Sunday, May 14, 2017

Long Island Closing Attorney Gets 3 To 9 Years For Filching Over $5.7 Million In Mortgage Refinancing Proceeds From Landlord Group Involving 8 Brooklyn Properties

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Madeline Singas announced that a West Hempstead attorney was sentenced today [April 24] to three to nine years in prison and ordered to pay restitution for stealing more than $5.7 million from clients between September 2012 and February 2014.

    David Frankel, 52, pleaded guilty on January 10 before Acting Supreme Court Justice Helene Gugerty to Grand Larceny in the 1st Degree (a B felony).

    Within days of receiving $5.7 million of his clients’ money to hold in escrow, this unscrupulous lawyer began stealing the funds, spending nearly all of it for his own personal purposes,” DA Singas said. “Thanks to our prosecutors and investigators this defendant will now go to prison and be forced to return the money to his former clients.”

    DA Singas said that Frankel represented seven realty companies between June 13, 2012 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)

    The NCDA was alerted to the allegations and an investigation was opened in December 2015. The defendant was disbarred in October 2015.

    Assistant District Attorney Peter Mancuso of DA Singas’ Government and Consumer Frauds Bureau is prosecuting the case.
Source: West Hempstead Attorney Sentenced to 3 - 9 Years for Stealing More Than $5.7 Million from Clients (David Frankel, 52, stole real estate proceeds to fund his own investments).
(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.