Thursday, July 09, 2009

Lawyer Charged With Stealing Escrow Funds

Marc A. Bernstein, 54, New York, New York, a lawyer, was indicted and charged with stealing settlement and escrow monies from his clients. This second indictment charges the defendant with stealing more than $1.5 million from five clients. This follows a previous indictment that was unsealed on May 19, 2009 charging the defendant with stealing $652,600 from 11 medical malpractice and personal injury clients. The total amount the defendant is charged with stealing in both indictments is $2.2 million.

Bernstein of Bernstein & Bernstein, LLP in Manhattan, was arrested on charges of grand larceny and scheme to defraud. The crimes charged in the latest indictment occurred between November 4, 2006 and June 29, 2009.

The investigation leading to the indictment revealed that Bernstein engaged in a scheme to steal from his victims, many of whom were affected by medical malpractice or injury suffered as a result of car accidents. In the typical case, Bernstein negotiated a settlement on behalf of the victim, took control of the incoming settlement money and then stole it. In one instance that has now given rise to charges, Bernstein, acting as an escrow agent, received $900,000 in real estate deposit money on a contract of sale for the purchase of a building in lower Manhattan and stole that money from the intended purchaser of the property.

The investigation further revealed that in many instances the victims named in the second indictment received false stories and promises from Bernstein, or were misled into believing that they could not access the settlement funds awarded to them. In one case, Bernstein deposited $225,000 of settlement checks into his attorney trust account, stole the money intended for the client, and then told this client, a young mother who was suing on behalf of her injured child, that the money was unavailable. In that particular case, Bernstein also failed to complete the settlement process for the client's disabled child, so that the client/mother not only had her share of the settlement monies stolen, but has also been unable to access the separate settlement funds awarded to her child. In another case, Bernstein settled a claim involving negligent care of an elderly woman in a nursing home, and then stole the settlement money from the deceased's two adult children. Bernstein typically used the stolen money to settle personal debts or make payments to other clients whose money he had misappropriated.

Bernstein was admitted to the New York Bar by the First Judicial Department in 1982. He was a named partner in the firm Bernstein & Bernstein, LLP. Following an investigation by the Departmental Disciplinary Committee of the First Judicial Department, Bernstein's license to practice law was suspended. The Supreme Court, Appellate Division, First Department, issued that order of suspension on April 23, 2009.

Bernstein was indicted on four counts of Grand Larceny in the Second Degree, a class C felony, one count of Grand Larceny in the Third Degree, a class D felony, and one count of Scheme to Defraud in the First Degree, a class E felony. A class C felony is punishable by up to 5 to 15 years in prison, a class D felony is punishable by up to 2 1/3 to 7 years in prison, and a class E felony is punishable by up to 1 1/3 to 4 years in prison.

Previously, Bernstein was indicted on five counts of Grand Larceny in the Second Degree, a class C felony, six counts of Grand Larceny in the Third Degree, a class D felony, and two counts of Scheme to Defraud in the First Degree, a class E felony.

Manhattan District Attorney Robert M. Morgenthau made the announcement. The investigation is continuing.

Mr. Morgenthau thanked the Departmental Disciplinary Committee of the First Judicial Department, including Chief Counsel Alan W. Friedberg and Counsel Eileen Shields. He also thanked Detective Michael McGinnis of the Special Frauds Squad of the New York City Police Department.

Assistant District Attorney Leah Keith presented the case to the Grand Jury under the supervision of Special Prosecutions Bureau Chief Thomas Wornom and Deputy Bureau Chiefs Joan Delaney and Judy Salwen. Financial Investigator Greg Waldvogel of the District Attorney's Office assisted in the investigation, under the supervision of Principal Accountant Investigator Michael Vecchio and Frank Puma, Chief of the District Attorney's Financial Crimes Bureau.

mortgage fraud