Sunday, November 15, 2015

Long Island Closing Attorney Charged With Raiding His Trust Account, Glomming Onto $5.7M+ In Property Refinancing Proceeds Belonging To One Family Of Real Estate Investors

From the Office of the Nassau County, New York District Attorney:
  • Acting Nassau County District Attorney Madeline Singas announced [] that a West Hempstead attorney was arrested [] for stealing more than $5.7 million from clients between September 2012 and February 2014.

    David Frankel, 50, surrendered [] to NCDA Detective Investigators and was arraigned before District Court Judge Darlene Harris.

    He was charged with one count of Grand Larceny in the 1st Degree (a B felony) and six counts of Grand Larceny in the 2nd Degree (a C felony). Frankel faces a maximum of 8 1/3 to 25 years in prison if convicted on the top count and bail was set at $300,000 cash or bond. He is due back in court on October 21.

    “This attorney was trusted with more than $5.7 million and he allegedly betrayed that trust by using the money to fund his own investments,” Acting DA Singas said. “Lawyers are duty bound to represent their clients in an ethical manner and I encourage anyone who thinks that they have been defrauded by an attorney to contact our office.”

    Acting DA Singas said that Frankel represented seven realty companies between June 13 and September 12, 2012, with overlapping ownership in eight Brooklyn properties. The properties were refinanced and $5,769,281.17 was placed in escrow into an Interest on Lawyer Account, commonly known as an IOLA account. The companies were held by relatives and the principals were deciding how to distribute the funds.

    Several days after the money was deposited into the account, Frankel began drawing on it and using the money to fund his own unsuccessful investments and to make payments in unrelated real estate transactions. The account, in which other unrelated money was periodically deposited, was drawn down to a balance of $836.81 by February 28, 2014. Frankel was not authorized to use the funds for any purposes other than distributing them as instructed by the principals of the companies.(1)
Source: West Hempstead Real Estate Attorney Arrested for Stealing More Than $5.7 Million from Clients (David Frankel, 50, allegedly stole real estate proceeds to fund his own investments).

(1) Clients found to have been victimized by any attorney trust fund theft may be able to seek some reimbursement for being screwed over by turning to the The Lawyers’ Fund For Client Protection Of the State of New York, which manages and distribute money collected from annual dues paid by members of the state bar to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.

See generally:
  • N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;

    When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),

    Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.
For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

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