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Theft by attorneys nonetheless an issue, even amid pandemic

Not even a pandemic could slow down one of the longest running practices of shady lawyers in New York State: theft.

The Lawyers Fund for Client Protection, a government agency that compensates victims of crooked and extremely negligent attorneys, paid $ 3.4 million to victims whose attorneys stole property trust accounts last year alone. That’s more than 40 percent of the total money the agency has returned according to its latest annual report.

That’s not a shock when you consider the agency has reimbursed victims of real estate trust theft more than $ 81 million since 1982. This is the highest dollar amount of any type of funds returned to customers.

More worryingly, in 2020 the Client Protection Attorney Fund had the lowest number of aggregate claims since 1984. Still, last year – amid the COVID-19 pandemic – he paid more money on property fiduciary theft than the $ 2.2 million distributed to victims in 2019.

“The few attorneys responsible for these losses are causing significant damage to clients and the reputation of the over (338,000) registered attorneys in New York State,” the report said.

Founded in 1981, the fund is the product of $ 60 in fees that lawyers may not even realize they are paying. It’s part of the $ 375 registration fee that lawyers are required to pay in New York every two years. Last year, the fund made 114 payments totaling $ 8.4 million to compensate the victims of 46 former lawyers.

The ongoing looting has resulted in The Lawyers Fund for Client Protection recommending dire ramifications for crooked lawyers.

“Attorneys who steal should be expelled,” said the Fund’s former executive director Timothy J. O’Sullivan, speaking before the National Legal Discipline Commission set up by then Chief Justice Jonathan Lippman to enforce state disciplinary action check for lawyers.

O’Sullivan testified that an automatic banning of attorneys who willfully “convert” (also called “steal”) funds would “send a strong message about the administration of justice in New York State to victims, the public and attorneys.”

This view has not changed under Sullivan’s successor, Michael J. Knight of Bethlehem. The agency’s 2020 report says attorneys who intentionally steal trust funds should be expelled “without questions or excuses”.

The vast majority of real estate escrow theft is in New York City and the Downstate state. However, Albany-based Lawyers Fund for Client Protection has extensive experience in repaying victims of lawyers in the capital region.

Payments to victims can range from just a few hundred dollars to hundreds of thousands of dollars to millions.

The latest report for 2020 showed that the fund paid 1,195 to a client of Troy attorney Philip G. Ackerman. Additional details were not given. In 2019, Ackerman, an attorney since 1993, was expelled from the Appeals Division of the Third Division of the Albany Supreme Court after failing to comply with an appeals panel investigation into complaints from Ackerman clients who said he had neglected their cases.

The agency paid $ 372,748 to a client who was the victim of James M. Russell, a former Fulton County attorney who was expelled in 1995. This came after he pleaded guilty in Westchester County for handling trust funds.

The agency paid $ 400,000 to a client of Paul Richard Karan, a disbarrassed attorney in Manhattan who pleaded guilty to grave theft and fraud in 2018. Karan escaped more than $ 2.6 million from estates and trusts of several families. He then spent the proceeds on mortgage payments, loans, credit card bills, restaurants, trips to Europe, and country club fees.

And the fund paid $ 400,000 to a victim of John Shasanmi, a Delaware attorney who pleaded guilty in 2019 to stealing $ 600,000 from an Upper Manhattan church he represented in a real estate transaction, and that Stole money from an escrow account.

Russell, Karan, and Shasanmi have all been listed as attorneys registered in the Albany Third Judicial District, which includes Albany, Rensselaer, Greene, Columbia, Schoharie, Ulster, and Sullivan counties. Her direct links to Albany were not entirely clear.

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