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Lawyer
Suspended for Accepting Nude Dances
Panel: Client Performed
for Him in Return for Reduced Legal Fees
Associated Press
September 19, 2008
CHICAGO - An attorney has
been suspended for more than a year for accepting nude dances from a
stripper as partial payment for the legal fees she owed him.
The Illinois Attorney
Registration and Disciplinary Commission on Thursday said Scott
Robert Erwin will begin serving a 15-month suspension for misconduct
next month.
Erwin, who practices in the
northern Illinois city of DeKalb, and his client mutually agreed
that she'd perform nude dances for him in his office as a way to
reduce her legal fees, the commission's report said. He credited her
for $534 toward his bill for services of various legal matters, the
report said.
While she agreed to the
performances, the client contended he touched her inappropriately
during those dances, and she went to police in 2002 with sexual
assault allegations.
Erwin denied any
inappropriate touching happened, and he was never charged
criminally, the report said. He declined to comment on the panel's
decision Thursday. The woman no longer works as a stripper, the
report said.
Lawyer Who
Stole $300,000 for Nestegg Going to Prison
New York Lawyer
September 5, 2008
PORTLAND, Maine (AP) -
There was no extortion. No lavish vacations. No gambling debts. No
drug addiction. Instead, a former partner in a major Maine law firm
stole more than $300,000 simply because he felt he needed greater
savings, his lawyer said.
Addressing a federal judge,
disgraced lawyer John Duncan said he never would have envisioned
himself in trouble with the law when he graduated 30 years ago from
law school.
"I have gone far astray
from the ideas and ideals I had," Duncan said in his first public
comments since the case shook Portland's legal community.
Judge George Singal, who
sentenced Duncan to 28 months in prison for tax evasion, told Duncan
he broke an important public trust when he stole $300,000 from his
clients and law firm Verrill Dana.
"People wonder who they can
believe in," Singal said. "That's the real damage here. People's
ability to trust has been harmed across the board. It pains me that
someone as well-educated as you are, an individual who the community
should look up to has fallen so far."
Duncan joined Verrill Dana
in 1978 after graduating from Bowdoin College and receiving a law
degree from the University of Virginia.
During the years of theft
and embezzlement, Duncan was earning an average of $269,000 a year
and his family had assets of more than $1 million.
He clearly did not need the
extra money to survive, said defense lawyer Toby Dilworth. Instead,
he had a compulsion to provide his family more financial security.
"His conduct was completely
irrational," Dilworth said. "He felt this desire to have more
savings, just so it would be there."
Duncan, 54, of Falmouth,
was permanently disbarred in July by the state Supreme Court. That
was believed to be the toughest penalty ever against a Maine lawyer.
Duncan has also pleaded
guilty to felony theft charges in Cumberland County Superior Court.
Sentencing on those charges is set for Sept. 18.
From his savings and with
help from family members, Duncan has paid back the money owed to
Verrill Dana and the Internal Revenue Service.
NY Lawyer
Accused of Stealing More Than $5 Million
By Vesselin Mitev
New York Law Journal
New York Lawyer
September 4, 2008
A disbarred real estate
attorney yesterday pleaded not guilty to 26 counts of wire and mail
fraud in Central Islip federal court.
Stuart Moshell,
a Jericho solo practitioner, is charged with stealing more than $5
million from clients and business associates, according to Eastern
District U.S. Attorney Benton J. Campbell.
Between 1998 and 2007, Mr.
Moshell allegedly induced several clients and business associates to
loan money by falsely informing them he had a client who needed a
"bridge loan" to complete a real estate deal. Mr. Moshell allegedly
promised lucrative returns on the investments but in reality used
the money to pay personal debts.
Mr. Moshell is also charged
with defrauding client escrow accounts and perpetuating mortgage
fraud.
In March, he tendered his
resignation as an attorney to the Appellate Division, Second
Department,
Matter of Moshell, 51
Ad3d 122.
At the time, he was under
investigation by the grievance committee for the Ninth Judicial
District for borrowing from escrow accounts to pay mounting debts,
said his attorney, James O. Druker of Kase & Druker in
Garden City. Mr. Moshell is "fully cooperating with the authorities
in terms of victim restitution," Mr. Druker said.
Mr. Moshell was arraigned
before Eastern District Judge Joanna Seybert.
Charges Stand
Against NY Lawyer in Benefits Fraud Case
By Anthony Lin
New York Law Journal
New York Lawyer
September 4, 2008
A federal judge has upheld
novel employee-benefits fraud charges against a lawyer, calling his
argument for dismissal "provocative" but "fatally flawed."
Prosecutors from the Eastern District U.S. Attorney's Office
obtained the indictment of Steven Coren of Coren &
Associates last year on charges that he helped clients divert
for their own use money supposedly set aside for employee benefits.
The case stemmed from Mr. Coren's representation of contractors on
public housing and infrastructure projects. Such contractors are
required under the federal Davis-Bacon Act, as well as a similar
state law, to pay laborers a "prevailing wage" of base pay and
fringe benefits set by the U.S. Department of Labor.
Mr. Coren set up and administered a trust into which his
contractor-clients paid their employee benefit contributions. The
government contends the lawyer used his position as trustee to help
clients pocket more than $1 million they certified was being used
for employee benefits. Mr. Coren faces a maximum of 20 years in
prison.
In arguing for dismissal of the charges, Mr. Coren claimed the trust
such as the one at issue is governed by the Employee Retirement
Income Security Act (ERISA) and that the Davis-Bacon Act cannot
dictate how funds in an ERISA-qualified account can be distributed.
Mr. Coren also argued that criminal charges should be dismissed
because the Davis-Bacon Act and its state counterpart are
insufficiently clear that there need be a relationship between funds
contributed to and distributed from a trust account set up for
employee benefits.
Eastern District Judge Eric N. Vitaliano noted in his
decision in eld, 07 cr. 265, that, to his knowledge, the case was
the first criminal prosecution based on a violation of the
Davis-Bacon Act, but he said there was an "abundance of authority
which patently establishes that the conduct alleged in this
inaugural charge is prohibited."
The judge noted that the purpose of such statutes has been to
protect workers on government projects by fixing a floor under
wages. Permitting an employer to claim credit for contributions not
intended for workers' benefit would render the statute ineffective,
Judge Vitaliano said.
"Taken together, the plain meaning of the language of the statute,
its legislative history, regulatory clarifications and related
interpretive case law gave more than fair warning that conduct such
as charged here is criminal - prevailing wage credit cannot be
claimed where it is intended beforehand that the workers on whose
behalf the credit is taken will be ineligible to share the benefit,"
the judge wrote.
Judge Vitaliano called Mr. Coren's argument that Davis-Bacon
conflicted with ERISA provocative but rejected it on the grounds
that the prevailing wage statute did not require that employee
benefits be funneled through an ERISA-qualified account.
"The laws simply require that they be paid," he said. "They could,
of course, always have been paid in cash. Therefore, whatever an
employer's obligations are under Davis-Bacon, they are not
discharged solely because dollars claimed to satisfy payment of a
prevailing supplement wage obligation are in fact contributed to an
ERISA-qualified fund, plan or program; nor is the government
precluded from examining who the actual beneficiaries of the [fund]
were in order to determine compliance with prevailing wage laws."
Mr. Coren was represented by Marc Mukasey of Bracewell &
Giuliani, who did not return a call seeking comment.
The prosecution is being led by Assistant U.S. Attorney Richard
Faughnan.
Lawyer
Caught Up in Internet Scam
Faces $200,000 Suit From Bank
By R. Robin McDonald
Daily Report
New York Lawyer
August 26, 2008
ATLANTA - Securities lawyer
Gregory Bartko said he is the victim of an Internet fraud scheme
that is apparently targeting law firms throughout the country and
the banks where lawyers have their escrow accounts.
As a result, Bartko is now
a defendant in a federal suit by Wachovia Bank—which is seeking
reimbursement for nearly $200,000 that the bank wired, on Bartko's
instructions, to a Korean bank on behalf of a company that had hired
Bartko via the Internet.
Wachovia has also notified
the State Bar of Georgia that Bartko's firm escrow account was
overdrawn by more than $190,000, Bartko said.
The scheme that entangled
Bartko matches one in a fraud alert issued in February by SunTrust
Bank in Atlanta.
An overseas company
contacts a U.S. lawyer by e-mail and retains that attorney as a
settlement agent to collect a debt from a U.S. company. The U.S.
company sends a settlement check to the lawyer, who deposits it into
his trust account and then wires the settlement amount, minus his
fee, to the "client." But the settlement check is counterfeit, and
the lawyer loses the money he wired abroad.
"I'm pretty upset about
it," Bartko said last week. "I got conned by someone who I thought
was a client."
Bartko is not the first to
have been taken in by the scam. The July issue of the California Bar
Journal reported on two unnamed California attorneys, one in Long
Beach and one in San Francisco, who fell for a similar Internet
pitch, but their banks noticed the counterfeit checks before any
money was sent abroad.
Wells Fargo Bank in San
Francisco and City National Bank in Los Angeles have reported at
least six other lawyers who were drawn in, according to the
California Bar Journal.
Bartko said that a member
of Wachovia's loss-management/rapid-deployment team in Atlanta told
him that she was already working on a virtually identical complaint
involving another metro-Atlanta attorney who had been instructed to
wire funds—based on a phony check—to an Internet client in the
Philippines by the same individual who had hired Bartko.
Bartko said he was taken in
by the fraud scheme because he occasionally handles international
legal transactions involving clients in Asia. It is not unusual for
such transactions to be conducted by e-mail, he said, because of the
12- or 13-hour time difference between Atlanta and the Far East, he
added.
Bartko said fraudsters
first contacted him in early February via an e-mail from the Tah
Tong Textile Co. in Taiwan seeking representation in the U.S. to
collect a large debt.
Bartko said the e-mail
mentioned five different firms in Atlanta that Tah Tong claimed to
have also contacted. Tah Tong's representative informed him that the
company had identified the Atlanta law firms, including Bartko's
solo practice, through the State Bar directory, Bartko said.
"I think I let my guard
down when I heard that," Bartko explained. "We entered into an
attorney-client agreement with them" on March 12 and, eventually,
contacted the alleged debtor.
Bartko said that in April
he received a SunTrust cashier's check—payable to his law firm—from
that debtor for $197,530 as partial repayment of its outstanding
account. Then, Bartko said, Tah Tong executive Hua Cheng instructed
Bartko via e-mail to wire the money to the textile company's account
at the Woori Bank in South Korea.
Bartko said Tah Tong is a
real public company that trades on the Taiwanese stock exchange.
"When they approached us to do some work for them, we checked them
out," he said. "It's a reputable company. … But I suspect there is
no connection between Tah Tong and the people who are involved in
the scam."
As for Hua Cheng, Bartko
said, "Since he was the one who instructed us what to do, I can only
assume he was part of the scam."
Bartko said he deposited
the cashier's check in his escrow account at Wachovia on April 8. A
bank representative told him that he could not draw on the funds
until April 10 — the time it would take to confirm that funds were
available and that SunTrust would honor the check, the lawyer said.
On April 11, shortly after
10 a.m., Bartko returned to Wachovia and arranged to wire $192,530
to the Woori Bank. Three days later, on April 14, Bartko said he
discovered that his escrow account reflected a debit of $197,530.
When he called Wachovia for
an explanation, bank representatives told him that SunTrust had
returned the cashier's check that Bartko had deposited as
counterfeit. A bank representative told him that Wachovia had
attempted to recall the wire the day Bartko had arranged it, but had
been unsuccessful.
While the cashier's check
was counterfeit, Bartko said that SunTrust had determined that the
customer in whose name it was purchased is a real one. "They are not
part of the [fraudulent] transaction," Bartko said.
On April 15, Wachovia
informed Bartko that he would be responsible for the $197,530
chargeback. Bartko said he learned that day that the bank's
loss-management team was already working a similar fraud involving
Hua Cheng, the same Tah Tong representative who had contacted Bartko.
"That disturbed me," he
said, noting that he thought the bank should have been on the
lookout for other counterfeit checks by the same fraudsters.
The bank sues
Wachovia's suit against
Bartko—originally filed in Gwinnett County State Court and
transferred to U.S. District Court on Aug. 18—claimed that the bank
had provided Bartko with "provisional credit" when it wired the
funds to South Korea. The bank laid claim to more than $7,000
already in Bartko's escrow account, closed it and billed the
$191,619.95 negative balance to Bartko.
Wachovia has also claimed
that the account was a personal—rather than a business—account,
making Bartko potentially personally liable for the loss.
Richard B. Herzog Jr.
with Nelson Mullins Riley & Scarborough in Atlanta is
handling the suit for Wachovia. On Monday, Herzog said because the
matter is currently in litigation, "I don't think I'm authorized to
speak on behalf of my client." Wachovia spokeswoman Evelyn Mitchell
said that it is Wachovia's policy not to discuss pending litigation.
Bartko acknowledged that he
has not paid the bank for the bulk of the wired funds. But he said
that what appears to have been a delayed communication between
SunTrust and Wachovia caused Wachovia to authorize the outgoing
money wire.
Bartko said that SunTrust
identified the cashier's check as counterfeit on April 9, the day
after he deposited it.
According to federal law,
SunTrust had three days in which to notify Wachovia electronically
that the deposited check was counterfeit. But SunTrust, according to
Bartko, missed the three-day notification deadline.
Bartko didn't wire the
money to Tah Tong until April 11. "So what's going on between the
ninth and the 11th?"—the time when SunTrust identified the
counterfeit check and Wachovia attempted to recall the bank wire,
the lawyer asked.
Bartko suggested that the
communication gap could have occurred because the counterfeit check
was misplaced. He noted that a copy of the check that was delivered
to Wachovia on April 16 stated that SunTrust was providing Wachovia
with a photocopy "in lieu of the original item lost in the process
of being returned."
Bartko said Wachovia's
legal counsel notified him about SunTrust's missed midnight
deadline, adding that Wachovia intended to file a claim of late
return against SunTrust for the $197,530 loss.
But in June, Wachovia's
counsel contacted Bartko a second time, notifying him that the late
return claim against SunTrust had failed and that Bartko's
"obligation to repay the overdraft remains."
A SunTrust representative
could not be reached to discuss the case.
Bartko said that since
April, his efforts to get additional information about the
counterfeit check have failed. SunTrust's associate counsel advised
him that any requests for information about the check would have to
come from Wachovia or via a subpoena and that "any recourse you may
have is between you and Wachovia."
Said Bartko: "I can't get
anything from Wachovia. They won't give me the first piece of
paper."
The case is Wachovia
Bank v. Bartko, No. 1:08-cv-2636.
NY Firm
Sees Fees Bid Slashed in Fight Over Rejected Will
By Mark Fass
New York Law Journal
New York Lawyer
August 21, 2008
NEW YORK - Two days before 83-year-old Faye Mancuso died in January
2000, she signed a new will disinheriting her family and naming a
man she hardly knew as the sole beneficiary of her $1.68 million
estate.
Ms. Mancuso's friend, Mary Pizzi, had suggested that her son,
Michael Pizzi, could assist Ms. Mancuso in her efforts to relocate
to a nursing home.
Instead Mr. Pizzi, a private investigator and former marshal in the
Eastern and Southern districts of New York, facilitated the drafting
of the new will, which left him everything. In court papers, Mr.
Pizzi claimed his relationship with Ms. Mancuso dated from his early
childhood when he says she was named his godmother.
Now, two years after a jury threw out the will on the basis of Mr.
Pizzi's undue influence, Brooklyn Surrogate Margarita López Torres
has refused his request for the $32,283 he claims he earned as
preliminary executor to her estate.
Surrogate López Torres also rejected the application for $136,618
filed by the Bay Ridge law firm Connors & Sullivan, which
represented Mr. Pizzi, awarding it a flat sum of $10,000 instead.
The judge concluded that justice precluded either Mr. Pizzi or
Connors & Sullivan from benefiting from their own wrongdoing.
"Where a fiduciary has sought to probate a will procured by undue
influence, not only is the fiduciary not entitled to commissions but
'allowing the proponent of the will to recover his attorney's fees
from the assets of the estate would be a perversion of justice
because it would allow the proponent of the will to profit by his
own wrong,'" Surrogate López Torres wrote in
Imprisoned
Pol Surrenders His Law License for Five Years
By Julie Kay
The National Law Journal
New York Lawyer
July 31, 2008
MIAMI — Former Broward County, Fla., Sheriff Ken Jenne, in
prison for public corruption, agreed to surrender his law license
for five years.
Jenne's attorney, David
Bogenschutz of Fort Lauderdale, Fla.'s Bogenschutz & Dutko, said
that Jenne agreed to the suspension as a compromise. The Florida Bar
had sought permanent disbarment.
Palm Beach, Fla., acting
Circuit Judge Paul Moyle — the referee in the case — signed off on
the agreement on Friday. Now the Florida Supreme Court must approve
it.
Jenne, 61, was sheriff for
nearly a decade and a former Democratic state senator. A lawyer by
training, he was one of the most powerful figures in the state when
he was indicted by a federal grand jury for allegedly accepting more
than $150,000 in improper payments from Sheriff's Office
contractors.
Jenne pleaded guilty last
September to one count of mail-fraud conspiracy and three counts of
income tax evasion. He is serving a one-year sentence at a Virginia
penitentiary and is scheduled for release in September.
Prominent Lawyer Is
a "Sexual Predator"
and a Cheat, Fired Staffer Claims
By Brenda Sapino Jeffreys
Texas Lawyer
New York Lawyer
July 30, 2008
A former paralegal at
Houston lawyer Richard Laminack's current and former firms
alleges the prominent plaintiffs lawyer is a "sexual predator" who
once offered her $15,000 to stay with him in a hotel room in Las
Vegas over a weekend and once suggested she perform a sexual act on
an expert witness to improve his mood and testimony.
Defendants in the
suit Angela Robinson filed in state district court in Houston on
July 25 are Laminack; his current firm, Laminack, Pirtle &
Martines; and the O'Quinn Law Firm, formerly known as
O'Quinn, Laminack & Pirtle in which Laminack was partner.
Robinson, a Magnolia,
Texas, woman who worked on fen-phen litigation while employed at the
firms, alleges the defendants engaged in mail fraud under 18 U.S.C.
§1962 for mailing settlement statements to fen-phen clients that
contained overcharges for medical records. Robinson alleges "firm
employees would order fictitious medical records" for clients from
health care providers that had never treated those clients, and then
the firms added $100 to $150 to the expenses deducted from the
clients' portion of their fen-phen settlements for those "fictitious
medical records."
Robinson alleges she told
Laminack of the "unlawful scheme to defraud thousands of fen-phen
litigation clients" but he "told her to be quiet and not inform
anyone of this" and he directed the firms to mail the settlement
statements containing the charges.
She alleges she was
wrongfully terminated under the Texas Supreme Court's 1985 opinion
in Sabine Pilot Services v. Hauck for failing to commit an
illegal act. Robinson also brings battery and intentional infliction
of emotional distress causes of action alleging she was subject to a
hostile work environment. She seeks unspecified actual and punitive
damages.
"No cause of action under
or alleging Title VI of the Civil Rights Act of 1964, 42 U.S.C.
§2000e, or Chapter 21 of the Texas Labor Code is being asserted at
this time against any defendant," she writes.
Robinson, who alleges she
worked under Laminack's supervision at O'Quinn Laminack and at
Laminack Pirtle from May 2002 until her "wrongful termination" on
April 14, 2008, seeks unpaid overtime wages under the Fair Labor
Standards Act totaling $27,500, plus an equal amount in penalties,
plus attorney fees and costs.
Laminack, managing partner
of Laminack Pirtle, could not immediately be reached for comment.
But Houston lawyer Dale
Jefferson, a partner with Martin, Disiere, Jefferson & Wisdom,
who represents the O'Quinn Law Firm, says the mail fraud allegation
is "completely false." As to the allegations of a hostile work
environment at O'Quinn Laminack when Laminack was working there,
Jefferson says Robinson never made a complaint under the firm's
sexual harassment policy. In 2006, Laminack and Thomas Pirtle
left O'Quinn Laminack to form Laminack Pirtle.
"When all the facts come to
light, I sure hope the actual facts are reported with the same
intensity as the alleged facts contained in the petition," Jefferson
says.
Robinson's attorneys, of
counsel Spencer Markle and partner Andrew McKinney IV
of Houston's McKinney & Cooper, could not immediately be
reached for comment.
NY Firm
Ruled Liable for Florida Firm's Foulup
By Joel Stashenko
New York Law Journal
New York Lawyer
July 18, 2008
ALBANY - A New York law firm can be held liable for the failure of a
Florida firm it retained to file a client's claim to more than $1.2
million from a Florida estate, an appeals court decided yesterday.
Client Alice Whalen was not aware that her Albany firm, DeGraff,
Foy, Conway, Holt-Harris & Mealey, was going to arrange for the
Florida firm to file the claim when the estate of Julius Gerzof
opened in Florida in 1996, and she relied "completely" on DeGraff
Foy to stake her claim to the money, the Appellate Division, Third
Department, ruled.
But the Florida firm, Bailey, Hunt, Jones and Busto, and its
attorney Scott Cagan, from whom DeGraff Foy sought assistance,
failed to file the claim, according to the court.
"Under these circumstances, defendant assumed responsibility to
plaintiff for the filing of the Florida estate claim and Bailey
became defendant's subagent," Justice Leslie E. Stein wrote for a
unanimous court in Whalen v. DeGraff, Foy, Conway, Holt-Harris &
Mealey, 504271. "Therefore, defendant had a duty to supervise
Bailey's actions."
"Therefore, defendant had a duty to supervise Bailey's actions."
Ms. Whalen had secured a judgment of just over $1.2 million in New
York courts against Mr. Gerzof for her share of a disputed
partnership called Pearcove Associates. The partnership's sole asset
was an apartment building in Nassau County.
In January 1995, before the judgment was satisfied, Mr. Gerzof died.
Four months later, DeGraff Foy approached Mr. Cagan and asked him to
track the Gerzof estate in Florida and also to advise the New York
firm on how long it would take to file a claim and how to do so once
the estate opened.
In summer 1995, DeGraff Foy informed Ms. Whalen that the Bailey firm
had been retained "to follow the Gerzof estate and file any claims .
. . required with respect to [her] judgment against Julius Gerzof."
The court noted that Ms. Whalen had no contact with the Florida firm
directly and did not enter into a retainer agreement with it.
Informed in early 1996 that the estate had opened, DeGraff Foy
instructed the Bailey firm and Mr. Cagan to file the claim and sent
the Florida firm the necessary information to do so, according to
yesterday's ruling. Parties get 90 days in Florida after estates
open to file claims.
At the same time, DeGraff Foy also was negotiating with lawyers for
the Gerzof estate over a settlement of the judgment Ms. Whalen had
secured against Mr. Gerzof. Those talks abruptly ended in early
1998, when the Gerzof attorneys informed DeGraff Foy that the notice
of claim had never been filed and that the estate lawyers were
ending the negotiations.
"Ultimately, plaintiff was unable to satisfy any of her judgment
from the substantial assets of the estate," the Third Department
noted.
DeGraff Foy, which is now known as DeGraff, Foy & Kunz, argued that
its duty to Ms. Whalen was completely satisfied once it retained the
Florida firm to track the Gerzof estate.
The Third Department panel, however, said the firm's obligation to
its client included the duty to supervise the Florida firm in the
filing of the claim, something it found the Albany firm failed to
do.
"It is undisputed that defendant knew of the deadline for filing the
notice of claim and took no steps whatsoever to even inquire as to
the status of that filing between February 1996 and January 1998,"
Justice Stein wrote.
Justices Thomas E. Mercure, Edward O. Spain, E. Michael Kavanagh and
Robert S. Rose concurred.
The ruling granted Ms. Whalen's motion for summary judgment for her
claim that DeGraff Foy was negligent for failing to supervise the
Bailey firm.
Bailey Hunt later changed its name to the Bandsawe Residual Corp.,
which filed for bankruptcy in the late 1990s. There is no phone
number for the company in the Miami area.
Ms. Whalen's attorney, Cornelius D. Murray of O'Connell & Aronowitz
in Albany, said yesterday's ruling sends the matter back to state
Supreme Court for a determination of the extent of DeGraff Foy's
liability.
"Something fell between the cracks," Mr. Murray said in an
interview. "A claim should have been filed against the estate in
Florida and neither the Florida firm that DeGraff retained, nor did
DeGraff itself, see to it that it was actually filed. If they are
going to delegate this task to somebody else, particularly when they
didn't tell the client, then they have the obligation to see that
the job is done."
Mr. Murray, echoing a footnote in the court ruling, said the filing
of the claim against Mr. Gerzof's estate was a simple clerical task
that could have been done by a nonattorney, not a complex task
complicated by laws in other states.
Kenneth G. Varley of Donohue, Sabo, Varley & Huttner in Albany
represented DeGraff Foy. Neither Mr. Varley nor David F. Kunz,
managing partner of DeGraff, Foy & Kunz, returned calls seeking
comment yesterday.
Flip-Flopping Disbarred Lawyer Pleads Guilty
Headed to Prison
By Vesselin Mitev
New York Law Journal
New York Lawyer
July 15, 2008
A disbarred Hewlett attorney pleaded guilty yesterday in Nassau
County Court to stealing more than $400,000 from clients.
Joseph C. Levine
had a plea deal revoked in February after one of his victims
implored County Court Judge John Kase to "not allow Mr.
Levine to con you the way he conned me" and give him a longer
sentence than one-to-three years behind bars.
Judge Kase offered Mr.
Levine the option of either taking a new deal of three to nine years
or withdrawing his guilty plea and going to trial. In March, Mr.
Levine opted to withdraw his guilty plea and go to trial.
He changed course yet again
yesterday by accepting the three-to-nine year deal.
Sentencing is set for
August 29
GC
Apologizes for Saying Judges
Were "Paid Off," Accepts Reprimand
By Alana Roberts
Daily Business Review
New York Lawyer
July 8, 2008
MIAMI - United Automobile Insurance general counsel Charles
Grimsley agreed to a public reprimand for saying Miami-Dade
judges "are being paid off" by plaintiffs attorneys.
Grimsley pleaded guilty to two Florida Bar grievances April 25,
and the Florida Supreme Court has approved the unconditional plea
and consent judgment for discipline.
Under the judgment, Grimsley wrote a letter of apology to the
Daily Business Review for his inappropriate comments about judges
and admitted a 2006 drunken-driving arrest.
The date of Grimsley's reprimand by the Bar's board of governors
has not been set. He must undergo a medical evaluation by a doctor
who specializes in substance and alcohol abuse and comply with any
treatment recommendations. He also must pay $1,371 in costs.
Grimsley, who remains with the company, declined to comment
beyond his letter to the Daily Business Review.
United Automobile Chief Executive Officer Richard Parillo Sr.
issued a statement saying the company "regrets the entire incident
resulting in the Florida Bar reprimand issued against Mr. Grimsley."
Parillo distanced the company from the comments but also criticized
Florida law for allowing abuse in insurance claims.
"His frustration with a legislative system widely known to
condone abuse unfortunately caused him to express thoughts and ideas
that were misdirected," Parillo's statement said.
The firm's outside attorney Carlos Lidsky declined to
comment.
In the June 17 apology letter, Grimsley acknowledged making an
inappropriate comment about judges but claims he immediately asked
to retract it.
The Daily Business Review disputes that contention and stands by
its story.
"Irrespective of how it happened, the fact remains that I should
never have made such a statement that was clearly derogatory toward
the judiciary in direct violation of several rules of professional
conduct," Grimsley's letter stated.
He was quoted in the article about United's efforts to fight
fraudulent and excessive claims for personal injury protection
coverage in car accidents. Company leaders and others alleged PIP
encourages fraud by lawyers, medical providers, policyholders and
others, increasing pressure for higher rates.
Grimsley didn't single out any judges, but the company had
aggressively been targeting Miami-Dade County Court Judge
Jacqueline Schwartz to get her removed from all of its cases for
alleged bias. The article also noted United had contentious lawyer
fee hearings before both Schwartz and County Judge Lawrence King.
Miami-Dade Circuit Court spokeswoman Eunice Sigler said Judges
King and Schwartz declined to comment on the disciplinary action.
Grimsley complained in the article about the rates of summary
judgments granted by judges compared with the company's success
before juries and concluded, "I think the judges are being paid off,
but I can't prove that."
In a follow-up article, he groused about judicial hostility and
the role of campaign contributions, but he added, "I don't think
there's any money changing hands."
Former Dade County Bar Association President Merrick Gross
wrote a letter to the editor criticizing Grimsley and the Daily
Business Review for publishing his "scandalous and unsupported
quotation."
United distanced itself from Grimsley's comments. Lidsky, a
partner in the Hialeah, Fla.-based law firm of Lidsky Vaccaro &
Montes, said at the time that his firm hand-delivered an apology
letter to King.
Grimsley's letter to the Daily Business Review was on the
letterhead of Charles J. Grimsley & Associates of Miami Gardens and
listed a phone number that reaches United's claims switchboard.
Disbarred
NY Lawyer Admits
Ripping Off His Grandparents
By Daniel Wise
New York Law Journal
New York Lawyer
April 15, 2008
A disbarred Westchester
County lawyer has admitted in court that he stole $310,000 from his
grandparents.
Chase Caro
of White Plains pleaded guilty
yesterday to grand larceny and has been sentenced to 2 1/2 to 7 1/2
years in prison by County Court Judge Susan Cacace.
A spokesman for Westchester
District Attorney Janet DiFiore said Mr. Caro, 49, admitted stealing
money meant for his grandparents' trust fund.
He already had pleaded
guilty to another theft of more than $470,000 from another elderly
client. He was sentenced to 2 to 6 years on that count.
Mr. Caro agreed to pay
restitution of $1.1 million, which also includes funds from a third
theft. His sentences will run at the same time.
Mr. Caro, who was disbarred
in November, is the son of Robert Caro, the Pulitzer Prize-winning
biographer of Robert Moses and Lyndon Johnson.
The Associated Press
contributed to this report.
BigLaw
Partner Should Face Criminal Charges
Bankruptcy Counsel Tell Judge
New York Lawyer
The Recorder
March 28, 2008
Criminal Charges Against
Pillsbury Partner Called for in SonicBlue Bankruptcy By Niraj
Chokshi
In an unusual move, attorneys in the SonicBlue bankruptcy are asking
a judge to refer one of two lawyers kicked off the case last year to
the U.S. attorney's office for alleged bankruptcy crimes.
The motion for referral
accuses William Freeman, a partner in Pillsbury Winthrop Shaw
Pittman's Los Angeles office, of failing to disclose payments the
firm received that allegedly affected its status as a disinterested
party in representing electronics maker SonicBlue in its bankruptcy.
"[T]he conclusion Mr.
Freeman willfully perjured himself ... has now become utterly
inescapable," wrote William McGrane, an attorney with Bay Area firm
McGrane Greenfield. He filed the motion last Friday on behalf of his
client, SonicBlue Claims -- created to buy creditors' claims against
SonicBlue.
"These actions are very
rare," said Jesse Fried, co-director of the Berkeley Center for Law,
Business and the Economy.
Freeman and Craig Barbarosh,
a partner in the firm's Orange County office, were kicked off the
case one year ago when San Jose Bankruptcy Judge Marilyn Morgan
found they failed to disclose a letter promising investors payment
even if SonicBlue filed for bankruptcy. The firm was accused of a
second major disclosure failure in November and then again recently.
McGrane accuses Freeman of
knowingly failing to disclose receipt of preference payments made on
account of antecedent debt -- payments in the 90 days leading up to
SonicBlue's Chapter 11 bankruptcy filing. All parties hired in a
bankruptcy are legally required to disclose any existing connections
with debtors, including preference payments.
Before the company filed
for bankruptcy, a retainer account was set up which SonicBlue
replenished periodically, according to the filings. The firm
withdrew payment from the retainer under the impression that it did
not technically constitute payments on account of antecedent debt.
However, McGrane said, in a
February 2005 e-mail to Barbarosh, Freeman wrote, "[t]he firm has
major exposure here." One week later, Freeman e-mailed Barbarosh the
proposed text of an e-mail to the head of the official creditor's
committee explaining the retainer account.
"We're going to get fucked
... I'm very uncomfortable," Barbarosh responded.
"We have no chance of
success," Freeman replied. "Embarasses [sic] to put my name on this
letter."
A firm associate was asked
to look into the payments. In an April memo, the associate wrote,
unless the court could be convinced otherwise, "it is clear that we
did receive payments on account of antecedent debt."
McGrane accuses Freeman of
deliberately withholding that information from the court in
declarations related to his application to be employed as counsel
for SonicBlue in the bankruptcy.
"How sad, and how
absolutely criminal, all this misconduct ultimately was," McGrane
wrote in the recent filing.
Freeman did not return
calls seeking comment on Thursday.
"We have received and
reviewed the pleading in question," said John Grenfell, a San
Francisco partner with Pillsbury who is representing the firm along
with its outside counsel. "We think it has no merit. And we expect
to file a response to it by April 7."
According to a response the
firm filed in February, the creditors committee investigated the
payments and "concluded 'that no such payments constitute avoidable
preference payments.'"
New Kind
of Jailhouse Lawyer:
Pol-Turned-Felon Gets to Keep His Law License
By Ryam J. Foley
The Associated Press
New York Lawyer
March 26, 2008
MADISON, Wis. - A former
state senator convicted of accepting kickbacks could practice law
again soon after the state Supreme Court declined Wednesday to
revoke his license.
Gary George, a Milwaukee
Democrat who served in the Senate for 23 years, was convicted in
2004 on a charge of accepting monthly cash payments that flowed from
a nonprofit group that received state funds. He was sentenced to 48
months in prison.
In a 5-0 decision on
Wednesday, the Supreme Court rejected a recommendation from state
regulators that George's license be revoked for misconduct.
The court said a suspension
of four years and three months is enough punishment and perhaps the
longest ever imposed in Wisconsin. The court applied the punishment
retroactive to March 2004, when his license was suspended.
That means George could be
eligible to practice again as early as June.
The court said George's
misconduct was extremely serious but disbarring him would be too
harsh. The court noted his long public service, previously clean
disciplinary record and prospects for rehabilitation.
The court ordered George,
who has completed his prison term and is living in Milwaukee, to pay
the cost of more than $14,000 for the disciplinary proceedings.
George's attorney, Mark
Hazelbaker, called the decision "a significant victory" for his
client. George wants to return to work as a lawyer so he can pay a
$568,000 restitution order, he said.
"Gary acknowledged that he
made some very serious mistakes and knew he was going to face the
severest of discipline," Hazelbaker said. "But throughout the whole
process he was hoping to have a chance to practice law again and
ultimately be able to redeem himself."
George pleaded no contest
to his role in a kickback scheme involving Opportunities
Industrialization Center of Greater Milwaukee, which had contracts
worth $40 million per year to administer the state's welfare-to-work
program.
The nonprofit group paid a
monthly retainer to attorney Mark Sostarich, typically about $5,800.
Sostarich would then send up to $4,670 to George, who performed no
legal work in exchange for the payments. The group also "invested"
$200,000 of an affiliate's money in a corporation controlled by
George's family.
In all, George received
$400,000 from the group. He also admitted that he used legislative
staffers to perform personal work for himself and his campaign.
Regulators asked for
George's license to be revoked because his "conduct involved
criminal behavior and dishonesty and a violation of public trust,"
said William Weigel, a lawyer for the Office of Lawyer Regulation.
But he said he respected the court's suspension and the effect was
little different.
Lawyers whose licenses are
revoked can petition for reinstatement after five years. The court's
order allows George to start that process April 1 instead of later
this year or early next year, Weigel said.
George will still have to
prove that he is fit to practice law before he is reinstated, during
a "rigorous process" that can take up to one year, he said.
Justices David Prosser and
Louis Butler recused themselves from the case.
Prosser served with George
in the Legislature. Butler, who is facing a tough challenge for a
10-year seat on the court in the April 1 election, did not give a
reason.
Witness's
"Amnesia:" $500,000;
Getting Away With $1.9 Billion Fraud: Priceless
New York Lawyer
March 24, 2008
COLUMBUS, Ohio (AP) — Prosecutors allege a former health care
executive accused of witness tampering in a $1.9 billion corporate
fraud case tried to bribe a witness to give favorable testimony.
Defense attorneys say investigators misunderstood taped phone
conversations.
Lawyers for executive Lance Poulsen were beginning their case
Monday after the government spent a week playing taped phone calls
and meetings for a federal jury.
Poulsen goes on trial in August on multiple charges of
conspiracy, securities and wire fraud and money laundering. The
government alleges he misled investors about unsecured loans his
company was providing health care companies such as hospitals and
nursing homes.
Before that trial, he is defending himself against charges that
he and longtime acquaintance Karl Demmler, a Columbus bar and
restaurant owner, teamed up to persuade the witness to help Poulsen
beat the fraud case against him.
Poulsen is founder and former chief executive officer of National
Century Financial Enterprises, once described as the country's
biggest health care financing company.
Poulsen said on a tape played Friday that the government's star
witness should explain that her previous statements to prosecutors
were based on old facts.
Poulsen said the witness should say, "But now, there is a new set
of charges and it's a new indictment and I'm not familiar with it,"
Poulsen said on the recording.
Prosecutors say the witness, Sherry Gibson, a former National
Century executive vice president was promised $500,000 if she could
"have amnesia" when it came time to testify.
On Friday, Poulsen attorney Peter Anderson suggested telephone
conversations between Demmler and Poulsen were harmless because they
corresponded with trips that Poulsen, living in Florida, was about
to make back to Columbus.
Jeffrey Williams, an FBI agent who led the investigation,
disagreed, saying records indicated dozens of phone calls back and
forth between the two at several different times last year.
Gibson pleaded guilty in 2003 to a lesser charge of securities
fraud in exchange for helping prosecutors.
Lawyer
for One Month Convicted of Extortion Says
He Was Just Trying to Settle Case
New York Lawyer
March 21, 2008
MANCHESTER, N.H. (AP) - A
lawyer who says he was just trying to settle a case has been
convicted of extortion.
Daniel Hynes of Manchester
told a Concord hair salon to pay him $1,000 15 months ago or face a
lawsuit because its different prices for men and women were
discriminatory. In one court document, he said the unequal prices at
Claudia Lambert's salon caused him mental anguish. That's even
though the salon charged women more than men.
This week, a Manchester
District Court jury convicted him of theft by extortion, a
misdemeanor.
Hynes, 27, said he plans to
appeal.
"The conviction goes
against the First Amendment," he said. "People have a right to
petition the courts."
Asked why he contacted the
salon directly, he said he was seeking "as amicable a resolution as
possible."
Assistant Attorney General
Elizabeth Baker said Hynes sent letters to at least 19 salons in the
state. The one to Claudia's said haircut prices should be based on
the time required or the length of the customer's hair, not gender.
"I demand payment in the
amount of $1,000 in order to avoid litigation," he wrote.
Lambert's husband, Ben
Nardi, contacted authorities, who arrested Hynes when he came
collect $500.
A jury deliberated for
about 90 minutes Wednesday before convicting Hynes, who was
represented by a public defender. He faces up to a year in jail and
a $2,000 fine.
He started practicing law
in New Hampshire a month before sending the letter to Claudia's.
The state Supreme Court
committee the handles misconduct by lawyers probably will review the
case, said Richard Uchida, a former member of the committee.
NY
Government Lawyer Fired for Running
Solo Practice On the Side for 20 Years
By The Associated Press
New York Lawyer
March 21, 2008
A state Department of Labor attorney is resigning after an
investigation found she has been conducting a private law practice
on state time for nearly 20 years.
State Inspector General
Kristine Hamann says Christine Timber, 58, of Albany, had
also been reprimanded in 1994 for conducting business for her
private practice while at her state job.
She resigns effective June
8, 2008.
Ms. Timber earned about
$100,000 a year in her state job. Department of Labor policy
prohibits employees from engaging in any outside business or
activity while they are working. Ms. Timber did not immediately
return a message left at her home in Albany.
Judge
Faults NY Firm's "Frivolous" Pursuit Of Case
By Vesselin Mitev
New York Law Journal
New York Lawyer
March 7, 2008
A personal injury firm maintained a "frivolous" action against a
psychologist "long after the record establishe[d]" it had no case, a
Nassau County judge has ruled.
In awarding costs and fees to Ethel Cwibeker, Supreme Court Justice
Karen V. Murphy found in
Dunn v. Khan,
5494/05, that there was "no basis to hold [Ms. Cwibeker] at fault
for any part of the plaintiff's cause of action" arising out of a
suicide and, thus, sanctions under CPLR §8303-a were appropriate.
The decision will be published Wednesday.
On Sept. 28, 2007, Justice Murphy
dismissed the complaint of Mitchell Dunn,
brought on behalf of his deceased wife, Pauline, against Ms.
Cwibeker, ruling that the psychologist had "submitted ample proof .
. . that no doctor-patient relationship had ever been formed"
between her and Ms. Dunn.
Albert B. Aquila, who represents Mr. Dunn, continued to allege in an
interview yesterday that Ms. Dunn was a patient of Ms. Cwibeker. He
said Ms. Cwibeker saw Ms. Dunn twice before her Aug. 25, 2003,
death. Ms. Dunn is believed to have taken her own life after being
hospitalized.
Ms. Cwibeker "saw her in the hospital for a session and she saw her
the day before she committed suicide," said Mr. Aquila of Sullivan,
Papain, Block, McGrath & Cannavo in Mineola.
Mr. Aquila said his firm would appeal the sanctions decision, which
"goes against case law."
And, although the judge noted that Mr. Dunn did not oppose the
summary judgment motion, Mr. Aquila said he has appealed the
dismissal of claims against the psychologist.
According to the decision, on Feb. 18, 2005, Mr. Aquila requested
copies of Ms. Cwibeker's office records relating to her treatment of
Ms. Dunn. The psychologist wrote back that she was not a medical
doctor and had only seen Ms. Dunn twice prior to her death.
Another letter seeking copies of Ms. Cwibeker's "psychotherapy and
counseling notes" followed on March 7, 2005, to which the
psychologist responded in a similar vein.
The initial action commenced on April 26, 2005, with Mr. Dunn
alleging that Ms. Cwibeker had rendered "medical and/or
psychological care and services to the decedent, Pauline Dunn, from
on or about October 2002 continuously up through and including
August 25, 2003." An additional action, making the same allegations
of medical and psychiatric malpractice against Ms. Cwibeker was
commenced on Feb. 10, 2006.
In reply to a discovery request seeking evidence that Ms. Cwibeker
had rendered medical or psychological care to Ms. Dunn during the
time claimed by Mr. Dunn, "plaintiff stated that there are no such
records."
According to the decision, Mr. Dunn admitted at a deposition
conducted on July 25 and Aug. 4, 2006, that "he and his wife,
Pauline, met the defendant, Ms. Cwibeker for the first time on
August 15, 2003" concerning their child's suicide attempt.
That admission was fatal to Mr. Dunn's case, said Rachel Yosevitz
Weisman, who represented Ms. Cwibeker.
Ms. Cwibeker "was not the doctor and the deceased was not her
patient - there were no records [Ms. Dunn] had ever been a patient,"
Ms. Weisman, of the Weisman Law Group in Cedarhurst, said in an
interview.
Justice Murphy acknowledged that under some circumstances, Mr.
Aquila did not have to "unconditionally accept Ms. Cwibeker's
blanket denials" of any doctor-patient relationship with Ms. Dunn.
But in this case, "absent a scintilla of evidence to the contrary,"
Mr. Aquila was obligated to accept her denials as true.
"Plaintiff had no evidence to support his allegations that the
defendant was the decedent's therapist or that defendant had met and
rendered 'medical or psychological care and services to the decedent
. . . from on or about October 2002 continuously up through and
including August 25, 2003,'" wrote the judge.
Even if the action had been commenced in good faith, it should have
been withdrawn after "it became clear that there was no basis to
hold [Ms. Cwibeker] at fault for any part of the plaintiff's cause
of action," Justice Murphy wrote.
The judge said Mr. Dunn's action should have been unconditionally
withdrawn and discontinued against Ms. Cwibeker. Thus, she concluded
that its continuation had been frivolous, a finding that mandated
the granting of costs, sanctions and reasonable attorney's fees.
Ms. Weisman said the fees could amount to around $75,000.
A hearing will be held on March 25 to determine the amount of the
sanctions and whether the fees will be paid by Mr. Aquila's firm or
by Mr. Dunn.
Chase
Bank Sues Law Firms Claiming Debt-Relief Scam
By Bud Newman
Daily Business Review
New York Lawyer
March 6, 2008
MIAMI - Chase Bank USA is
suing two Coral Springs, Fla., attorneys specializing in reducing
consumer debt and South Florida affiliates, claiming they are
engaging in blatantly illegal and fraudulent practices.
The federal suit filed
Friday in Wilmington, Del., accuses Hess Kennedy Chartered, lawyer
Laura Hess, Edward Kennedy, affiliated companies and others of using
"an unlawful debt elimination scheme" relying on lawsuits
challenging valid credit card charges.
Attorney Jeffrey Campos of
Coral Springs and the Legal Debt Center, which has the same Coral
Springs address and suite number as Hess' law firm, also are named
as defendants. In addition, attorneys general in Florida, North
Carolina and West Virginia are looking into Hess Kennedy's
operations, and the Florida Bar has moved to suspend Hess' license.
The bank suit claims its
credit card customers were urged to falsely claim nonexistent
billing errors on monthly statements to avoid payment or have the
debt erased.
Nationwide, Chase said more
than 3,800 credit card holders have used such tactics to avoid
paying more than $25 million in legitimate debts.
The Chase attorney who
filed the suit, Beth Moskow-Schnoll in Wilmington, declined to
comment. A spokeswoman for the bank declined to comment.
The six-count complaint
seeks injunctive relief and punitive damages to prevent the
defendants from operating a debt reduction "scheme." The complaint
claims "tortuous interference with contractual relations" between
Chase and its customers, abuse of process, conspiracy and violations
of Delaware trade practices and fraud laws.
Chase is asking the court
to declare that "billing error disputes asserted by Chase's card
members who are represented or assisted by defendants are sham"
claims.
Chase also wants the
defendants to notify "each card member whom defendants have
previously advised, assisted or represented" that the disputes do
not eliminate the obligation to pay outstanding debts. Calls to
Hess, Kennedy and Campos were not returned. The first item that pops
up in a Google search for Hess Kennedy refers to Hess Kennedy Co.,
an international law firm. Clicking on that reaches Laura Hess &
Associates P.A. Hess and Campos are Florida Bar members, but Kennedy
is not listed as a member of the Florida Bar. The Florida Bar filed
a contempt petition Feb. 11 against Hess with the Florida Supreme
Court, seeking a three-month license suspension. The petition noted
the high court in 2005 "publicly reprimanded Hess and placed her on
probation for three years," but eight new complaints were filed
about her work during the probation period.
In a statement dated Oct. 4
on the Hess Kennedy Web site, the company described itself as a law
firm that "believes that integrity, honesty and values play a major
role in the culture of a company." It said customers can "rest easy"
when working with the firm.
Florida Attorney General
Bill McCollum hasn't been resting. His office filed a civil suit
Feb. 21, claiming Hess Kennedy and its affiliates have bilked
thousands of consumers by promising to reduce or eliminate
out-of-control credit card or other debts for a fee. Fees appear to
vary, according to several online complaints that customers posted
about problems they had with the company. A Rhode Island man said
Hess Kennedy charged him $700 but paid none of his credit card bills
and his "credit rating has been destroyed by these people." A
Minnesota woman claimed she was charged $500 for credit counseling
and was referred to Hess Kennedy about getting a refund but
concluded it was "a bunch of ripoffs." The North Carolina attorney
general's office has filed a suit with allegations similar to the
Chase action. The Better Business Bureau of Southeast Florida has
received 140 complaints about the firm and given it a failing grade.
The West Virginia attorney
general's office obtained an injunction Dec. 14 barring Florida
attorneys employed by Hess Kennedy from settling West Virginia
consumer debts until they comply with a state investigation. The
monthly service fee for debt settlement firms is capped at 2 percent
of consumer payments in West Virginia, where state investigators say
it appears Hess Kennedy has been charging more.
The Chase and state suits
make essentially the same claims. They say Hess Kennedy and the
affiliated Consumer Law Centers in Boca Raton and Delray Beach,
Fla., falsely told customers that their credit card companies had
violated the federal Fair Credit Billing Act. The law firm or the
customers then wrote letters to credit card companies disputing all
charges. In a Feb. 21 news release, McCollum said Hess and related
companies falsely told clients that they "did not have to pay
creditors and creditors could not sue or otherwise take action
against them" once the letters were sent to credit card companies
claiming FCBA violations. Chase's federal court suit said defendants
misled card members into believing they can stop payments on debts
dating back years "until Chase investigates and resolves the
purported 'billing error disputes' to their satisfaction."
"Defendants' conduct is
entirely in bad faith and serves no legitimate purpose," the Chase
suit said. "Defendants' ulterior goals are to extract fees from card
members who should be paying the money to Chase to satisfy their
debts and to maliciously harass Chase in an improper (albeit
unsuccessful) attempt to coerce the elimination of their clients'
legitimate debts."
Jailed
Lawyer Faces More Heat From SEC in $1 Billion Scam
By John Pacenti
Daily Business Review
New York Lawyer
March 4, 2008
FORT LAUDERDALE - Last year attorney Stephen Ziegler got sentenced
to five years and had his law license suspended by the Florida Bar
for his role in a $1 billion viaticals fraud through the now-defunct
Mutual Benefits Corp.
Federal authorities are not
done with him yet, though.
The Securities and Exchange
Commission filed a complaint Feb. 15 against Ziegler and two other
convicted Mutual Benefits officials: Raquel Kohler, the company’s
chief financial officer, and Ameer Khan, former president and
nominee shareholder of related company, Viatical Services.
The complaints aim to bar
the individuals from participating in any type of securities fraud
in the future or face the possibility of criminal contempt of
federal court.
"We only have so many tools
in our quiver and we felt this was an important complement to the
criminal convictions," said Teresa Verges, assistant regional
director in the SEC office in Miami.
The way viatical
settlements work is that life insurance policies for the dying and
elderly are sold at a discount. Investors collect on the difference
between the insurance payout at death and the purchase price.
Mutual Benefits started
failing when people started living longer than the company
projected.
In the end, the company
became nothing but a shell for a Ponzi scheme, according to SEC
investigators, with top company officials living in luxury while
paying off early investors with money that arrived from later
customers who were lured with promises of big returns.
From 1994 to 2004, the
company bilked more than 30,000 investors worldwide of $956 million.
Last year, President Peter
J. Lombardi was sentenced to 20 years in prison. Ziegler, Kohler and
Khan each are serving five-year prison sentences. Lombardi agreed to
pay $1.5 million to the receiver and a $6 million penalty to the
SEC. "Ziegler was a substantial participant in the MBC offering
fraud," the complaint reads. "He served as a primary securities
regulator counsel for MBC."
Ziegler falsified
documentation in connection with the purchase and assignment of
group insurance polices, according to the complaint. He then filed
false reports with the state regulators.
Kohler, according to the
complaint, helped conceal the fraud and wired investor funds to
accounts controlled by MBC's principals. "Kohler also participated
in the preparation and filing of false and misleading information
with state of Florida regulators to conceal the fact that a
convicted felon with a disciplinary history was a controlling
principal of MBC," the complaint reads. Khan tracked policies and
performed post-investment services for MBC and "was well aware of
MBC's misuse of investor funds and helped conceal the fraud,"
according to his complaint. The SEC has said the company really was
run by Leslie and Joel Steinger, whom the SEC permanently barred
from violating securities laws in 1998. According to the SEC, the
Steingers and their relatives were paid $26 million in consulting
fees from MBC.
Now that is what is
happening to Ziegler, Kohler and Khan. Both Kohler and Khan have
agreed to terms with the SEC but Ziegler has yet to consent to
judgment. The SEC is not seeking monetary relief because the
defendants have been ordered to pay millions in restitution by the
U.S. District Court.
"It’s an important message
to send given the roles," said the SEC's Verges. "If they ever
violated securities law again, we can immediately apply to court for
contempt and additional penalties. A judge can refer the matter to
criminal contempt.
"The complaint isn't good
news for Ziegler if he ever wants to practice law again."
Ziegler may reapply to
practice law after his prison sentence is up, said Francine Walker,
spokeswoman for the Florida Bar. "The process is fairly lengthy
where the applicant has to prove rehabilitation under suspension,"
she said. "It's a process and not automatic."
Walker said the new SEC
complaint will find its way into Ziegler's disciplinary file. She
said investigators will determine if additional action is required
against the attorney.
Bookkeeper Who Stole $4 Million
From Brother's NY Law Firm Pleads Guilty
By Vesselin Mitev
New York Law Journal
New York Lawyer
March 3, 2008
Anthony Galasso, the Long
Island bookkeeper who
stole more than $4 million from his
brother's law firm, pleaded guilty last week to 22
charges, including two counts of grand larceny.
In return, Mr. Galasso, was
promised a term of 2 1/2 to 7 1/2 years in prison when he is
sentenced on April 28. Mr. Galasso was arrested in January 2007
after the 22-count indictment was brought by the Nassau County
District Attorney's Office.
His brother, Peter J.
Galasso, a partner in Galasso, Langione & Botter of Garden City,
notified authorities after finding a client's escrow account
depleted.
In court last week before
County Judge George R. Peck, Mr. Galasso admitted using client money
to fund personal expenses, including private jet trips, a luxury car
and tickets to shows and sporting events .
Peter Galasso called the
guilty plea a sign that his brother had "[run] out of options."
The firm has filed
a civil suit against Anthony Galasso and
two of the firm's former banks, claiming the banks
enabled the theft.
Former
In-House Lawyer Avoids Prison in FBI Fraud Case
By Lynne Marek
The National Law Journal
New York Lawyer
February 29, 2008
CHICAGO — A federal court
in Chicago sentenced a former Siemens AG subsidiary attorney to four
years of probation with electronic monitoring for her role in
facilitating a joint venture fraud by the company in 2000 and lying
to the FBI about the matter.
The in-house lawyer, Ellen
Roth, pleaded guilty last year to drafting documents that falsely
represented a Siemens Medical Solutions USA joint venture as being a
minority-owned business eligible to bid for a $49 million Cook
County Hospital contract in Chicago when it was in fact not a
qualified bidder. She ultimately admitted lying to the FBI on the
eve of a trial in the U.S. District Court for the Northern District
of Illinois.
Federal prosecutor Barry
Miller asked U.S. District Judge John W. Darrah at a hearing
yesterday to impose the 60-month prison sentence suggested by
federal sentencing guidelines, telling the judge that the public
attention to the case would be a deterrent to other such conduct.
While Darrah said he agreed
that the case could serve as a deterrent, he rejected the
recommendation for prison time.
Roth's attorney Michael
Monico told the judge that Roth simply hadn't had the strength to
walk away from the fraud because she was the main breadwinner for
her husband and children and the provider of healthcare benefits for
the family. She had led an "unblemished life" up until the incident
and was unlikely to ever appear again as a criminal defendant, he
said. Roth, 62, told the judge that her conduct was "an aberration
a terrible thing" for which she was embarrassed and remorseful.
Monico, a lawyer with
Chicago-based Monico, Pavich & Spevack, was pleased with the
outcome, saying Darrah came to a "fair sentence." Roth must also pay
a $12,500 fine, perform 200 hours of community service and continue
counseling she has been receiving.
"It was in keeping with the
nature of the offense and the defendant's background," Monico said.
Miller declined to comment.
Daniel Desmond, another
Siemens executive involved in the fraud who pleaded guilty to
perjury, was also sentenced to four years probation and a smaller
fine of $10,000.
I llegal Bills:
Lawyer Busted for Counterfeiting
By Amanda Bronstad
New York Lawyer
The National Law Journal
February 27, 2008
LOS ANGELES — Federal immigration authorities have arrested a Los
Angeles attorney, charging him with illegally selling hundreds of
counterfeit Federal Reserve notes, some of which, if real, would
have been worth $500 million.
U.S. Immigration and Customs Enforcement (ICE) agents arrested
Darrell Lee Johnson, 78, of the Law Offices of Darrell Lee Johnson,
who is charged with possessing and attempting to sell fictitious
financial obligations. Johnson has had his license suspended five
times by the State Bar of California for failing to pay his
membership fees and MCLE noncompliance. He also has received two
disciplinary actions, most recently in 2006.
ICE agents allege that Johnson, along with two other people
previously arrested, marketed the fraudulent notes to investors
nationwide. The agents seized 500 fraudulent notes from Johnson's
law office, and from his residence, that had a 1934 issue date and
depicted President William McKinley.
The Bureau of Engraving and Printing's largest denomination
printed for the public was a $100,000 Series 1934 Gold Certificate
with a picture of President Woodrow Wilson. These notes, printed in
1934 and 1935, were used as transactions between Federal Reserve
Banks.
The investigation, which is ongoing, is being prosecuted by the
U.S. Attorney's Office for the Central District of California, with
assistance from the U.S. Secret Service. ICE is the investigative
arm of the Department of Homeland Security.
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NY Lawyer Sees Plea Deal Unravel
After
Swindled Ex-Client Tells Judge He's Being Conned
By Vesselin Mitev
New York Lawyer
New York Law Journal
February 26, 2008
A plea deal that would have sent a disbarred Long Island attorney to
prison for as little as a year is off the table after his former
client last week read a victim impact statement to the sentencing
judge.
Melissa Seganti detailed in her statement how her former lawyer,
Hewlett-based Joseph Levine, swindled her out of a $300,000 personal
injury settlement and pocketed the money to pay off gambling debts.
"Please do not allow Mr. Levine to con you the way he conned me,"
Ms. Seganti asked Nassau County Court John Kase. "I am begging you
to give him the maximum sentence allowed, to not only restore my
faith in the judicial system, but to send Mr. Levine a clear message
that he will not get away with this."
According to Ms. Seganti, of Rockville Centre, she suffered a
"horrific injury" on Jan. 19, 2004, after sheet rock that was
delivered to her home fell on her, causing her to tear the meniscus
in her right knee and break her right wrist. After five surgeries,
she told the court, "I still take medication for pain and suffer on
a daily basis."
Initially, Ms. Seganti retained Mr. Levine's wife, Jennie M.
Dellaria to represent her, as she knew her from a beach club. Ms.
Dellaria told Ms. Seganti she wanted to spend more time with her
child and could no longer represent her, but her husband, Mr.
Levine, would handle the case.
In actuality, Ms. Dellaria had resigned from the bar after the
grievance committee began investigating an allegation that a check
she drew on her attorney trust account was dishonored.
In re Dellaria, 38 AD3d 14 (2nd Dept. 2006).
Ms. Seganti stated she settled her case at mediation for "much less"
than she and Mr. Levine had discussed. Mr. Levine agreed to reduce
his fee to $50,000, instead of the customary one-third of the net
settlement, or $100,000. However, she stated that when she tried to
collect her money, Mr. Levine stalled.
"Every single day it was excuse after excuse, phone call after phone
call, message after message, fax after fax, as to why I still did
not have my proceeds of the check," she said.
"The final story was the IRS had frozen his escrow account and he
was trying to have it reversed but, in the meantime he was going to
take out a second mortgage to pay me my money while this was being
cleared up," said Ms. Seganti, adding that Mr. Levine had actually
faxed her fake mortgage documents and arranged for her to speak with
people who were purported representatives of the lenders.
After hearing Ms. Seganti's statement, Judge Kase, in an unusual
move, pulled the one-to-three year sentence offered by the Nassau
County District Attorney's Office in exchange for his guilty plea
last month.
The judge offered Mr. Levine a three-to-nine year sentence instead,
in the alternative, an opportunity to take back his plea and take
his chances at trial. Mr. Levine faces up to 15 years in prison if
he is convicted of the grand larceny charge to which he pleaded
guilty.
Michael L. Soshnick, Mr. Levine's attorney, said he was surprised at
how "hot" Ms. Seganti was, as she had been reimbursed by the
Lawyers' Fund for Client Protection.
"She got a quarter of a million dollars for her personal injury
claim, so I don't think she did that badly," he said.
While stressing that "no one is ever justified" in stealing someone
else's money, Mr. Soshnick said that Mr. Levine had been warned that
he was being targeted by organized crime because he had not paid his
gambling debts.
"One night FBI agents knock on his door, confirm his identity and
tell him that pursuant to a court-ordered wiretap warrant my
client's name was mentioned and he was perceived to be an intended
murder victim," said Mr. Soshnick, of Mineola.
At that point, Mr. Soshnick said his client decided to steal the
money.
"I think it's obvious that my client is a sick person with a severe
disorder," said Mr. Soshnick of his client's gambling addiction.
Mr. Levine is due back in court today.
Mr. Levine had been suspended for two years from practicing law on
Dec. 3, 2001, after being convicted of conspiracy to commit mail
fraud. He was reinstated on April 15, 2005.
He resigned on April 6, 2007 and was subsequently disbarred on June
26, 2007 after four complaints of professional misconduct, including
the withholding of settlement funds from Ms. Seganti.
In re Levine, 43 A.D.3d 176.
NY Lawyer
Admits Stealing $2.1 Million
By Anthony Lin
New York Law Journal
New York Lawyer
February 15, 2008
A Manhattan lawyer has
pleaded guilty to stealing $2.1 million in client funds from an
escrow account.
Real estate lawyer Ira L.
Berman took money placed in his care as down payments on property
sales and used it for his personal and office expenses.
According to the Manhattan
District Attorney's Office, which announced the guilty plea
yesterday, at least eight people lost money that was placed in
escrow with Mr. Berman for the purposes of consummating property
sales primarily in Manhattan but also in Southampton, N.Y.
Prosecutors said about $3.2
million is missing, though $1.1 million remains in the escrow
account and will be distributed to Mr. Berman's victims.
Mr. Berman, 66, has already
been promised a sentence of three-to-nine years in prison on a
charge of first-degree grand larceny.
NY Lawyer
Accused of Stealing $266,000 From Client
By Daniel Wise
New York Law Journal
New York Lawyer
February 14, 2008
A Westchester attorney was arraigned yesterday on a charge he stole
nearly $266,000 from a client to cover personal debts and funds owed
to others.
The lawyer, Roger Cohen,
69, pleaded not guilty to one count of third-degree grand larceny
and was released on $250,000 bail, according to the Westchester
County District Attorney's Office.
Mr. Cohen was accused of
taking more than $294,000 from the proceeds of a real estate sale
for his client, who owned a real estate investment company. The
proceeds were supposed to have been placed in an Internal Revenue
Services account to be established for the client, whose name was
not released.
When the client demanded
the money's return, Mr. Cohen refunded only $28,671, according to
prosecutors.
NY Lawyer
Loses License for 30 Months
Over "Exorbitant" Fees, Ethical Breaches
By Daniel Wise
New York Law Journal
New York Lawyer
February 4, 2008
A Manhattan divorce lawyer who took nearly $41,000 in fees from an
escrow fund that had been designated for other purposes must be
suspended for 2 1/2 years, the Appellate Division, First Department,
ruled last week.
The panel also found that
the lawyer, Leah Larsen, 68, violated ethical rules by demanding an
"exorbitant" fee not backed by time records and by pressuring her
client to withdraw a complaint about the fee he had made to the
Dutchess County judge handling the divorce.
One judge on the panel,
Justice James M. McGuire (See
Profile), would have disbarred Ms. Larsen. But the
majority, consisting of Justices Richard T. Andrias (See
Profile), David B. Saxe (See
Profile), Eugene Nardelli (See
Profile) and John W. Sweeny Jr. (See
Profile), found the suspension severe enough in view
of Ms. Larsen's previously unblemished 28-year career.
According to the opinion in
Matter of Larsen,
M-5004, Ms. Larsen had told her client, Conrad Tebbetts, that he
could pay her with $40,750 from the proceeds of the sale of the
divorcing couple's home.
Justice James V. Brands had
ordered the money be paid into Mr. Tebbetts' 401(k). Mr. Tebbetts
suggested Ms. Larsen take only about $30,000 for the fee. Ms. Larsen
then sent her client a one-page bill for $168,400, claiming 852
hours of work at $200 an hour without detailing her work, the
decision reported.
When Mr. Tebbetts wrote to
Justice Brands to complain about the bill, Ms. Larsen threatened to
collect the entire $138,000 balance due at an arbitration unless he
withdrew his letter to the judge.
Lawyer's
Bullying Secretary Over Weight Demands
She Exercise Were Likely "Outrageous," Judge Rules
By Thomas B. Scheffey
The Connecticut Law Tribune
New York Lawyer
February 1, 2008
Noted Greenwich, Conn., criminal lawyer Philip Russell's conduct
toward his legal secretary will probably be considered "outrageous"
by the judge or jury hearing her civil trial, concluded Bridgeport,
Conn., Superior Court Judge Richard P. Gilardi, awarding her a
$75,000 pre-trial lien. Megan Lamothe is suing Russell for
intentional infliction of emotional distress.
Russell is currently on leave from his firm, serving a home
confinement sentence for his admitted destruction of a hard drive
containing child pornography while working for a Greenwich church.
The church's music director was implicated. Russell, a former Bronx,
N.Y., assistant district attorney, pled guilty to a single count of
obstruction of justice, and was spared prison time.
Lamothe says Russell warned her at her first job interview that
his law firm was in disarray and that he was a "yeller." Within a
few months "he fulfilled his prophecy," with Lamothe resigning after
the final outburst. During her course of employment, Russell said
she had been a good employee, but harangued the 300-pound woman
about her weight gain. She was diagnosed with uterine cancer in
February 2006.
She had diabetes and testified she was concerned about her
ability to have a child.
Russell told the court "it's none of my business," about her
health problems, but allegedly ordered Lamothe to exercise daily, to
walk from the train station, and, she says, "constantly belittled,
berated and screamed at her in front of her fellow employees," wrote
Gilardi in his Jan. 18 ruling. Russell allegedly told her to "move
her fat ass," called her "fat" and threw objects at or near her.
The alleged incidents of physical contact convinced Gilardi to
issue the pre-judgment remedy. At one time a workman broke a light
fixture in a stairwell and Lamothe called the building's management
to clean up the debris. Upset, Russell allegedly grabbed her arm and
brought her to the basement to get a vacuum cleaner. "When he
couldn't open the basement door because the vacuum was in the way he
pushed the door open, grabbed the vacuum, and threw it down the
stairs, breaking it," Gilardi noted.
He then allegedly took Lamothe nearby to the lobby of the Patriot
National Bank and "in front of the bank tellers and customers yelled
to ask if there was a dust pan or a broom" Lamothe could use, then
made her go get them.
On another occasion, Lamothe says she was outside smoking a
cigarette, and Russell "came up and grabbed the cigarette out of her
mouth and stomped it on the ground. He announced to everyone that
she is '(expletive) sick' and told her that if he ever saw her
smoking again she would be fired," Gilardi recounted. Russell
conceded he might have told Lamothe she was sick because she was
"fat," Gilardi noted, adding, "He said it was not beyond the realm
of possibility that he told plaintiff she was 'retarded.'"
Russell, a former member of the Connecticut Law Tribune's
editorial board, is defended in this case by Lewis H. Chimes of New
Haven, Conn.'s Garrison, Levin-Epstein, Chimes & Richardson.
"I think, given the very low standard for a PJR in Connecticut,
this wasn't a surprise, although I was surprised at the amount,"
Chimes said. "I think once the facts are known, it will be clear
this is a garden variety workplace stress situation. [The tort of]
Intentional infliction of emotional distress has a very high
standard, and 90 percent of claims are not allowed." He added, "I
don't think this case meets this threshold."
Lamothe is represented by the five-lawyer New Milford, Conn.,
firm of Guendelsberger, Collins, Henry & Guendelsberger. Her lawyer,
Rebecca E. Guendelsberger, said her client is currently employed in
a Bridgeport law office. She said the judge, "obviously recognized
that my client was hurt. This is something that no employee should
have to experience, especially someone who works for an attorney."
Disbarred
Lawyer Gets 41-Month
Term for Settling Clients' Cases, Keeping the Cash
By The Associated Press
New York Lawyer
January 18, 2008
A federal judge has
sentenced former Lafayette, La. attorney Mel Credeur to 41 months in
a federal prison and ordered him to pay more than $769,000 in
restitution.
Credeur accepted a plea
agreement last year and pleaded to one count of making false
statements to a bank and one count of forging securities of private
entities. He had been indicted in 2006 on charges that he lied to
banks by asking for extensions on attorney-client lines of credit,
even though he had already settled their cases.
Prior to the plea
agreement, Credeur also faced 23 counts of forging securities of
private entities, stemming from allegations that he settled his
clients' cases without their knowledge and then kept their
settlements by forging their signatures.
According to the plea
agreement, Credeur faced possible fines of more than $1 million and
up to 40 years in prison. U.S. District Judge Richard Haik on
Tuesday sentenced Credeur to 41 months on each count to run
concurrently and five years of supervised release afterward.
Credeur was disbarred in
April 2007, according to a release from the Louisiana Supreme Court.
Lawyer
Who Testified Against Partner for Ripping
Off Clients Is Now Charged With Doing the Same
By The Associated Press
New York Lawyer
January 4, 2008
A Memphis attorney who
testified last year against a partner who stole from clients now
faces accusations that he stole as well.
Phoebe Copeland claims in a
lawsuit that J. Richard Rossie stole more than $346,000 from her
after she granted him power of attorney to handle her estate.
Copeland hopes to block any
settlement between Rossie and Darrelle Miller, another client who is
suing the attorney, claiming Rossie stole more than $1 million from
her.
Rossie's attorney, James
Wilson, could not be reached for comment on Thursday.
Copeland's attorneys argue
that a settlement with Miller would make Rossie insolvent and unable
to pay Copeland.
Chancellor Arnold Goldin
has issued a restraining order temporarily preventing Rossie from
distributing any money.
According to a financial
statement, Rossie is worth $3.85 million, but Copeland's attorneys
say much of that is immune from judgment.
Copeland is accusing Rossie
of taking her money by writing at least 42 checks to himself between
August 2000 and June 2007, using funds from the law firm's escrow
account. He then deposited the money in personal accounts at various
banks, the suit alleges.
Rossie is a former partner
of John Houser Parker who pleaded guilty last year to stealing
nearly $2 million from clients and was sentenced to 22 years in
prison. Rossie testified against Parker at a sentencing hearing.
State prosecutor Steve
Crossnoe would not say whether he is considering criminal charges
against Rossie.
Lawyer
Who Sexually Assaulted Five or More Minors
at Courthouse Sentenced to 25 to 50 Years
By Amaris Elliott-Engel
The Legal Intelligencer
New York Lawyer
December 24, 2007
A former Philadelphia
criminal defense attorney convicted of several sex crimes with
minors, including an estimated five incidents in the Criminal
Justice Center, was sentenced last week to serve 25 to 50 years in
prison.
Larry Charles, 50, was
sentenced Thursday by an out-of-county judge, Berks Common Pleas
Senior Judge Albert A. Stallone, for sex crimes between 1999 and
2007 related to six girls authorities said Charles raped, molested
or groped. Charles pleaded no contest to crimes including rape,
indecent assault and corruption of minors. He received consecutive
sentences for the crimes related to each of the girls, including
seven to 14 years for raping a 5-year-old girl.
The girl was raped
vaginally and anally in both a motel in New Jersey and a bank
deposit room, said Jim Carpenter, the assistant chief of the
Philadelphia District Attorney's Office's family violence and sexual
assault unit. Authorities said Charles sexually abused the girls in
both of his offices in Center City and Southwest Philadelphia, in
the deposit rooms of banks, in the Criminal Justice Center (CJC) and
in motels.
The criminal case against
Charles broke open when sheriff's deputies found him with a
14-year-old girl after engaging in sexual contact with her in a
third-floor attorneys' lounge at the CJC on Martin Luther King Day
2007.
Deputies began searching
for Charles because they found it unusual that he was in the
building on a public holiday with a young girl; Deputy Andrew Ortiz
had to break down the door, and the girl was found cowering inside,
Carpenter said. Charles was found naked.
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