Alexander Kaplan, Esq., Sentenced To 46 months In Prison For Mortgage Fraud Scheme

Real Estate Lawyer Sentenced in Manhattan Federal Court to 46 Months in Prison for His Role in a Multimillion-Dollar Mortgage Fraud Scheme

U.S. Attorney’s Office June 21, 2011
* Southern District of New York (212) 637-2600

Press Release

PREET BHARARA, the United States Attorney for the Southern District of New York (pictured above), announced that ALEXANDER KAPLAN, formerly a Brooklyn-based real estate lawyer and the owner of a title insurance company, was sentenced on Friday, June 17, 2011, in Manhattan federal court to 46 months in prison by United States District Judge RICHARD J. HOLWELL for his role in a multimillion dollar mortgage fraud scheme. KAPLAN was convicted, on February 6, 2009, of eighteen counts of mortgage fraud after a two-week jury trial.

According to the evidence presented at trial and statements made in court:

From late 2004 through January 2007, KAPLAN and his coconspirators obtained hundreds of mortgage and home equity loans by submitting loan applications and supporting documents to various lenders that contained false information about, among other things, the prospective borrower’s employment, income, and intent to reside in the property in question, as well as the fair market value of the property.

The fraud also involved paying individuals who fit a certain financial profile to act as phony purchasers, or “straw buyers,” of the target properties. KAPLAN’s co-conspirators then prepared and submitted false and misleading information concerning the straw buyers’ current residences, employment, income, assets, and existing debt. False documentation, such as bank statements and proof of income, were also created and submitted to the lenders.
In addition, KAPLAN and his co-conspirators sought mortgages and home equity loans at values that were in excess of properties’ actual sale prices and, therefore, the properties’ true market values. To support applications for loans in excess of the properties’ market values, they procured artificially inflated appraisals of the market value of the target properties. Using these false appraisals, KAPLAN’s co-conspirators received mortgages and other loans in excess of the actual sale price of the properties securing the loans. The difference between the appraised value of the property and the property’s actual sale price represented, in part, the profits from the scheme.

KAPLAN’s role in the scheme largely centered on the purchase of a block of ten rent-regulated condominium apartments at 243 West 98 Street, on the Upper West Side of Manhattan th (“the Apartments“). Over the course of two separate days in January 2006, KAPLAN served as the attorney for the buyers and the banks in the closings of the Apartments. He conspired with others to obtain mortgages, based on false statements and material omissions, to finance 100 percent of the purchase price of the Apartments.

In his capacity as the buyers’ attorney and bank attorney, KAPLAN presided over the closings, and obtained signed and completed false documents, including, among other things, loan application documents, on which each of the buyers indicated that the Apartment was to be a “primary residence,” and false affidavits stating that the buyers intended to occupy the Apartments. He submitted these fraudulent documents to the lenders.

Almost all of the Apartments were then resold, or “flipped,” to straw-buyers within a matter of months after their initial purchases. The purported sales prices for each of the flips was almost twice the initial purchase price, and KAPLAN’s co-conspirators obtained almost $13 million in additional loans on the Apartments by submitting false information and documents to various lenders. KAPLAN served as both the buyer’s and seller’s attorney for each of these flips, drafting sham contracts of sale and other necessary documentation. He also served as the attorney for the banks at the closings of certain loans obtained in connection with the flips of the Apartments.

In addition to the prison term, Judge HOLWELL sentenced KAPLAN, 36, of Brooklyn, New York, to three years of supervised release.

Mr. BHARARA praised the efforts of the Federal Bureau of Investigation, the New York City Police Department, and the United States Bureau of Immigration and Customs Enforcement. He also thanked the New York State Attorney General’s Office for its outstanding work in the investigation.

This case is being prosecuted by the Office’s Organized Crime Unit. Assistant United States Attorneys AVI WEITZMAN and KATHERINE R. GOLDSTEIN are in charge of the prosecution.

Mortgage Fraud: 02-09-09 Alexander Kaplan, Guilty

Posted on February 9, 2009
by alaskakid
LINK

LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, announced that attorney ALEXANDER KAPLAN was found guilty today of participating in a multimillion-dollar mortgage fraud scheme. KAPLAN was found guilty, after a two-week jury trial in Manhattan federal court, on all eighteen counts in the Indictment against him. According to the evidence at trial, statements made in open court, and the Indictment:

From late 2004 through January 2007, KAPLAN and his coconspirators, using phony purchasers, or “straw buyers,” obtained hundreds of mortgage and home equity loans by submitting to various lenders loan applications and supporting documents that contained false information about, among other things, the prospective borrower’s employment, income and assets, and intent to reside in the property in question, as well as the fair market value of the property.

In addition, KAPLAN and his co-conspirators, using artificially inflated appraisals, sought and obtained mortgages and home equity loans at values that were in excess of properties’ actual sale prices and, thus, the properties’ true market values. The difference between the appraised value and actual sale price of the property represented, in the part, the profits from the scheme.

KAPLAN participated in the scheme by acting as a lawyer for the straw buyers and providing misleading and false information to the lenders. As shown at trial, concerning a block of ten rent-regulated condominium apartments at 243 West 98 th Street, on the Upper West Side of Manhattan (“the Apartments”), KAPLAN served as the attorney for the buyers and the banks in the closings of sales of the Apartments, supported by 100% financing. None of the documents submitted to the lenders in these transactions disclosed that: (1) certain buyers were seeking loans to purchase more than one Apartment as a “primary residence;” (2) each of the Apartments was already occupied by a tenant, and therefore not suitable for a primary residence; or (3) the Apartments were subject to rent regulation laws that precluded the buyer from charging the reported rents.

KAPLAN presided over the closings, and obtained for submission to the lender signed and completed false documents, including, among other things, loan application documents, on which each of the buyers indicated that the Apartment was to be a “primary residence,” and false affidavits stating that the buyers intended to occupy the Apartments.

Almost all of the Apartments were then resold, or “flipped,” to straw buyers within a matter of months. The purported sales prices for each of the flips was almost twice the initial purchase price, and KAPLAN’s co-conspirators obtained almost $13 million in additional loans on the Apartments by submitting false information and documents to the lenders.

KAPLAN served as both the buyer’s and seller’s attorney in connection with the flip transactions, drafting sham contracts of sale and other documentation. KAPLAN also served as the attorney for the banks in connection with certain of the flip transactions, and distributed a portion of the loan proceeds to his co-conspirators.

KAPLAN, of Brooklyn, New York, was found guilty of one count of conspiracy to commit bank, wire, and mail fraud; six counts of bank fraud; eight counts of wire fraud; and three counts of mail fraud. The conspiracy count carries a maximum prison sentence of 30 years and a fine of $1 million or twice the gross gain or loss resulting from the offense. Each of the substantive bank, wire, and mail fraud counts carries a maximum prison sentence of 30 years and a fine of $1 million or twice the gross gain or loss resulting from the offense.

KAPLAN is scheduled to be sentenced by United States District Judge RICHARD J. HOLWELL on May 1, 2009.

Of the 26 other defendants originally charged with KAPLAN in United States v. Aleksander Lipkin, et al., 25 have pleaded guilty. The case against JOHN CIAFALO remains pending.

Mr. DASSIN praised the investigative work of the Federal Bureau of Investigation, New York City Police Department, and Department of Homeland Security’s U.S. Immigration and Customs Enforcement.

Assistant United States Attorneys JONATHAN B. NEW, KATHERINE R. GOLDSTEIN, and AVI WEITZMAN are in charge of the prosecution.

The charges and allegations contained in the Indictment against CIAFALO are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

N.Y. Attorney Convicted of Mortgage Fraud
Mark Hamblett All Articles
New York Law Journal
February 09, 2009

The bogus world of a Brooklyn, N.Y., attorney who built a profitable business on title insurance while earning high fees on real estate closings came crashing down on Friday as a federal jury convicted him in a subprime mortgage scam.

Alexander M. Kaplan, 34, of Lerner & Kaplan, sat stoically at the defense table while a jury of 10 women and two men pronounced him guilty on all 18 counts in an indictment charging him with conspiracy and bank, mail and wire fraud.

Kaplan, who testified in his own defense, is scheduled to be sentenced May 1 by Southern District Judge Richard Holwell.

The verdict was a victory for Assistant U.S. Attorneys Avi Weitzman and Jonathan New, who persuaded the jury that Kaplan played a pivotal role in a wide-ranging conspiracy that ripped off lenders of millions of dollars.

Kaplan's role, they proved, was to keep lenders in the dark by representing the bank, the buyer and the seller in transactions where mortgage brokers, particularly lead actor Alexander Lipkin, would use the identities of innocent straw buyers to obtain huge loans on properties. Sometimes, they would flip the properties within weeks using even more phony documents.

Weitzman told the jury during summations in the two-week trial that Kaplan was "a liar and fraudster," who "engaged in a massive fraud that was perpetrated by all these people.

"He did so by telling lies to banks over and over again. He lied about who the real purchasers were and he lied about the amount of money he disbursed from the loan proceeds," Weitzman said. "His lies were all intended to protect his criminal partners and to make sure the real estate transactions looked legitimate."

Kaplan was one of 27 people indicted in the conspiracy. All of the other defendants except one have pleaded guilty, including Lipkin who admitted to guilt in two schemes in June 2008. He has yet to be sentenced.

The first was part of a foreclosure "rescue scheme" whereby Lipkin induced distressed homeowners to transfer the deeds in their homes to straw buyers who would supposedly "save" their homes and promise to return the deed to the homeowners.

In the end, Lipkin and his cohorts, using the straw buyers, would take out millions of dollars in loans on the property. They would then default on those loans, leaving both the banks and the straw buyers damaged.

The second scheme concerned subprime mortgages. Lipkin and others submitted applications for millions of dollars to lenders using fraudulent documents, a scheme that cost the lenders more than $4.5 million.

Kaplan, the prosecutors said, was one of several dirty lawyers who helped facilitate these plots, including the signature scam in the indictment: the purchase of a block of apartments at 243 West 98th Street in Manhattan where Lipkin and several others, including Kaplan, never disclosed to the bank that the units were occupied and under rent control. Some tenants were paying as little as $393 a month.

Kaplan made between $850 to $1,100 in fees per closing and much more in title fees, Weitzman said, and he made "tens of thousands" in fees on the West 98th Street deal.

AN UPHILL BATTLE

Defense lawyer Diarmuid White of White & White in Manhattan, was faced with an uphill battle. It did not help when his client took the witness stand and was unable to remember key details, claimed paralegals handled a good deal of the work, and conceded he did not file income taxes in 2006 and then blamed his accountant.

White's strategy was to portray Kaplan as an ambitious young attorney who was trying to build a "mill" and who let things get away from him through sloppy business practices and mismanagement.

"No question he did not act as diligently as he should have," White told the jury during opening statements, asking why Kaplan "would risk everything -- his law career, his business, everything, to willingly participate in such a conspiracy?"

Kaplan, admitted to the bar in 1999 after graduating from New York Law School, started with a small firm practicing immigration, matrimonial and real estate law. After working for another real estate firm in Brooklyn, he and partner Garry Lerner, who is his cousin, started their own practice focusing on real estate.

Kaplan got his foot in the door by becoming the closing agent for one bank. He soon became the agent for another six banks and, at the peak of his practice, did closings for as many as 60 banks.

By 2004, he was doing as many as 10 closings a day, employing teams of paralegals to handle most of the transactions.

In the  same building as Lerner & Kaplan on E. 12th Street in Brooklyn, Kaplan built a thriving 10-employee title company, Executive Settlement Services.

"Why send this out? Why not have a title company that I control and all the fees that it generates?" White said to the jury during opening arguments. "Now that's good business, but it's not so good for a lawyer because there is a potential conflict of interest."

There were ethical lapses, he said, and Kaplan "spread himself too thin" because "he couldn't possibly oversee every transaction."

In his summation, White did not mince words, saying Lerner & Kaplan was "run poorly, not well supervised, not managed properly."

"There was too much emphasis on growing the business," he said. "The practice was a mess."

White said that Lipkin, "the ringleader," lied to everyone along the way, the banks, the straw buyers, the other defendants and Kaplan, whom he played for a dummy.

"He was a fool, a total fool," White said. "He was ripe for Lipkin to manipulate and that's what happened. He was duped."

But Weitzman and New convinced the jury that it was impossible for Kaplan to sign off on one document after another on the closings, particularly the West 98th Street property, without knowing, or at least consciously avoiding, the truth.

Weitzman compared Kaplan to the three monkeys who hear no evil, see no evil and speak no evil.

"Essentially, Kaplan's defense is 'I didn't see nothing. I didn't hear nothing,'" he said.

Kaplan faces a potential sentence of upwards of 30 years and a fine of $1 million, but is expected to receive much less under the U.S. Sentencing Guidelines.

Damages For Mental Anguish Arising From Foreseeable Result, A Non-Pecuniary Damage, Should Not Be Barred

Dombrowski v Bulson

2010 NY Slip Op 09625 [79 AD3d 1587]
December 30, 2010
Appellate Division, Fourth Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, February 16, 2011

Thomas E. Dombrowski, Appellant, v Raymond W. Bulson, Respondent.
—[*1] Cantor, Lukasik, Dolce & Panepinto, P.C., Buffalo (Jeremy C. Toth of counsel), for plaintiff-appellant.

Damon Morey LLP, Buffalo (Vincent G. Saccomando of counsel), for defendant-respondent.

Appeal from an order of the Supreme Court, Allegany County (John A. Michalek, J.), entered July 17, 2009 in a legal malpractice action. The order granted the motion of defendant for summary judgment, dismissed the complaint and denied plaintiff's cross motion for summary judgment.

It is hereby ordered that the order so appealed from is unanimously modified on the law by denying the motion in part and reinstating the complaint only insofar as it seeks damages for nonpecuniary loss and as modified the order is affirmed without costs.

Memorandum: In this legal malpractice action, plaintiff alleges that defendant negligently represented him in a criminal action and that, as a result of defendant's negligence, plaintiff was convicted following a jury trial of two felonies and one misdemeanor and was sentenced to a determinate term of incarceration of four years plus a period of postrelease supervision. County Court denied plaintiff's subsequent motion to vacate the judgment of conviction pursuant to CPL 440.10 on the ground of ineffective assistance of counsel, and we denied plaintiff's motion for leave to appeal from the order denying that motion. Plaintiff thereafter commenced a proceeding in Federal District Court seeking a writ of habeas corpus, again contending that he was denied effective assistance of counsel. In granting the petition in that proceeding almost three years later, the Magistrate determined that defense counsel failed to conduct an adequate investigation and failed to conduct a sufficient cross-examination of the complainant, who is plaintiff's daughter, regarding prior inconsistent statements. When the Magistrate issued his ruling, however, plaintiff had been incarcerated for more than five years, and the prosecution declined to retry him. The indictment was thus dismissed. Plaintiff then commenced this legal malpractice action, seeking money damages for his loss of liberty arising from his alleged wrongful incarceration and for lost wages.

Supreme Court granted defendant's motion for summary judgment dismissing the complaint on the ground that plaintiff has no right to recover any money damages. With respect to loss of liberty, the court determined that damages for such nonpecuniary loss are not recoverable in a legal malpractice action and, with respect to lost wages, the court determined that plaintiff was estopped from seeking such damages because he had been deemed disabled by [*2]the Social Security Administration prior to his incarceration and had received disability payments while incarcerated. We conclude that the court erred in determining that plaintiff is not entitled to seek damages for nonpecuniary loss arising from his loss of liberty, and we therefore modify the order accordingly. We further conclude, however, that the court properly granted that part of defendant's motion with respect to damages for lost wages, in view of plaintiff's receipt of disability payments while incarcerated.

"To establish a cause of action to recover damages for legal malpractice, a plaintiff must prove that the defendant attorney failed to exercise 'the ordinary reasonable skill and knowledge commonly possessed by a member of the legal community, and that the attorney's breach of [that] duty proximately caused plaintiff to sustain actual and ascertainable damages' " (Velie v Ellis Law, P.C., 48 AD3d 674, 675 [2008], quoting Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]). It is well settled that nonpecuniary damages are not recoverable in a legal malpractice action involving the negligence of an attorney in a civil matter (see e.g. Wolkstein v Morgenstern, 275 AD2d 635, 637 [2000]; Dirito v Stanley, 203 AD2d 903 [1994]). Here, however, the issue before us is whether that rule should also apply to legal malpractice actions where the underlying matter is criminal rather than civil in nature. The only New York appellate court decision on point is that of the First Department in Wilson v City of New York (294 AD2d 290 [2002]), which held that recovery of nonpecuniary damages is not permitted. In our view, the reasoning of the First Department in Wilson is not persuasive, and we therefore decline to follow the holding in Wilson.

"It is fundamental to our common-law system that one may seek redress for every substantial wrong. 'The best statement of the rule is that a wrong-doer is responsible for the natural and proximate consequences of his [or her] misconduct' " (Battalla v State of New York, 10 NY2d 237, 240 [1961]; see Derby v Prewitt, 12 NY2d 100, 105-106 [1962]). Where emotional or other nonpecuniary loss is a direct result of a defendant's breach of duty, a plaintiff may recover damages for such loss (see generally Martinez v Long Is. Jewish Hillside Med. Ctr., 70 NY2d 697, 699 [1987]; Kennedy v McKesson Co., 58 NY2d 500, 504-506 [1983]). The risk of imprisonment is a direct result of attorney malpractice in a criminal case and, indeed, it is the primary risk involved in most criminal cases. In our view, a cause of action for criminal legal malpractice is analogous to causes of action for false arrest and malicious prosecution, both of which allow recovery for the plaintiff's loss of liberty resulting from the plaintiff's wrongful incarceration (see Strader v Ashley, 61 AD3d 1244 [2009], lv dismissed 13 NY3d 756 [2009]; Lynch v County of Nassau, 278 AD2d 205 [2000]; see generally Britt v Legal Aid Socy., 95 NY2d 443, 448 [2000]). We thus conclude that a plaintiff who establishes that he or she was wrongfully convicted due to the malpractice of his or her attorney in a criminal case may recover compensatory damages for the actual injury sustained, i.e., loss of liberty, and any consequent emotional injuries or other losses directly attributable to his or her imprisonment.

We note in addition that the recent trend in other states with respect to this issue is in favor of allowing recovery for loss of liberty in criminal legal malpractice cases, even in those states that, in conformity with the general rule, do not otherwise allow recovery of nonpecuniary damages in malpractice actions (see e.g. Wagenmann v Adams, 829 F2d 196, 221-222 [1st Cir 1987]; Snyder v Baumecker, 708 F Supp 1451, 1464 [NJ Dist 1989]; Rowell v Holt, 850 So 2d 474 [Fla 2003]; Holliday v Jones, 215 Cal App 3d 102, 118-119, 264 Cal Rptr 448, 458 [1989]). As has been noted, "[w]hen an attorney's negligence causes a client's loss of liberty, courts have been willing to step away from the general rule barring damages for emotional distress. Generally, these cases hold that when an attorney represents a criminal defendant, incarceration is the foreseeable result of negligence. Accordingly, damages for the mental anguish arising from that foreseeable result, a non-pecuniary damage, should not be barred" (Rhoades and Morgan, Recovery for Emotional Distress Damages in Attorney Malpractice Actions, 45 SC L Rev 837, 845 [1994]; see also Barry, Legal Malpractice in Massachusetts: Recent Developments, 78 Mass L Rev 74, 82 [1993] [*3]["Courts in other jurisdictions have frequently held that emotional distress damages are recoverable where the attorney's malpractice results in the client's wrongful deprivation of liberty," noting cases in Massachusetts, New Jersey and California]).

Finally, with respect to plaintiff's remaining contentions, we conclude that the mere fact that the Federal Magistrate in granting his petition for a writ of habeas corpus determined that he was denied effective assistance of counsel does not establish plaintiff's innocence as a matter of law, nor does it have collateral estoppel effect on the issue of causation. Present—Smith, J.P., Peradotto, Lindley, Sconiers and Pine, JJ.

New York State Supreme Court Judge Carol Huff Plays Ball With The NYC Police Pension Fund

Empire Center files appeal in police FOIL case

Kevin Holloran

March 24, 2011
LINK

The New York City Police Pension Fund had no legal basis for refusing last year to release the names of retired police officers in response to a Freedom of Information Law (FOIL) request from the Empire Center, according to an appellate brief filed by the Center this week.

The Empire Center is appealing a December decision by Supreme Court Justice Carol E. Huff of Manhattan, who sided with the Pension Fund in its refusal to comply with the FOIL request. Names and pension benefits of more than 300,000 other retired public employees in New York -- including all retired police from agencies outside New York City -- already have been posted at SeeThroughNY.net, the Empire Center government transparency site.

In a brief filed with the Appellate Division of state Supreme Court, the Empire Center argues:

The singular refusal of the Fund to make public the names of the individual retirees currently receiving pensions makes it impossible for the Empire Center to provide comprehensive comparative data to the public, and frustrates the public's ability to exercise oversight on the use of taxpayer funds. The Fund's refusal violates its statutory duty under FOIL, and defeats FOIL's core purposes of informing the public about the actions of government agencies and the expenditure of taxpayer funds.

The brief says Justice Huff’s decision was “based on a misreading of a law protecting the privacy of the beneficiaries of pensioners - a law that has no bearing on the names of pensioners themselves.”

Download a copy of the Empire Center's appellate brief and record on appeal.

Legal Battle For Public Access Heats Up

January 31, 2011
LINK
CONTACT: Tim Hoefer
(518) 434-3100

The Empire Center for New York State Policy today announced that it is appealing a recent court ruling that would block public release of the names of more than 44,000 retired police officers collecting benefits from the New York City Police Pension Fund.

“The names of public employees and retirees have always been regarded as public information under New York’s FOI law,” noted Tim Hoefer, director of the Albany-based Empire Center. “Because taxpayers foot the bill for the salaries of government workers and retirees, they have a right to know who they are and how much they are paid, just like any private company’s board of directors know who their employees are and how much they are paid. Access to this data also provides a means for scrutinizing spending on a case by case basis, adding a level of accountability previously unknown in government spending.”

Hoefer first requested a list of the names and annual retirement allowances paid to retired police officers in a letter sent to the fund last January. Similar information for members of other New York pension funds -- including the names of thousands of retired state and local police officers from other departments -- already has been posted at SeeThroughNY.net, the Empire Center's government transparency website. SeeThroughNY.net also includes searchable databases of government employee salaries, pork barrel spending and teacher and superintendent contracts.

The Police Pension Fund denied Hoefer’s request, saying it was required to release only a list of individual pension amounts, but not the names of pension recipients. The Empire Center then filed a legal challenge to the Fund’s decision, which was argued in written briefs submitted last fall to state Supreme Court Justice Carol E. Huff of Manhattan.

In an opinion dated December 6 but not filed until December 30, Justice Huff sided with the Police Pension Fund, saying it could provide pension amounts while withholding the names of pension recipients. The Empire Center, represented by attorney David A. Schulz of Manhattan, has appealed the decision to the Appellate Division of the state Supreme Court.

The Empire Center’s initial notice of appeal says Justice Huff “committed errors of fact and law” and that the Pension Fund had “failed to meet its burden of establishing any basis in fact or the law to withhold from the public the names and other requested information about those receiving retirement benefits.”

Pending a decision on the appeal, the Empire Center today posted a complete database of retirement allowances for 44,370 retired New York City police officers, minus the names withheld by the pension fund.

The data show the average pension of New York City police officers who retired in 2009 was $58,563, up 19 percent from the $49,066 average pension of officers retired in 2000. The amounts do not include an additional $12,000 “variable supplement” payment collected by retirees with regular service (non-disability) benefits. Mayor Michael Bloomberg has proposed the elimination of this supplement, also known as the “Christmas bonus” because it is paid in December.

The Empire Center is a project of the Manhattan Institute for Policy Research, one of the nation’s leading non-profit think tanks.

Copies of court papers are available here and here.

The Shady Deals of U.S. Supreme Court Justice Clarence Thomas and His Wife

America must demand Thomas' resignation.

The 'Judicial Insider Trading' of Justice Clarence Thomas and His Wife 'Ginni'
The Brad Blog
LINK

Brad interviews watchdog attorney Kevin Zeese on KPFK...

He had inappropriate sexual entanglements with a number of women and lied about it repeatedly to the American people. Yet nobody --- save for one Colorado law school prof --- seems to be calling for Justice Clarence Thomas' resignation for some reason.

That, even though Thomas, unlike Rep. Anthony Weiner, appears to have actually, and flagrantly, and repeatedly, broken the law.

As we reported in January, Thomas appears to have "knowingly and willfully" filed falsified Financial Disclosure Forms which withheld disclosure of nearly $700,000 his wife received from the rightwing Heritage Foundation for the better part of the last 20 years. Only once it was pointed out publicly this year did Thomas bother to file "self-initiated amendments" to the forms he had signed just above the legal warning in bold and all caps which reads: "NOTE: ANY INDIVIDUAL WHO KNOWINGLY AND WILLFULLY FALSIFIES OR FAILS TO FILE THIS REPORT MAY BE SUBJECT TO CIVIL AND CRIMINAL SANCTIONS (5 U.S.C. app. § 104)"

While there has been little indication that law enforcement is actually investigating the crimes of the U.S. Supreme Court Justice (which, as we pointed out in January, are punishable by up to $50,000 and/or 1 year in jail for each instance of falsification), last Friday when Thomas' Financial Disclosure Form for 2010 [PDF] was released, the matter appears to have gotten shadier still, leading at least one government watchdog organization to describe what Thomas and his wife Virginia "Ginni" Thomas may be been doing as "Judicial Insider Trading."

Connecting the dots, it would seem the couple made huge profits from Thomas' participation and insider knowledge of last year's Citizens United ruling at the U.S. Supreme Court, as we'll show you below.

While Barack Obama's DoJ seems to be looking the other way, there was one person in Congress trying to bring attention to this issue last week with his ConflictedClarence.com website: Rep. Anthony Weiner...

For some reason or another, Weiner has been distracted of late, so I was happy to pick up the ball today and cover the new Thomas disclosures on our radio show on L.A.'s Pacifica Radio affiliate, KPFK today. The audio from the show is below. But here are a few quick details, as promised.

Before posting the timeline, one very important point that hasn't received nearly enough attention: during Thomas' contentious confirmation hearings in 1991, he received a huge boost when an outside organization ran $100,000 worth of television commercials attacking those Senators who were threatening to vote against Thomas' confirmation. That organization? A newly formed group called Citizens United.

Twenty years later, and without either Thomas disclosing it, or anyone in the media connecting the dots, Thomas decided in favor of the group in the now-infamous Citizens United v. FEC case, which has allowed a tsunami of corporate money into our political and electoral system.

It was that decision that allowed corporations to pour virtually unlimited money into 501(c)(4) non-profits that could, in turn, use the money to affect elections with millions of dollars in campaign ads, etc.

Ginni Thomas created one of those 501(c)(4) organizations just after oral arguments were argued before her husband in the Citizens United case, and somehow managed to raise some $550,000 in about two months' time before the end of 2009.

Here, courtesy of Velvet Revolution's ProtectOurElections.org campaign:

Sept 9, 2009: Citizens United argued.
Nov 6, 2009: Virginia Thomas launches her new Liberty Central 501(c)(4) organization, which raises 550K in 2009.
Jan 21, 2010: Citizens United decided.
March 15, 2010: Virginia Thomas announces that Liberty Central would "accept donations from various sources — including corporations — as allowed under campaign finance rules recently loosened by the Supreme Court."
November 14, 2010: Liberty Central announces that Virginia Thomas would be leaving the organization.
November 16, 2010: Liberty Consulting incorporated in the state of Virginia.
February 4, 2011: Politico reports that Virginia Thomas had launched Liberty Consulting.
February 8, 2011: ProtectOurElections.org releases its expose of Liberty Consulting
February 12, 2011: Liberty Consulting website is deleted http://libertyinc.co/
February 23, 2011: ProtectOurElections.org files a formal bar complaint against Clarence Thomas requesting that he be disbarred on various grounds.

Note the date on which Ginni launched her 501(c)(4), Liberty Central, Inc., and note how quickly she was able to raise half a million dollars from it. And that was even before she told the LA Times that the group would "accept donations from various sources — including corporations — as allowed under campaign finance rules recently loosened by the Supreme Court."

Unlike for the past 20 years, Justice Thomas was able to understand the (incredibly simple) Financial Disclosure Form this time around, for 2010, well enough that he was able to list his "Spouse's Non-Investment Income" including "salary and benefits" from both Liberty Central, Inc., and Liberty Consulting, Inc.

Unfortunately, the form doesn't require him to specify how much she received from each, and Liberty Central has extended its deadline for filing its own disclosure forms until August. So, until then, we're just left to speculate as to how much the Thomases made from those ventures, although the Disclosure Form does reveal that the Thomases invested some of their own money to start up Liberty Consulting, Inc. The form indicates that less than $15,000 was invested.

Setting aside the fact that common sense suggests Thomas should have recused himself from the Citizens United decision (which was decided by a 5 to 4 vote), given the $100,000 in ads from that group that benefited him when he was confirmed by the U.S. Senate, Ginni's ability to profit from the decision is raising a lot of questions that should be answered.

Today, VR's ProtectOurElections.org sent another letter [PDF] to the DoJ, including the newly released Financial Disclosure Form, asking the department to investigate a number of additional questions that have been raised by the new disclosures, including:

Was Mrs. Thomas tipped off to the Citizens United decision before it was rendered?

Did Mrs. Thomas launch Liberty Central to take advantage of Citizens United and did she receive any income as a result of Citizens United?

What happened to the $550,000 raised by Mrs. Thomas for Liberty Central (which is listed on its 2009 IRS 990 form)?

Did Mrs. Thomas raise funds for Liberty Central after the Citizens United decision and if so how much and what was it used for?

Is Liberty Consulting engaged in consulting Supreme Court litigants or potential litigants?

Is Liberty Consulting engaged in lobbying and if so is Mrs. Thomas lobbying for litigants before the Supreme Court?

Is Liberty Consulting a legitimate company or a conduit to raise funds for the Thomas family?

[And by way of my own disclosure, since, unlike Thomas, I happen to believe it's the right thing to do, VR is an organization co-founded by The BRAD BLOG.]

All of the above was the topic of discussion with VR/ProtectionOurElection.org's attorney and spokesperson Kevin Zeese this afternoon on my KPFK show, after a few minutes discussing some of the other stories that America hasn't heard about thanks to the ridiculous Anthony Weiner "scandal."

Download MP3, or listen online below [appx. 28 mins]...

And here's a bonus for ya. VR/POE's short video expose of Ginni Thomas' Liberty Consulting --- in which a visit is made to the organization's address at "Suite 302" in Burke, Virginia. The organization's website was removed from the Internet just days after this video was released earlier this year...

Attorney Michael K. Loucks, Prosecutor of Health Care Fraud, Switches Sides

Prosecutor of Health Care Fraud Becomes a Defender of "The Dark Side"

NY Times' Duff Wilson: "Michael K. Loucks was arguably the nation’s most influential prosecutor of health care fraud....But a year and a half ago, Mr. Loucks, a Republican, left the United States attorney’s office in Boston after he was passed over for the top post and President Obama appointed a Democrat. Instead, Mr. Loucks joined Skadden, Arps last July, and has startled former allies by emerging in recent months as zealous a corporate defender as he was a prosecutor, complete with proposals seeking more lenient treatment for the medical companies he once vilified."

From Betsy Combier: Could it be that Mr. Loucks joined up with former Chief Judge of New York State, Judith Kaye, after President Obama didnt appoint him to the top post at the United States attorney’s office in Boston? Maybe our President had something in mind when he 'overlooked' Mr. Loucks so that he could stop attacking health care frauds? Just asking.

Judith Kaye

June 4, 2011
Drug Makers’ Feared Enemy Switches Sides, as Their Lawyer
By DUFF WILSON, NY Times

Michael K. Loucks was arguably the nation’s most influential prosecutor of health care fraud.

He racked up numerous convictions and mega-settlements in nearly a quarter-century, using whistle-blowers and secret grand juries to pressure major pharmaceutical and health companies into ending illegal practices like kickbacks to doctors and misuse of blockbuster drugs.

Once described as a cross between a firebrand preacher and a charismatic litigator, Mr. Loucks burnished a reputation aptly captured in a Fortune magazine headline: “Why Do Drug Companies Fear This Man? Maybe because he’s declared all-out war on cheats in the drug industry.”

But a year and a half ago, Mr. Loucks, a Republican, left the United States attorney’s office in Boston after he was passed over for the top post and President Obama appointed a Democrat. Instead, Mr. Loucks joined Skadden, Arps last July, and has startled former allies by emerging in recent months as zealous a corporate defender as he was a prosecutor, complete with proposals seeking more lenient treatment for the medical companies he once vilified.

In a six-page memo last month to clients in his portfolio, which may include some of the very same corporations he prosecuted repeatedly, Mr. Loucks bemoaned strategies he had embraced.

“The government and the whistle-blower have an advantage,” he wrote, complaining that federal investigators were now using the law unfairly. “While prosecutors often assert the company has engaged in ‘serious’ misconduct, they keep the company in the dark, often for years, as to the specific allegations.”

Those who have known him are quick to recall that his crowning achievement was a $2.3 billion settlement against Pfizer that capped a four-year secret investigation.

“We’re all disappointed that he’s gone over to the dark side because it seemed that he was a good prosecutor,” said Shelley R. Slade, a whistle-blowers’ lawyer in Washington and a former senior counsel for health care fraud at the Justice Department.

“I looked upon it with sadness,” Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, said of Mr. Loucks’ change. “He’s a good and honorable person. He did great work in the Boston office. He’s a good lawyer. It’s just too bad.”

Federal ethics rules prohibited Mr. Loucks from any dealings with the United States attorney’s office in Boston for a year after his resignation, and he can never be involved in cases he investigated directly. But he is not barred from representing clients he once prosecuted on other matters, and his law firm’s roster includes some of the biggest companies he once investigated, including Pfizer, Merck, Schering-Plough, Bristol-Myers Squibb and Medtronic.

He defends his newfound friendship with former foes, and notes that he’s still wearing cowboy boots native to his Oklahoma childhood even though he’s now working in the white-collar division of a prestigious law firm.

“While everyone calls it ‘the other side,’ I’m doing the same thing I’ve always done, which is zealously representing my clients,” he said.

And while he used to call some of those people’s actions “evil,” today he argues that drug and medical device companies are making strides in complying with federal billing, fraud and kickback laws. “They make products that have huge benefits to a number of people,” he said. Skadden, a 2,000-lawyer firm, has made several hires in recent years to amplify its health care practice.

In interviews and a lengthy e-mail exchange, Mr. Loucks said his views on the whistle-blower law had evolved.

The False Claims Act, with its triple damages, has been the government’s most powerful weapon against health care fraud since Congress in 1986 increased the rewards for whistle-blowers. Since then, taxpayers have recovered an estimated $28 billion from medical companies.

As a federal prosecutor in Boston, Mr. Loucks created a health care fraud unit and used the law, as well as the tools of secrecy and surprise, to reap major awards. The unit’s victories are renowned, starting with an $875 million payment in 2001 by TAP Pharmaceuticals. Whistle-blowers shared $95 million in that case, alerting companies and informants to the stakes involved.

For years, Mr. Loucks has argued that whistle-blowers are paid far much in health care fraud cases — bounties up to 30 percent, totaling $650 million in just the last two years, he said. These people would blow the whistle for less, he argued both inside the prosecutor’s office and more recently in a paper titled “the Great American Giveaway.” While that hostility toward what he considers the greed of some whistle-blowers is old news, Mr. Loucks’ views on unsealing their complaints are new.

In his May 12 memo to clients, Mr. Loucks urged some companies to press judges to unseal complaints more quickly. That way, he says, they can learn the scope of complaints sooner, identify witnesses and fight back harder.

“If Mike was still with the Justice Department, he could give you 10 reasons why this is a bad idea,” said Suzanne E. Durrell, a whistle-blowers’ lawyer in Boston who worked with Mr. Loucks when she was chief of the civil division for the United States attorney in Massachusetts.

Mr. Loucks says more openness would let companies clean up their own acts, even if it meant adverse publicity.

He points to new statistics that he says support his argument. The Justice Department reported to Congress that 885 False Claims Act cases involving health care fraud were pending under seal at the beginning of this year, with only about 200 prosecutors to juggle them. On average, a case was sealed for more than a year, and some much longer.

“That the government doesn’t have adequate resources to handle the cases is not a good cause to keep them under seal,” Mr. Loucks said in an interview, comparing it to a sports game where only one team is allowed to try to score. In these cases, that would now be his former team.

“I knew what I was doing on behalf of the government,” he said. “I don’t know if lawyers on the other side felt they were not able to adequately represent their clients while the case was under seal.”

Nicholas C. Theodorou, chairman of Foley Hoag’s business crimes defense group in Boston, said Mr. Loucks’ argument made sense from a corporate defense standpoint, and possibly would sit well with some federal judges who have questioned why cases remain under seal so long.

For his part, Mr. Loucks uses a baseball reference. Johnny Damon left his beloved Boston Red Sox in late 2005 to sign with “the evil empire, the New York Yankees,” Mr. Loucks said. Both teams won World Series with help from Mr. Damon.

Asked whether the “evil empire” analogy fit the Justice Department or Skadden, Mr. Loucks said, “One man’s evil empire is another’s home team.”

Disbarred: James J. Armenakis

Matter of Armenakis

2011 NY Slip Op 04593
Decided on June 2, 2011
Appellate Division, First Department
LINK
Per Curiam

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on June 2, 2011

SUPREME COURT, APPELLATE DIVISION

First Judicial Department

Peter Tom,Justice Presiding,
David B. Saxe
Karla Moskowitz
Diane T. Renwick
Leland G. DeGrasse,Justices.

[*1]In the Matter of James J. Armenakis (admitted as James John Armenakis), an attorney and counselor-at-law: Departmental Disciplinary Committee for the First Judicial Department, Petitioner, James J. Armenakis, Respondent.

Disciplinary proceedings instituted by the Departmental Disciplinary Committee for the First Judicial Department. Respondent, James J. Armenakis, was admitted to the Bar of the State of New York at a Term of the Appellate Division of the Supreme Court for the First Judicial Department on January 15, 1973.

Jorge Dopico, Chief Counsel, Departmental
Disciplinary Committee, New York
(Raymond Vallejo, of counsel), for petitioner.
Michael A. Gentile, for respondent.
M-889 - April 4, 2011

IN THE MATTER OF JAMES J. ARMENAKIS, A
SUSPENDED ATTORNEY [*2]

PER CURIAM

Respondent James J. Armenakis was admitted to the practice of law in the State of New York by the First Judicial Department on January 15, 1973, under the name James John Armenakis. At all times relevant to this proceeding, respondent has maintained an office for the practice of law within the First Judicial Department.

By order entered December 4, 2008, this Court suspended respondent from the practice of law pursuant to 22 NYCRR 603.4(e)(1)(ii), based upon his admissions under oath and supporting documentation that he had committed professional misconduct that immediately threatened the public interest (Matter of Armenakis, 58 AD3d 222 [2008]). Specifically, respondent admitted that he converted to his own use $735,000 he
was holding in escrow; mismanaged the escrow account which included repeated overdrafts; failed to maintain proper records; deposited personal funds into the escrow account; and failed to supervise a non-attorney in connection with the escrow account.

On October 22, 2010, respondent pleaded guilty in Supreme Court, New York County, to grand larceny in the second degree (Penal Law § 155.40[1]), a class C felony; grand larceny in the third degree (Penal Law § 155.35), a class D felony; offering a false instrument for filing in the first degree (Penal Law § 175.35), a class E felony; and criminal possession of stolen property in the third degree (Penal Law § 165.50), a class D felony. The plea was in full satisfaction of an indictment and superior court information.

During his plea allocution, respondent admitted that he committed grand larceny in the second degree and offered a false instrument for filing in the first degree when, from 1996 through 2008, he failed to pay withholding taxes in relation to his law firm employees which amounted to approximately $90,000 (with penalties and interest it amounted to $200,000) and, he knowingly and falsely understated his tax liability on his 2006 New York State personal income tax return. Respondent further admitted that, as counsel for the seller in a real estate transaction, he deposited into his escrow account a down payment check in the amount of $735,000 and, thereafter, used those funds for personal obligations so that on or about May 2, 2008, the day of the closing, said funds were not turned over. Thus, respondent conceded that by stealing the $735,000, he committed grand larceny in the third degree and knowingly possessed stolen property in the third degree. On November 17, 2010, respondent executed an affidavit of confession of judgment in the amount of $735,000, and was scheduled to enter into an order of restitution. While respondent was scheduled to be sentenced on these convictions on April 20, 2011, we have not been informed as to whether sentence has in fact been imposed.

The Departmental Disciplinary Committee now seeks an order, pursuant to Judiciary Law § 90(4)(b), striking respondent's name from the roll of attorneys on the ground that he was automatically disbarred as a result of his felony convictions, as defined by Judiciary Law § 90(4)(e). Respondent has written this Court stating that he will not be submitting a response to the Committee's motion to strike.

Respondent's conviction of New York felonies constitutes grounds for automatic disbarment under Judiciary Law § 90(4) and his name should be stricken from the rolls (see Matter of Bernstein, 78 AD3d 94 [2010] [automatic disbarment based upon conviction of, inter alia, grand larceny in the second and third degree, and offering a false instrument for filing in the [*3]first degree]; Matter of Cherry, 51 AD3d 119 [2008] [automatic disbarment based upon conviction of grand larceny in the second and third degree]; Matter of Koeppel, 218 AD2d 46 [1995] [automatic disbarment based upon conviction of criminal possession of stolen property in the third degree]). The fact that respondent has not yet been sentenced does not impede the Committee's petition since, for purposes of automatic disbarment, conviction occurs at the time of plea (see Matter of Chilewich, 20 AD3d 109 [2005]; Matter of Sheinbaum, 47 AD3d 49 [2007]).

Accordingly, the Committee's petition should be granted and respondent's name stricken from the roll of attorneys pursuant to Judiciary Law § 90(4)(a) and (b), effective nunc pro tunc to October 22, 2010.

All concur.

Order filed.
(Entered June 2, 2011)

Tom, J.P., Saxe, Moskowitz, Renwick, and DeGrasse, JJ.

Respondent disbarred and his name stricken from the roll of attorneys and counselors-at-law in the State of New York, nunc pro tunc to October 22, 2010. Opinion Per Curiam. All concur.

Disbarred: Marc A. Bernstein

Matter of Bernstein

2010 NY Slip Op 07244 [78 AD3d 94]
October 12, 2010
Per Curiam
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, December 29, 2010

[*1]

In the Matter of Marc A. Bernstein (Admitted as Marc Alan Bernstein), an Attorney, Respondent. Departmental Disciplinary Committee for the First Judicial Department, Petitioner.

First Department, October 12, 2010
APPEARANCES OF COUNSEL

Alan W. Friedberg, Chief Counsel, Departmental Disciplinary Committee, New York City (Eileen J. Shields of counsel), for petitioner.

Arthur L. Aidala, for respondent.
{**78 AD3d at 95} OPINION OF THE COURT

Per Curiam.

Respondent Marc A. Bernstein was admitted to the practice of law in the State of New York by the First Judicial Department on February 8, 1982 under the name Marc Alan Bernstein. At all times relevant herein, respondent has maintained an office for the practice of law within the First Judicial Department.

By order entered April 23, 2009, this Court immediately suspended respondent from the practice of law pursuant to 22 NYCRR 603.4 (e) (1) (i), (ii) and (iii), based upon his failure to cooperate with the lawful demands of the Departmental Disciplinary Committee and his substantial admission under oath that he converted clients' settlement funds to his personal use, and other uncontested evidence of professional misconduct (Matter of Bernstein, 63 AD3d 87 [2009]).

In May and July 2009, respondent was charged in two separate indictments filed in Supreme Court, New York County, with nine counts of grand larceny in the second degree (Penal Law § 155.40 [1]), a class C felony, seven counts of grand larceny in the third degree (Penal Law § 155.35), a class D felony, one count of scheme to defraud in the first degree (Penal Law § 190.65 [1] [a]), and two counts of scheme to defraud in the first degree (Penal Law § 190.65 [1] [b]), both class E felonies, for stealing funds from escrow accounts. In March 2010, respondent was charged in an indictment filed in Supreme Court, New York County, with criminal tax fraud in the second degree (Tax Law § 1805), a class C felony, offering a false instrument for filing in the first degree (Penal Law § 175.35), a class E felony,{**78 AD3d at 96} and three counts of repeated failure to file income and earnings taxes (Tax Law § 1802 [a]), a class E felony.

On April 5, 2010, respondent pleaded guilty to the felony charges in the first two indictments, as adjusted.[FN*] As to the March 2010 indictment, he pleaded guilty to offering a false instrument for filing in the first degree, and two counts of repeatedly failing to file State income tax returns for the years 2003 through 2007.

Specifically, respondent admitted that between 2006 and 2009, he stole settlement and escrow funds from 16 medical malpractice and personal injury clients and a $900,000 deposit he was holding in escrow for a real estate purchaser. He also schemed to defraud approximately 13 additional clients in which he obtained property with a value in excess of $1,000. The total amount of his theft is believed to be approximately $2.2 million. Respondent also admitted that his filed New York State income tax return for 2008 contained material false information and statements by which he understated and underpaid the taxes due on the money he stole by more than $50,000, and that he repeatedly failed to file State personal income tax returns from 2003 through 2007. Respondent was ordered to pay a minimum of $200,000 in restitution by June 3, 2010, his scheduled sentencing date, at which time a restitution hearing was to be held to determine the total amount of restitution to be ordered.

By petition dated May 12, 2010, the Disciplinary Committee seeks an order striking respondent's name from the roll of attorneys pursuant to Judiciary Law § 90 (4) (a) and (b), upon the ground that he was automatically disbarred upon his conviction of a felony as defined by [*2]Judiciary Law § 90 (4) (e) (see Matter of Caro, 46 AD3d 136 [2007]; Matter of Szegda, 42 AD3d 193 [2007]). Respondent's counsel was served with this motion but no response has been submitted.

Respondent's conviction of New York felonies constitutes grounds for automatic disbarment under Judiciary Law § 90 (4) (see Matter of Cherry, 51 AD3d 119 [2008] [automatic disbarment based upon conviction of grand larceny in the second and third degree]; Matter of DeGrasse, 44 AD3d 107 [2007] [automatic disbarment based upon conviction of grand larceny in the second degree]). For the purposes of automatic disbarment, conviction occurs at the time of plea or verdict (Matter of Sheinbaum,{**78 AD3d at 97} 47 AD3d 49 [2007]; Matter of Ramirez, 7 AD3d 52 [2004]). Accordingly, the Committee's motion to strike respondent's name from the roll of attorneys and counselors-at-law, pursuant to Judiciary Law § 90 (4) (b), should be granted, and respondent's name stricken from the roll of attorneys and counselors-at-law, nunc pro tunc to April 5, 2010, the date of his plea.

By separate motion dated May 13, 2010, the Committee requests an order pursuant to 22 NYCRR 603.13 (g) appointing an attorney to inventory respondent's files and to take such action as seems indicated to protect the interests of his clients on the ground that respondent has "stonewalled" every effort to return client files to those from whom he stole settlement funds. The clients need documents from their files to prove how much they are entitled to receive in restitution and to support their claims with the Lawyers' Fund for Client Protection.

The Committee advises that beginning in early 2009, after it sought respondent's interim suspension, and continuing through the fall of 2009, it has received a "steady stream of complaints" from respondent's clients alleging that, not only did he fail to disburse their settlement funds to them but that he completely stopped communicating with them. In March/April 2009, the Committee was contacted by Jordan Hecht, Esq., from whom respondent had subleased an office in the Hecht law firm's suite, reporting that respondent's clients were coming to the office to get their files but he could not release them because the files did not belong to him. By June 2009, Mr. Hecht informed the Committee that respondent had removed his files from the office but left no instructions for contacting him.

During this same time period (March 2009), the District Attorney's Office endeavored to assist the complainants in obtaining their files so they could prove respondent's thefts, and aided them in filing claims with the Lawyers' Fund for Client Protection. According to an affidavit of Assistant District Attorney (ADA) Keith, in September 2009, Judge Carruthers ordered respondent to produce all client files to the District Attorney's Office for return to his former clients, but respondent produced only 15 files. On March 19, 2010, Judge Carruthers ordered respondent to produce an inventory of his files by March 30, 2010, but he has not yet complied. ADA Keith further states that Archive Systems, Inc., has a storage facility in New Jersey at which respondent has placed dozens of boxes of files, yet respondent has not paid for the storage space and Archive's collection department is seeking payment. Based upon her conversation{**78 AD3d at 98} with the representative at Archive, ADA Keith states that "it seems clear that it will take a court appointed receiver or some other mechanism of the courts to get access to the client files locked in the New Jersey storage facility." In addition, respondent's attorney in the criminal proceeding informed ADA Keith that respondent handed over to a successor law firm the few cases and client files he considered viable, ongoing matters and it is unclear if the affected clients were given notice of such transfer. Ms. Keith hopes that a receiver may be able to obtain the proper return of the complainants' [*3]property (their files) which they need for a restitution hearing.

The Committee adds that respondent's files in the storage facility are in danger of being destroyed and respondent's conduct has, in effect, obstructed the remaining clients from accessing their own files. Staff counsel notes that it is in respondent's own interest not to return said files so that his clients cannot prove their losses, thereby reducing the amount of restitution ordered by the court as well as the reimbursement he will owe to the Lawyers' Fund.

Accordingly, the Committee's petition to appoint an attorney pursuant 22 NYCRR 603.13 (g) to inventory the client files of respondent, Marc A. Bernstein, Esq., and to take such action as seems indicated to protect the interests of his clients should be granted.

Gonzalez, P.J., Tom, Andrias, Nardelli and Román, JJ., concur.

Respondent disbarred, and his name stricken from the roll of attorneys and counselors-at-law in the State of New York, nunc pro tunc to April 5, 2010. Receiver appointed, as indicated.

Footnotes

Footnote *: Count six of the July 2009 indictment (3553/09), alleging scheme to defraud in the first degree, was dismissed.

Attorney Arnold E. DiJoseph III of Podlofsky & Orange Simply Didn't File His Client's Papers, No Excuse Given

I'm going to try to expose as many lawyers as I hear about who do not do their jobs, in a new section. Send me cases!!

Thanks,

Betsy Combier

Casali v Cyran

2011 NY Slip Op 03791
Decided on May 3, 2011
Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on May 3, 2011
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT

REINALDO E. RIVERA, J.P.
THOMAS A. DICKERSON
L. PRISCILLA HALL
JEFFREY A. COHEN, JJ.

2009-11669
(Index No. 20640/05)

[*1]Frank Casali, appellant,
v
Daniel J. Cyran, etc., respondent, et al., defendant.

Podlofsky & Orange, LLP (Arnold E. DiJoseph, P.C., New York,
N.Y. [Arnold E. DiJoseph III], of counsel), for appellant.
Vardaro & Helwig, LLP, White Plains, N.Y. (Edward J.
Guardaro, Jr., and Terence S. Reynolds of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for medical malpractice, the plaintiff appeals from an order of the Supreme Court, Nassau County (Feinman, J.), entered October 16, 2009, which denied his motion to vacate an order of the same court entered August 28, 2009, upon his default, granting the motion of the defendant Daniel J. Cyran for summary judgment dismissing the complaint insofar as asserted against that defendant.

ORDERED that the order entered October 16, 2009, is affirmed, with costs.

To vacate his default, the plaintiff was required to demonstrate a reasonable excuse for the default and potentially meritorious opposition to the motion (see CPLR 5015[a]; Legaretta v Ekhstor, 74 AD3d 899; Rivera v Komor, 69 AD3d 833; Nowell v NYU Med. Ctr., 55 AD3d 573). The plaintiff's excuse for failing to oppose the motion of the defendant Daniel J. Cyran for summary judgment dismissing the compaint insofar as asserted against Cyran can only be classified as law office failure. Although the Supreme Court has the discretion to excuse a default resulting from law office failure (see CPLR 2005), here, the plaintiff's attorney, in his affirmation, admitted that there was "no excuse, reasonable or otherwise." Additionally, the plaintiff failed to establish that he had potentially meritorious opposition to the motion (see Bollino v Hitzig, 34 AD3d 711). Accordingly, the Supreme Court properly denied the plaintiff's motion to vacate the prior order granting Cyran's motion for summary judgment dismissing the complaint insofar as asserted against Cyran.

RIVERA, J.P., DICKERSON, HALL and COHEN, JJ., concur.

ENTER:
Matthew G. Kiernan
Clerk of the Court

Surrogate Diana Johnson Decides the Matter of Ralph Besdansky; The Surrogate Court/Public Administrator RICO?

From the Editor Betsy Combier:
While you read the article below, remember that many people believe that there is a RICO going on in the close ties of Surrogate Courts and Public Administrators. As, in my case.

Also, I added the 2009 article by Barbara Ross published in the NY Daily News about the corrupt courts in Brooklyn. Her husband is Robert Tembeckjian, Administrator of the New York State Commission on Judicial Conduct

Further reading:

Judge who bribed party boss retires

How Judges Hide From Justice

Surrogate Finds Evidence Home Officials Influenced Resident's Will

Surrogate Diana Johnson

Daniel Wise, New York Law Journal, 04-15-2011

There is ample evidence that two former administrators of a Brooklyn home for the aged "inserted" themselves into the drafting of an 89-year-old resident's will that named them as his sole beneficiaries, Brooklyn Surrogate Diana A. Johnson  has found.

Surrogate Johnson on Tuesday denied a motion to admit to probate the disputed will of Ralph Besdansky, under which the former administrator and former director of patient care at the Palm Beach Home for Adults in Sheepshead Bay stand to receive bequests of approximately $250,000 each.

That bequest was in addition to large gifts Mr. Besdansky already had made to the administrators.

Surrogate Johnson also questioned whether the lawyer who drafted the will had been too compliant in allowing David J. Blatt, the adult home's administrator, and Tzila Goldberg, its patient-care director, to become too deeply embedded in the process.

The surrogate noted that the lawyer, Alan B. Hertz of Midwood, stated in a deposition that he thought it was important for his client to have a psychiatric examination before going through with the bequests.

"Curiously," Surrogate Johnson wrote in Estate of Ralph Besdansky, 520/2007, Mr. Hertz "permitted and acquiesced in his client being brought by the very individuals who stood to gain by the will to a psychiatrist of their choosing."

Mr. Hertz declined to comment.

Paul F. Millus, who represents the two former Palm Beach officials, said "there was no overreaching whatsoever."

Mr. Besdansky, who had no relatives, "felt a kinship with these folks" and "gladly and willingly decided to help these lovely people out," said Mr. Millus, a partner at Snitow, Kanfer, Holtzer & Millus.

The Brooklyn Public Administrator's Office challenged the will, arguing that it was the product of undue influence on the part of the two home officials. It also claimed that Mr. Besdansky lacked testamentary capacity.

The two officials, whom Mr. Besdansky had named as executors of his will, then moved, after the completion of discovery, for summary judgment requiring the will to be admitted to probate.

Surrogate Johnson denied the motion, finding disputed issues of fact remained concerning both undue influence and testamentary capacity.

Mr. Besdansky, then 89, was admitted to the Palm Beach home in 2003 after he had been discovered sleeping on the front steps of the building where he lived in an apartment alone.

About three weeks later, he called Mr. Hertz seeking advice about financial matters, Surrogate Johnson related.

She also noted that before Mr. Besdansky called the lawyer to set up an appointment, Mr. Hertz had never provided legal services to him and did not know how Mr. Besdansky had gotten his phone number.

Several days later, Ms. Goldberg and the wife of Mr. Blatt took Mr. Besdansky for a psychiatric evaluation and remained with him during the 37-minute exam. Surrogate Johnson wrote that Mr. Hertz had "no problem" that the exam was conducted in their presence.

Surrogate Johnson observed that the report of Saed M. Hashemi, who examined Mr. Besdansky, indicated that the appointment had been arranged by Palm Beach staff rather than Mr. Hertz.

Dr. Hashemi concluded that Mr. Besdansky was capable of "making decisions and managing his money." Mr. Hertz then drafted the will, which was signed on April 26, 2004.

However, the public administrator submitted a report by psychiatrist Robert L. Goldstein, who determined that Mr. Besdansky was suffering from dementia and other disorders, and lacked the capacity "to make, understand, or appreciate the consequences of executing the will" and did not know the nature or extent of the property being disposed of.

During his career as a metal polisher, Mr. Besdansky, who died on Dec. 5, 2006, had managed to salt away approximately $2 million.

Within two months of moving into the home, he gave Mr. Blatt and Ms. Goldberg gifts of $250,000 each. Also, he had added their names to a trust containing $890,000 that the administrators were to share on his death.

That left $500,000 subject to the will.

Only the will bequests were before Surrogate Johnson. In concluding that there was enough evidence to require a trial, she noted that "an inference of undue influence" arises when a person, who is a beneficiary is "involved in drafting the will."

The sole predicate for that finding—that the beneficiary have a confidential relationship with the testator—was "clear" in Mr. Besdansky's situation, she wrote, since there was a "substantial disparity in power" between him and the two officials.

Also, she found that Mr. Besdansky had lived "a very solitary life" and that his $500,000 in gifts to the administrators soon after his arrival at the home constituted a drastic change in a lifetime of frugal habits.

Similarly, she found, there were issues of fact to be resolved regarding Mr. Besdansky's testamentary capacity.

If Surrogate Johnson refuses to admit the will, the funds will go to the state unless relatives appear to claim them. So far no relatives have come forward.

The Brooklyn Public Administrator's Office was represented by Charles G. Fiore of Lewis & Fiore.

Daniel Wise can be contacted at dwise@alm.com.

Estate of Ralph Besdansky, Deceased, 520/2007

Surrogate's Court, Kings County
Trusts and Estates
new york law journal, 04-15-2011

Estate of Ralph Besdansky, Deceased, 520/2007

Surrogate's Court, Kings County
Trusts and Estates
New York law journal, 04-15-2011

Cite as: Estate of Ralph Besdansky, 520/2007, NYLJ 1202489936506, at *1 (Surr., KI, Decided April 12, 2011)
Surrogate Diana A. Johnson
Decided: April 12, 2011
ATTORNEYS
For the Petitioner (movants): Paul F. Millus, Esq., Snitow Kanfer Holtzer & Millus, LLP, New York, N.Y.
For the Objectant: Charles Fiore, Esq., Lewis & Fiore, Esqs. New York, N.Y.

The following papers were considered in deciding this motion for summary judgment:
Papers Numbered
Notice of Motion and Affirmation 1, 2
Affirmation in Opposition 3
Reply Affirmation 4
Exhibits 5

PROBATE PROCEEDING
DECISION AND ORDER

David J. Blatt and Tzila Goldberg ("Petitioners") move for an order granting summary judgment to them dismissing the objections filed by the Public Administrator, and admitting the purported will of Ralph Besdansky ("Decedent") dated April 26, 2004 to probate.

Decedent died on December 5, 2006 at the age of ninety-two. Decedent had been a resident of Palm Beach Home for Adults ("Palm Beach"), an assisted living facility, from September 8, 2003 until his death. Petitioner David J. Blatt is the Administrator of Palm Beach. Petitioner Tzila Goldberg at the time was the Director of Community Relations and Resident Care at Palm Beach. Petitioners are the co-executors of the purported will which bequeaths Decedent's entire estate alleged to be approximately $500,000.00 to them.

On February 26, 2007, Petitioners filed their probate petition. The Public Administrator, who had been cited as a necessary party pursuant to SCPA 1123 2(i)(2), filed his objections on June 11, 2008. The objections are that at the time the purported will was executed Decedent lacked testamentary capacity, and/or that the purported will was the product of undue influence practiced upon Decedent by Petitioners. Preliminary letters testamentary were issued to Petitioners on March 5, 2009. These letters, however, were revoked on November 19, 2009, based on Petitioners' failure to comply with this Court's Order of October 23, 2009, requiring them to file a bond in the sum of $550,000.00. Since that time the Public Administrator has assumed the temporary administration of this Estate.

The motion before the Court was made following extensive discovery. Petitioners' motion is supported by their attorney's affirmation, their affidavits and numerous exhibits which include deposition testimony. The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851 [1985]). Summary judgment in a contested probate proceeding may be granted where the proponent sufficiently establishes a prima facie case for probate, and the contestant fails to raise any genuine issues of fact (Matter of Colverd, 52 AD3d 971 [3d Dept 2008]). The burden of proof on the issue of testamentary capacity rests with the proponent of the will, while the objectant bears the burden on the issue of undue influence.

In September 2003, Decedent, a retired metal polisher, was admitted to Maimonides Medical Center in Brooklyn, New York. Decedent was eighty-nine years of age and had been found sleeping by a neighbor on the front steps of the apartment building wherein he resided alone. During his three-day hospitalization, a social worker at the hospital had called Petitioners to refer Decedent to them. After speaking to Decedent, Petitioners determined he could benefit from and was able to afford a private room at their facility. Upon his discharge from Maimonides Medical Center on or about September 8, 2003, Decedent was admitted to Palm Beach.

Alan B. Hertz, Esq., ("Hertz"), the attorney draftsman of the purported will alleges Decedent contacted him by telephone in late September 2003, wanting to speak to an attorney regarding his financial matters. Hertz does not recall whether anyone else participated in that telephone conservation. He had never provided legal services to the Decedent prior to that time, and did not know how Decedent obtained his phone number. He surmises that Decedent found out about him through "word of mouth", as he had previously been to Palm Beach relating to residents' inquiries concerning living wills, health care proxies and other questions. When he met with Decedent at Palm Beach that September, Hertz claims that, among other things, Decedent wanted to talk about making a will. Hertz had not previously prepared a will for any resident of Palm Beach. In fact he indicated that he has prepared less than ten wills over the past five years. At their initial meeting Hertz advised Decedent to undergo a psychiatric examination. He felt it important because Decedent, "wanted to give all his assets, 50/50 to Tzila Goldberg and David Blatt." (Hertz deposition at 52).

On October 2, 2003, twenty-four days after his admission to Palm Beach, Decedent was taken by Goldberg and Rivkay Blatt, (Blatt's spouse) to the office of Dr. Saed M. Hashemi for a psychiatric examination. The thirty-seven minute examination was conducted in the presence of Goldberg and Rivkay Blatt, who remained throughout the entire psychiatric examination.1 Dr. Hashemi's report dated October 2, 2003, states,"[t]he evaluation was requested by the staff at the Palm Beach regarding clinical decisions involving mental competency." (Petitioners exhibit A). Dr. Hashemi found that, although there was some decline in memory and concentration, there was no noticeable degree of dementia. He concluded that, "[c]linically, the patient [Decedent] is deemed competent of making decisions and managing his funds."

On April 26, 2004, Hertz took his employees Racha Markowitz, Yosef Krauss and Sandra Louman to Palm Beach to serve as witnesses to the purported will. Decedent also signed a typewritten letter notarized that day authorizing several financial institutions to add Petitioners' names to all of his bank accounts, bonds, safety deposit vaults, and other assets giving each a 50 percent ownership interest at the time of his death. On May 2, 2oo4, Decedent executed a Durable Power of Attorney for HSBC Bank USA Transactions in favor of Hertz.

The burden of proving that a decedent possessed testamentary capacity rests on the proponent of the will (Matter of Walker, 80 AD3d 865 [3d Dept 2011]). The proponent must establish, (1) that the decedent understood the nature and consequences of executing a will, (2) that the decedent knew the nature and extent of the property that he or she was disposing of, and (3) that the decedent knew the natural objects of his or her bounty, and his relations with them (Matter of Kumstar, 66 NY2d 691 [1985]). This notwithstanding, until the contrary is established a testator is presumed to be sane and have sufficient mental capacity to make a valid will (Matter of Betz, 63 AD2d 769 [3d Dept 1978]; Matter of Beneway, 272 AD 463 [3d Dept 1947]). This presumption coupled with Dr. Hashemi's report finding Decedent competent to make decisions and manage his funds, constitutes a prima facie showing of Decedent's mental capacity to make a valid will. The burden therefore shifts to objectant to demonstrate a triable issue of fact in this regard.

The Public Administrator offers the report of Dr. Robert L. Goldstein, a board-certified psychiatrist. Dr. Goldstein based upon, inter alia, his viewing of Dr. Hashemi's examination and his review of Dr. Hashemi's report concludes that Decedent suffered from dementia (either of the Alzheimer's Type, or Vascular Dementia), and a severe mood disorder (most likely Major Depressive Disorder). It is his expert medical opinion that Decedent's "mental weakness, significant cognitive deficits, and defective judgment had critically compromised his psychological functioning", and Decedent neither had the mental capacity to make, understand or appreciate the consequences of executing the will, nor did he know or appreciate the nature and extent of the property being disposed of.

The findings of Dr. Goldstein contradict Dr. Hashemi's findings that Decedent did not show evidence of dementia, and was competent to make decisions and manage his funds. The conflicting expert medical opinions regarding Decedent's mental capacity creates a triable issue of fact concerning Decedent's testamentary capacity (Matter of Raskas, 213 AD2d 718 [2d Dept 1995]).

Undue influence is defined as influence that amounts to a moral coercion, which restrains independent action and destroys free agency, or which by insistence cannot be resisted, constraining the individual to do that which is against his/her free will and desire, but which he/she is unable to refuse or too weak to resist (Matter of Caruso, 70 AD3d 937 [2d Dept 2010], citing Matter of Walther, 6 NY2d 49 [1959]).

Undue influence, "can be shown by all the facts and circumstances surrounding the testator, the nature of the will, his family relations, the condition of his health and mind, his dependency upon and subjection to the control of the person supposed to have wielded the influences, the opportunity and disposition of the person to wield it, and the acts and declarations of such person" (Matter of Bach, 133 AD2d 455 [2d Dept 1987]).

In the probate petition Petitioners concede that they were in a confidential relationship with Decedent. However, even without this admission it is clear that a confidential relationship existed between Petitioners and Decedent, as Blatt was the Administrator, and Goldberg the Director of Community Relations and Resident Care at the facility where Decedent resided. Where, as here, there is substantial disparity in power between the parties involved in a transaction, the law may impute the existence of a confidential relationship (Ten Eyck v. Whitbeck, 156 NY 341 [1898]).

Both Petitioners indicate in their depositions that Decedent had revealed the extent of his assets to them. This is not unusual as, "[i]t is inevitable that the aged and infirm, under such circumstances, will become very dependent upon those who tend to their wants, and a high degree of confidentiality will develop under which the aged will reveal to them their closest thoughts and the state of their financial affairs" ( Matter of Burke, 82 AD2d 260 [2d Dept 1981]). As such transactions between them are be scrutinized with extreme vigilance, and clear evidence is required that the transaction was understood, and that there was no fraud, mistake or undue influence (see Matter of Gordon v. Bialystoker Ctr. & Bikur Cholim, 45 NY2d 692 [1978]). While the vast majority of those who care for the aged are honest and dedicated professionals, the relationship is one which unfortunately, "the greedy and the corrupt may find considerable gain" (Matter of Burke, 82 AD2d 260, supra).

It is undisputed that Petitioners each received a "gift" of $250,000.00 from Decedent within several months of his taking up residency at Palm Beach. In fact Decedent had been taken to HSBC bank by Goldberg and Rivkay Blatt to effect the wire transfers and establish the accounts. It is also undisputed that Petitioners received on Decedent's death an additional $447,747.36 each in Totton Trust payments as Decedent had added their names to all of his bank accounts, bonds, safety deposit vaults, and other assets.

Yet by all indications Decedent had been a man of frugal habits, who by being so had amassed assets of approximately two million dollars. Blatt indicates in his affidavit that Decedent had lived a very solitary life for many years before coming to Palm Beach. During Dr. Hashemi's examination, Decedent indicated that his life basically consisted of watching TV and listening to the radio. He stated he was a bachelor because he didn't make enough money. He complained of the cost of his hospital stay at Maimonides Medical Center just the prior month declaring, "they charge a lot of money, I won't go there anymore". Then suddenly a month or so later he gives away $500,000.00 ($250,000.00 each) to two individuals who admittedly never invited him to their home or participated in any other social engagement with him other than speaking to him or doing that which was part of their regular duties at Palm Beach. This drastic change "in decedent's dedication to these lifelong penurious practices" (see Matter of Brandon, 79 AD2d 246 [2d Dept 1981]), clearly constitutes sufficient circumstantial evidence of undue influence to raise a triable issue of fact as to whether Petitioners exerted undue influence over Decedent (see Matter of Katz, 63 AD3d 836 [2d Dept 2009]).

Additionally there is ample evidence of Petitioners' involvement in the drafting of Decedent's will. Hertz claims he wanted Decedent to undergo a psychiatric examination before going forward with any testamentary instruments due to Decedent wanting to give all his assets to Petitioners. But then curiously Hertz permitted and acquiesced in his client being brought by the very individuals who stood to gain by the will to a psychiatrist of their choosing. Dr. Hasemi's report indicates that it was conducted at the request of the staff at Palm Beach, and not that of Hertz. Further, Hertz apparently had no problem with the fact that the examination was conducted in the presence of Goldberg and Rivkay Blatt. Yet it was the finding that Decedent was mentally competent from this psychiatric examination which caused Hertz to go forward and draft the will. By their actions Petitioners inserted and involved themselves in the prerequisite to and basis for Hertz's drafting of the will which bequeathed all of Decedent's assets to them. In so doing it is clear Petitioners have involved themselves in the drafting of Decedent's will. It is well settled that where a beneficiary under a will is in a confidential or fiduciary relationship with the testator, and is involved in the drafting of the will, an inference of undue influence arises placing the burden on the beneficiary to explain the circumstances of the bequest, the adequacy of which is a question for the trier of fact ( Matter of Neenan, 35 AD3d 475 [2d Dept 2006]; Matter of Bertel, NYLJ, April 7, 1994, at 26, col 6 [Sur Ct, New York County]).


Accordingly, as there are clearly issues of fact raised, Petitioners' motion for summary judgment dismissing the objections of the Public Administrator based on mental capacity and undue influence is denied.

This constitutes the decision and order of the Court.

1. The Court's viewing of the examination on the DVD provided to the court shows that one of the women present provided answers to several of Dr. Hashemi's questions directed to Decedent.

Audit reveals shady shenanigans in Brooklyn courts

BY BARBARA ROSS, DAILY NEWS STAFF WRITER, Monday, July 06, 2009
LINK

Brooklyn's scandal-plagued court system gets a new black eye in a scathing audit that found the borough's public administrator's office riddled with "mismanagement and laziness."

The city controller's office uncovered shoddy recordkeeping, suspicious real estate deals and auctions run by a shadowy company that vanished when auditors started asking questions.

"From the time my auditors began this audit, there seemed to be one startling revelation after another with regard to the lack of detail paid to the process of distributing and accounting for the estates of the deceased," Controller William Thompson said.

Surrogate judges in each borough appoint a public administrator to oversee the estates of people who die without wills.

Thompson's auditors found a "culture of mismanagement and laziness" in Brooklyn's public administrator office.

Things were such a mess that Thompson urged all Brooklyn residents to "make out a will as soon as possible" - avoiding the risk of being bilked by the office.

The Fraud and Corruption of Appellate Division First Department Judge Luis Gonzalez

and he will be removed on _____________ or will be interrogated publicly on _________.

Judge Lippman, please fill in the blanks.

Betsy Combier, Editor

Sunday, March 27, 2011

OBJECTIONABLE: Manhattan Justice Luis Gonzalez with ex-wife Vivian Gonzalez, whom he hired as a $65,000-a-year court clerk.

NY Presiding Justice Accused of Lying on Mortgage Docs

Judge out of order
The New York Post by Isabel Vincent and Melissa Klein - March 27, 2011
Link

A Manhattan judge in charge of one of the most prestigious state courts in the country lied on mortgage documents, received property-tax breaks he didn't deserve and made questionable hires that included his ex-wife. Justice Luis Gonzalez, the presiding judge of New York's Appellate Division First Department, simultaneously took advantage of both rent-stabilization rules and home-ownership tax breaks by claiming places in two boroughs as his home, The Post has learned. In 2009, he took out a $510,276 loan on a Brooklyn house, attesting on the mortgage document that the property would be his primary residence. He then got a STAR tax break in 2009, 2010 and 2011 -- a perk that amounted to $4,440 and is supposed to go only for a primary residence. But Gonzalez really resided in a rent-stabilized Grand Concourse apartment in The Bronx, a living situation that is also supposed to be a primary residence. Gonzalez confessed his duplicity to The Post, saying he designated the Brooklyn abode as his main home to get the mortgage. "To be honest with you, I did not think there was anything improper about it," he said. "It sounds super silly, super stupid."

Asked whether the deception was a crime, he said, "If it is, you're talking to someone who is in deep trouble." Jonathan New, a mortgage-fraud expert and former Manhattan federal prosecutor, said it's a federal crime -- fraud -- to lie on a credit application to a federally insured institution or for a federally insured loan. It is punishable by up to 30 years' prison and a maximum $1 million fine. Documents on file with the city show that Gonzalez got the February 2009 loan through now-defunct Union Federal Mortgage Corp. and that the loan was insured by the Federal Housing Administration. Such government-insured loans are available only for a primary residence. Gonzalez has taken out four mortgages on the Williamsburg home since 2004 and paid off three. On the first, for $280,000, he also said he would live in the house, on South Sixth Street. The judge says he lived in the modest two-bedroom house sometime between 2006 or 2007 and 2009, a period in which he borrowed $467,000 in two loans. He said he moved back to The Bronx in January 2009 and was unaware the Brooklyn home had a tax break.

Gonzalez, 65, was promoted from an Appellate Division judge to presiding justice in March 2009 by Gov. David Paterson, becoming the first Latino to hold to the position. As presiding judge, he was required to live in The Bronx or Manhattan. He earns $147,600. Critics say Gonzalez has allowed nepotism to run rampant in the court. Vivian Gonzalez, whom the judge divorced 10 years ago but remains friendly with, was hired in December as a $65,000-a-year court clerk. Gonzalez said there was "no prohibition" against hiring his ex. He said he signed off on recent hirings of court workers' relatives, including his secretary's brother, his executive assistant's nephew and the son of a court officer who used to be his driver. None had state court experience, state payroll records show. But Gonzalez said all were qualified.

Additional reporting by Candice Giove -- melissa.klein@nypost.com

Posted by Corrupt Courts Administrator at 10:00 AM

32 comments:
cant stop laughing said...

Oh, Great! Another dishonest judge in New York. And this fellow is the top job in Manhattan. Can't stop laughing.

March 27, 2011 10:05 AM

IRS said...
Tip Number

124,651

I have a receiver who's appointment is listed on the Part 36 website,

but.. ummm...

there is no mention of the compensation he took...

How come???

March 27, 2011 10:40 AM

Anonymous said...
This post typifies what is wrong with the court system and law practice. Attorneys have been subject to discipline for such conduct. Resulting in ruined careers. Some Judges have been disciplined for such conduct. A Judge was removed as a Judge and eventually disbarred for stealing $1,000.00 from a client when he was a practicing attorney. The resulting discipline and act were ten years apart. Note that Gonzalez based on this article got over $4,000.00 in tax abatements. We need for everyone to be treated equally under the law not unequally based on your status and connection.

March 27, 2011 10:46 AM

Anonymous said...
And pray tell what do his 'ETHICS FORMS' reveal? Want to bet nothing is listed. The impudent OCA, DDC & CJC will give the fraud a free pass. It's the same story - one law for us, the citizens and no law for the rulers! This thing has been living off the tax payers for too long. The 1st Dept. is a den of thieves that been long in jail!

March 27, 2011 10:52 AM

sick to my stomach said...

sad, very sad..what has this world become! Judges, Lawyers, and Prosecutors stealing, lying, covering up crimes all for the MIGHTLY OLD DOLLAR!!!!

March 27, 2011 10:57 AM

Anonymous said...

A couple of those jobs are civil service required jobs..like court clerk, court officer. So where was the bulldog union.... CSEA..... when these nepotistic jobs were handed out without a civil service ranking and selection?

OCA and CSEA work in collusion.... so that the union can get the small pay raises every year they look for..without much trouble or financial payoffs.

One bloated CSEA rep told me in 2005, that CSEA only worried about those little raises because CSEA believes(they have no concrete knowledge) that their members only want CSEA to seek raises exclusively...so all the bad stuff OCA demands, like judges hiring their girlfriends for all the top supervisory titles, unfair hearing practices allowing them to fire anyone..no matter how illegal....stays put in every contract...check it out for yourself.

It is stated like most of what is in those convoluted contracts CSEA PUBLISHES for member reference, in paragraphs that need judicial interpreters to assess...but they can be determined if you study them for weeks or months and then sleep on the thought that CSEA is not your buddy, so the wording will always be OCA friendly!

So CSEA...what do you say about the jobs that this judge handed out as a favor..and also.... where can you locate those illusive civil service laws.

Civil Service told me they don't have them...they exist, but not for publication...try the internet maybe..huh...really?

March 27, 2011 11:42 AM

Sewer Rooter said...

Eric Holder, Scheiderman, Cuomo, Tembeckjian who claims to read newspapers to begin action, where are you? Criminal prosecution and immediate removal from the bench is required; anything less and you each are the bigger evil. Fire the entire nepotistic staff at Appellate Court.

March 27, 2011 11:44 AM

Anonymous said...

Gonzalez and Susan Hernandez are two of the most corrupt individuals in the entire unified court system. There are at least 40 other friends and relatives, not only in the Appellate Division but all over the the Bronx as well. Numerous complaints have been sent to the IG, hopefully this will be the start of something.

March 27, 2011 12:26 PM

Anonymous said...

Isn't this the same Luis Gonzalez who was discussed in recent posts?

Isn't this the same Luis Gonzalez who isn't really a judge but was given the position of "Administrative Judge"?

Let's hope that the investigation doesn't stop with this, but they look into how he got this promotion.

March 27, 2011 12:42 PM

Anonymous said...

If Gonzalez got caught, it's not because he is more corrupt, but either sloppier or crossed the wrong people.

The Second Dept, particularly the 9th JD has them beat. Look at whose in charge at the OCA. That's probably why nothing changes there.

March 27, 2011 12:46 PM

Anonymous said...

The same Luis Gonzalez, and it was because of both sloppiness and arrogance. Both the judge and Susan flaunted these hirings of inept and conceited relatives in the face of everyone. It was only a matter of time before complaints were submitted. Furthermore the ones mentioned are only the tip of the iceberg, his nephew as well as girlfriend were also recently employed in the Appellate Division with high salaries and no prior court experience.

March 27, 2011 12:53 PM

Anonymous said...

re: civil service jobs

fyi, although the jobs maybe civil service, they can be filled without complying with the laws and rules (any surprise).

I think we all know that when dealing with any government agency, if they want to do something, or not do something, there is nothing anyone can do about it.

If there was actual accountability and repercussions for misconduct, there probably wouldn't be a need for this blog.

March 27, 2011 12:55 PM

Anonymous said...

Any job OCA distributes may be in the category that violates civil service rules...wherever those rules are now resting for viewing...but that is why we pay such high union dues...so CSEA..our civil service watchdog, will prevent civil service titled and tested jobs, from going to Judicial family, friends and those many, many girlfriends that the Judges so enjoy on the desk in their offices..yes Appellate judge sitting and now 76...I mean you and your trim!

Where are the comments defending CSEA from the reps... scared because you know I am right and ready with more for you for later.

March 27, 2011 2:14 PM

Anonymous said...

This just SMELLs of a County Wide Credit fiasco. I'm thinking of going to Judge school too.

Q: ...and the answer is ??

A: ahhhhhhh, I dunno, ahhhhh....both are primary residence?

CJC=Can't Just Cheat ?

March 27, 2011 2:24 PM

Anonymous said...

The lowlives from the 1st department that recently retired and are collecting state pensions should be the target of serious criminal investigations.

March 27, 2011 3:01 PM

Anonymous said...

Interesting that some of the retirees from 1st dept had early mafia ties and would brag that all they had to do was "make a phone call" to get things done. Not to mention other vile transgressions.

March 27, 2011 3:04 PM

Anonymous said...

Funny cause all they have to do is look at phone records to connect the dots. It's called investigations 101...elementary!

March 27, 2011 3:11 PM

Anonymous said...

Gonzalez is better than the prior make-believe PJ: one Jonathan Lippman.... why isn't the NY Post looking into Lippman's shady deals?!

March 27, 2011 3:52 PM

Anonymous said...

Gonzalez is a corrupt pervert who fucks anything that walks. Susan Hernandez is a nasty cunt who walk around with such arrogance that her enemy list is a mile long.

March 27, 2011 4:31 PM

fed waiter said...

What a joke. What are the feds waiting for?

March 27, 2011 4:46 PM

Anonymous said...

I'm thinking of going to Judge school too

just make sure you have some extra cash around to pass!

March 27, 2011 5:55 PM

Anonymous said...

I'm thinking of going to Judge school too

just make sure you have some extra cash around to pass!

March 27, 2011 5:55 PM

i like to watch said...

What Speedy Gonzalez should have said was that it was OK for judges and lawyers to be criminals in New York. And the more sex they have the better. And the more they screw people (the little people) all the better. Realize that screwing people doesn't necessarily have anything to do with sex. Ask a shrink, he/she will give you the details.

March 27, 2011 6:18 PM

Anonymous said...

Sun-Ming "Sunny" Sheu came to a "sudden" untimely Death within days of appearing at OCA exposing "Certificated" Supreme Court Judge Joseph Golia for even more significant Financial Disclosure issues.

The FBI in NYC were Fully Aware and one Special Agent warned Sunny to "be careful".

Where is our Federal Govt? Where are real actions and result? Where is the Murder Investigation of Sun-Ming Sheu?

http://www.youtube.com/watch?v=3Tr3QChAy4Y
http://www.youtube.com/watch?v=W9fWFfCgM5Q&feature=related
http://www.youtube.com/watch?v=p80mLeqUbek&feature=related

March 27, 2011 8:08 PM

Anonymous said...

I thought that Senator Sampson was guiding or leading the Feds or something about all this corruption?

Looks like he is out of place in this picture with Governor Andrew Cuomo, Speaker Silver, and Senator Dean Skelos smiling, feeling good, doing a budget, 3 Men still in a Room, NO Talk about Courts and Court Reforms, no talk about Court Corruption, No Changes at All. Same old same old same old. And the beat goes on.

http://blog.timesunion.com/capitol/archives/62063/cuomo-says-budget-is-done/
March 27, 2011 10:05 PM

Anonymous said...

You have to love it! The PJ of the 1st Dept. nailed in a criminal fraud! You can't make this stuff up! Do you think that he used the US Postal Service to facilitate this fraud? Have no fear Luis Gonzalez your friends Milt Williams and the doughboy Leo M will work their magic and all will be fixed - Oh sorry I mean well, yes well! How come old Jonathan Lippman is soooo quiet? Hum Stage right the federal are coming or are they? Time to flush the luv!

March 28, 2011 12:26 AM

Anonymous said...

They forget to add his daughter Nydia Gonzalez & his brother who he also got jobs in brooklyn supreme court...This is nepotism/corruption at its best.

March 28, 2011 12:48 AM

Anonymous said...

The problem with court corruption and the existence of any kind of reform is that the court's only pretend accountability in litigation after the arrests, is another court..Federal Ct..... so now you are fighting judges and lawyers with judges and lawyers...cannot happen in this America we have today.

You also then have Gov. agency going after another Gov. agency, likely all doing the same crimes..not going to happen!

You have the option of the Gov agencies of the FBI, DOJ, CJC ETC. and they are also part of the same game...not interested in busting up what great gig they have going until their retirements.

So what do you have.. a very interesting fact loaded lawsuit stuck in a Gov. judicial entanglement, that is attempting to figure out how to legally twist judicial crimes to benefit OCA's reputation, because the pltf has information and damages that could cause greater exposure and harm to the NY justice syndicate.

So this case continues bending and twisting through the courts, always adjourned 100% by the courts for their failure to comply... with zero repercussions for their circumventing of due process, for multiple years with no end in sight...until maybe the American people, not Gov. agencies who are all completely unheroic....can finally view the truth and demand integrity and the long sought reform!

March 28, 2011 11:49 AM

Anonymous said...

YOUR BEST BET IS TO JUST START SHOOTING!!!!!!!!!!!!!!!!!

ITS GODLY AND APPROVED BY JESUS !!!!!!!!!!!!!!!

WHAT ARE YOU WAITING FOR

THE RADIATIONS COMING ANYWAY !!!!!!!!!!!!!!!!!!!!

DEATH TO TYRANTS

March 28, 2011 12:48 PM

Anonymous said...

Geez, ex-wife's, nephews, brothers, daughters, girlfriends, its like a family reunion everyday at work for Gonzalez and Hernandez

March 28, 2011 6:16 PM

Anonymous said...

How come Barbara Ross (legal writer) at the Daily News hasn't written one word about this hot scandal? Could it be that if she did write something her husband none other than Robert (Mr. Rogers) Tembeckjian would get fired so it's better to "cover" it up. How ofter do you get the PJ of the 1st Dept. caught in the act? Has he left the building yet?

March 28, 2011 11:30 PM
anonymous said...

One can only hopes that he steps down, but judging by his arrogance thats not likely.

March 29, 2011 6:21 AM