State Appeals Court Belts NYC Real Estate Attorney w/ Immediate License Suspension, Subject To Possible Disbarment For Allegedly Playing Fast & Loose w/ Client Funds; Among Charges Is Accusation That He Took Out $1.76M Loan While Acting As Own Lawyer, Agent & Title Closer, Then Failed To Record Lien While Secretly Scoring Add'l $500K Mortgage

In New York City, The Real Deal (New York) reports:

• Luigi Rosabianca, a prominent real estate attorney who specializes in representing ultra-high-net-worth foreign buyers, has been suspended from practicing law after a Manhattan court found there was evidence to suggest he mishandled client funds and that he refused to cooperate with an investigation.
  
  The decision to suspend Rosabianca, reached by the Appellate Division First Department on March 12, came after four separate clients complained to the Departmental Disciplinary Committee, which handles attorney misconduct, and Rosabianca failed to respond to any of the allegations.
  
  Most recently, in March 2014, a client claimed that Rosabianca represented him in the sale of his apartment, but Rosabianca failed to promptly remit the sale proceeds and refused to provide accounting records for the disbursement.
  
  The year before, a mortgage company claimed that Rosabianca took out a $1.76 million mortgage while acting as his own attorney, title closer, and agent, but failed to record the mortgage and secretly obtained a separate $500,000 mortgage, forcing them into a subordinate mortgagee position.(1)
  
  In 2011, two complaints against Rosabianca claimed that clients had trouble getting escrow funds back from him. In one case, a client’s $25,000 check bounced due to insufficient funds.(2) In another, Rosabianca took longer than promised to return $8,350. According to the Departmental Disciplinary Committee, the investigation that this complaint spurred revealed that Rosabianca had intentionally converted and misappropriated the client’s funds on multiple occasions.
  
  Rosabianca, founder of law firm Rosabianca & Associates, was featured in a New York Magazine article last summer about foreign buyers of Manhattan real estate. “Sometimes they come in with wires,” Rosabianca told New York of his foreign clients. “Sometimes they come in with suitcases.”
  
  The New York article, published June 29, 2014, describes him as the founder of WIRE International Realty, a brokerage that caters to foreign buyers. On Tuesday, however, Rosabianca told The Real Deal that he is no longer affiliated with WIRE, and has no management or ownership of the firm, though they formerly shared office space. He declined to comment on the court’s decision to suspend him from practicing law.
  
  In an April 2014 press release from WIRE, Rosabianca is identified as a principal and broker of record for the firm, and is quoted as saying, “Over the past few years, WIRE International Realty has experienced great transactional success in the U.S. with Americans and foreign nationals alike.”
  
  A cached version of his LinkedIn page also identifies him as the founder and principal of the firm. Rosabianca said that he and the firm have since parted ways.
  
  Neither Rosabianca & Associates nor WIRE International Realty are specifically mentioned in the Appellate Division’s decision, which focuses on Rosabianca as an individual attorney.
  
  Representatives from the Departmental Disciplinary Committee were not immediately available to comment. Rosabianca is suspended until the committee’s disciplinary proceedings are concluded, at which point it could potentially recommend to the court that he be disbarred.(3)

Source: Top RE lawyer Luigi Rosabianca suspended for mishandling client funds (Attorney insists he is no longer affiliated with WIRE International Realty).

For the court ruling, see Matter Of Rosabianca, 2015 NY Slip Op 2012 (NY App. Div., 1st Dept. March 12, 2015).

(1) From the court ruling:

• In February 2013, an officer with Emigrant Mortgage Company (EMC) filed a complaint with the Committee alleging that in May 2008, respondent obtained a mortgage loan from EMC in the amount of $1.76 million to refinance a prior mortgage. The loan was collateralized by two units of real property, one owned by respondent and the other owned by his parents.
  
  Respondent acted as his own attorney, as counsel for his parents, and as title closer and agent. As title closer and agent, respondent was responsible for recording both of EMC's mortgages for which service he received a portion of the loan funds. EMC alleged that respondent failed to record both mortgages and obtained a $500,000 mortgage against the properties from another lender; as a result, EMC stated, it was forced into the position of a subordinate mortgagee.
  
  Between March and June 2013, the Committee repeatedly requested that respondent submit a written answer to EMC's complaint, but he failed to do so. On October 15, 2013, respondent appeared for a deposition, and during that proceeding, agreed to promptly provide the Committee with a written answer to EMC's complaint. However, he failed to do so.

(2) From the court ruling:

• In November 2011, the Lawyers' Fund for Client Protection (the Fund) notified the Committee that a check for $25,000 drawn against respondent's IOLA account had been dishonored due to insufficient funds. The Committee opened a sua sponte complaint and requested that respondent submit a written explanation as to why the check had been dishonored. The Committee also requested that respondent produce specified escrow account records for the six-month period immediately preceding the check at issue (May to October 2011), which he was required to maintain under the Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.15(d)(1). However, respondent failed to comply with the Committee's request.

(3) The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Lawyers' Fund was established in 1982 to provide reimbursement to law clients who have lost money or property as a result of a New York lawyer's dishonest conduct in the practice of law. The Lawyers' Fund is a remedy for law clients who cannot get reimbursement from the New York lawyer who caused the loss, or from insurance or other sources.

According to the Fund, "typical losses covered include the theft of money from estates of dead clients; escrow funds in real property closing; settlements in personal injury actions; and money embezzled from clients in investment transactions" up to a maximum of $400,000 for each client loss. Clients must apply for reimbursement within two years after they discover their loss.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes Canadian attorney ripoff funds; courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.