Sunday, June 05, 2016

Already Facing Charges Of Stealing Nearly $200K From Four Clients, Long Island Lawyer Gets Pinched Again After 13 More Clients Come Forward, Accusing Him Of Swindling $550K From Them

In Garden City, Long Island, Newsday reports:
  • A Garden City attorney already accused of stealing nearly $200,000 in settlement checks meant for four of his clients has been charged with stealing an additional $550,000 from another 13 clients, Nassau County police said [].

    Steven Morelli, 59, of Manhattan, was rearrested [...] and charged with three counts of second-degree grand larceny and 10 counts of third-degree grand larceny, police said.

    Morelli, already scheduled to appear in court on June 27, had previously been conditionally released on his own recognizance after being arrested on March 8, when he was charged with second-degree grand larceny and three counts of third-degree grand larceny.

    Morelli now faces arraignment on the new charges [] in First District Court in Hempstead.

    All told, Morelli is accused of stealing about three-quarters of a million dollars from at least 17 clients.(1)

    The crimes took place between June 2014 and earlier this month, police investigators said [].

    “Mr. Morelli’s scheme was that he would receive settlement in regards to these lawsuits, the money would be placed into his account at the law firm,” Nassau Det. Sgt. Richard Harasym, commanding officer of the Crimes Against Property Squad, said in March. “Evidence we gathered showed that once that money was deposited into the accounts, Mr. Morelli almost automatically withdrew that money and spent it on personal items.”
    Once Morelli found out police were investigating him [on the initial charges], “he made good on the monies owedto three of the [initial] victims, Harasym said, adding that Morelli still owed a fourth victim about $40,000.

    However, police said in March that investigators believed there were additional victims — and, police said Tuesday, there were. It was not immediately clear what happened to the additional $550,000 allegedly stolen or misappropriated by Morelli or if, following his arrest, he made any attempts to reimburse those victims.
Source: Lawyer Steven Morelli arrested in more thefts, cops say.

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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