadly, IF he was having financial difficulties before, he has made things quite a bit worse — a defense lawyer does not come cheap, and if he has to pay restitution, that will be challenging without his income as an estate lawyer. I will be following this case to see “where has the money gone?”…

There are safeguards that can be put in place with estates to reduce the risk of theft or embezzlement happening. I am going to be looking into those factors. Feel free to share ideas about any of the aforementioned topics.

No good deed goes unpunished. (quote by Judge Crandall, overheard in court…..)

She will be lucky if she doesn’t get shunned by the local attorneys for her good deed.