Sunday, May 07, 2017

Long Island Prosecutor: Guilty Lawyer Used Client Trust Account As "Personal Piggy Bank", Siphoning Off $785K+ Held For 22 Unwitting Clients; Sentencing, Automatic Disbarment Remain Pending

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced that an attorney whose office is in Garden City and stole hundreds of thousands of dollars from 22 clients’ settlement funds pleaded guilty today [April 17] to grand larceny charges.

    Steven Morelli, 60, pleaded guilty in front of Acting Supreme Court Justice Helene Gugerty to three counts of Grand Larceny in the Second Degree (a C felony) and five counts of Grand Larceny in the Third Degree (a D felony). The defendant is due back on June 9 for sentencing and faces 2-1/2 years to 7-1/2 years in prison. The defendant agreed to the Court’s issuance of restitution orders of approximately $615,000.00. Additionally, prior to plea, the defendant paid restitution of approximately $170,000.00.(1)

    “Attorneys are entrusted with a special responsibility to act in their clients’ best interests, but instead this defendant treated his clients’ settlement funds as his personal piggy bank,” DA Singas said. “I am grateful to the NCPD and our prosecutors for bringing this defendant to justice and ensuring that he will never practice law again.”

    DA Singas said that from February 2015 through August 2015, the defendant retained and misused settlement checks from four clients totaling $150,000.00. After a joint investigation was conducted by the NCDA and the NCPD Crimes Against Property Squad he was arrested by Nassau County Police detectives for that crime in February 2016.

    The investigation continued after the initial arrest and uncovered 13 more victims, who had approximately $573,000.00 in stolen funds. The defendant was then re-arrested in May 2016 for these crimes. The joint investigation continued after the second arrest and revealed five additional victims and client thefts of approximately $64,000.00. In total, Morelli stole more than $785,000.00 from his clients.

    The defendant used the money for personal purposes and to carry on his law practice. Because of the defendant’s plea to a felony charge he will be automatically disbarred.
Source: Attorney Pleads Guilty to Grand Larceny Charges for Stealing More than $785,000 from Clients (Steven Morelli stole from 22 clients and will be disbarred).
(1) In New York, the Lawyers' Fund for Client Protection was created to provide a source of, at least partial, reimbursement to clients who have suffered monetary losses at the hands of dishonest lawyers licensed and practicing in the state.

According to their website, typical losses reimbursed by the Lawyers' Fund include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions with law clients, and unearned fees paid in advance to lawyers who falsely promise their legal services.

Perhaps the best of all the attorney ripoff reimbursement funds in the U.S. in terms of its payout limits, the Fund places a $400,000 maximum limit, per law client loss, on awards from the Fund, fixed by regulation of the Fund's Trustees. There is no aggregate maximum on awards involving one lawyer.

For similar "attorney ripoff reimbursement funds" that sometimes help cover 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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