Wednesday, December 23, 2015

Queens DA Hauls Disbarred Brooklyn Lawyer Into Court, Accusing Him Of Essentially Using Client Trust Account In Mini-Ponzi Scheme; Defendant Allegedly Used Funds Collected On Behalf Of Two Clients In Seperate Home Sales To Satisfy Escrow Obligation On A Home Sale Involving 3rd Client

From the Office of the Queens County, New York District Attorney:
  • Queens District Attorney Richard A. Brown [] announced that a Brooklyn attorney has been charged with stealing thousands of dollars from clients between July and November 2013.

    District Attorney Brown said, “The defendant is alleged to have violated his fiduciary duty by stealing from his clients rather than helping them. In one instance, for example, the defendant is accused of using funds collected on behalf of two of his clients to pay a third client. The defendant has since been disbarred and cannot practice law, but now he must answer for his alleged actions in a court of law.”

    The District Attorney identified the defendant as Ira Seplow, 62, of East 85 Street in Brooklyn. Seplow was arraigned yesterday before Queens Criminal Court Judge Ernest Hart on a complaint charging him with third-degree grand larceny and first-degree scheme to defraud. The defendant was released on his own recognizance and ordered to return to court on January 21, 2016. If convicted, Seplow faces up to seven years in prison.

    District Attorney Brown said that, according to the criminal complaint, Seplow was retained in July 2013 to handle the estate of a client’s aunt, including the sale of her Rockaway Park bungalow on 109 Street. On July 12, 2015, a contract of sale was signed and a ten percent down payment of $15,000 was paid. The funds, which were to be held in escrow for the client, were allegedly deposited into Seplow’s Capital One bank account. At the time of the closing on the bungalow, the client allegedly did not receive the $15,000 down payment being held by Seplow for him.

    It is additionally alleged that Seplow was hired by a Queens couple in August 2013 to sell their Shore Front Parkway condominium in Rockaway, Queens. A contract was signed in August 2013 and a ten percent down payment of $39,200 was allegedly paid by the prospective owner and deposited in Seplow’s account on August 14, 2013, to be held in escrow for his clients. It is further alleged that the clients were given a check for $35,750 and told by Seplow not to deposit the check for several days.

    When the clients did deposit the check it was returned for insufficient funds by the bank. However, on the same day as the closing on the couple’s condominium, Seplow allegedly wrote a check payable to another client in the amount of $35,750 from his account.

    Finally, it is alleged that this client was owed $51,500 in escrow funds being held by Seplow and which he obtained as a ten percent deposit from the buyers of her Queens home. Seplow allegedly paid her $50,750 in August 2013; $35,750 of which allegedly came from the down payment for the Queens couple’s condo and $15,000 from the sale of bungalow belonging to other client’s aunt.
Source: Attorney Charged With Stealing Thousands Of Dollars From Clients (Defendant, Since Disbarred, Faces Seven Years in Prison If Convicted).
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(1) Clients found to have been victimized by a theft by a New York attorney 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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