Sunday, April 17, 2016

After Already Serving 12 Months In Jail Pre-Sentencing, Long Island Lawyer Gets Six More Months After Admitting Escrow Theft, Use Of Forged Lien Satisfaction To Pilfer Over $1 Million In Real Estate Deals; Clients Victimized In Two Transactions Score Full Recovery Of Over $700K From State Bar's Client Protection Fund Payout

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced that a Roslyn Heights attorney who stole $720,000 held in an escrow account, as well as sold an East Hills property owned in the name of his law firm and pocketed more than $700,000 in proceeds, was sentenced [] to six months in prison and restitution of more than $1.2 million.
    The defendant [attorney Steve Weinstock], who has already served a year in jail, was sentenced [] by Judge Delligatti to six months incarceration, five years’ probation, and restitution in the total amount of $1,227,710.15.

    “The defendant’s greed knew no bounds and he stole from his clients, his law partner, a mortgage company and real estate buyers who were unaware that there was an unpaid mortgage on their property,” DA Singas. “These brazen thefts are particularly troubling because the defendant was in business with his then law partner for more than 10 years. My office will continue to aggressively prosecute any and all instances of professional corruption and I encourage anyone who may have been victimized by an attorney to contact our complaint hotline.”

    DA Singas said that in or about April 2014, Weinstock’s then law partner received a package from the defendant that included a handwritten statement by Weinstock that there was escrow money missing in the amount of $720,000. The note also indicated that Weinstock sold an East Hills property without satisfying an outstanding mortgage loan.

    The activities were done without the knowledge or permission of Weinstock’s then law partner. The case was then referred to the NCDA by the former partner.

    The investigation revealed that Weinstock had taken the $720,000 from an escrow account that constituted separate down payments for two sales of commercial condominium units in New York City.

    In addition to the escrow thefts, evidence revealed that Weinstock’s law firm purchased a property in East Hills in 2008 and then took out a mortgage on the property in 2010. Weinstock, on behalf of the law firm, sold the property in 2013 without paying off the outstanding mortgage.

    The buyers’ lender paid approximately $608,000 directly to Weinstock’s law firm. At the closing, the buyers paid Weinstock approximately $117,000, in addition to the $50,000 down payment paid by the purchasers at the time of contract – for a total of approximately $775,000 in proceeds from the sale.

    A forged Satisfaction of Mortgage was filed in the Nassau County Clerk’s office to conceal an outstanding mortgage loan amount of approximately $485,000 on the property.

    After the closing, Weinstock continued to make payments on the outstanding mortgage loan without notifying the lender or the buyers that a lien on the property had not been satisfied. The balance of the loan at the time the scheme was approximately $483,000. The outstanding loan is not included in the total amount stolen by Weinstock as part of the scheme.

    The funds stolen by Weinstock were used for various personal and professional expenses, including substantial loan repayments, credit card payments and cash withdrawals.

    The clients who were victims of Weinstock’s theft of two down payments are receiving full restitution – in the amount of $370,000 and $350,000 – from the Lawyers’ Fund for Client Protection of the State of New York.(1)

    Anyone who believes they may have been a victim of a crime is encouraged to call the NCDA Tip Line at (516) 571-7755.
Source: Roslyn Heights Attorney Sentenced for Stealing More than $1.4 Million (Steve Weinstock stole money held in an escrow account and failed to pay off an outstanding mortgage loan).

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.[...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(1) The Lawyers’ Fund For Client Protection Of the State of New York manages and distributes 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 New York bar acting as an attorney or a fiduciary.

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.

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.

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