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 Rachel Dollar is an attorney and Certified Mortgage Banker who handles fraud recovery litigation for lenders and secondary market investors nationwide. She is a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar
Mortgage Fraud Blog is co-sponsored by Interthinx the leading provider of fraud services and solutions for the mortgage industry.
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Tuesday, July 01, 2003
Pyramid Trust Accounting Leads to Attorney Arrest
Nassau County District Attorney Denis Dillon today announced the arrest of an attorney and a disbarred attorney for thefts of hundreds of thousands of dollars from clients. Jeffrey Schwartz, 59, of 11 Sturbridge Drive, Dix Hills, was charged with Grand Larceny in the Second Degree, a Class C Felony punishable by up to 15 years in prison.
According to Dillon, ”Schwartz had been disbarred in 1989, but continued to practice law until he was arrested in December of 2002 for Perjury and Offering a False Instrument for Filing. During the time he continued to practice illegally, Schwartz collected funds from clients to be held in escrow for anticipated closing costs on real estate transactions. Although the law requires escrow funds to be kept in non-interest-bearing accounts or IOLAs (Interest on Lawyers Accounts), where any interest goes to the States Lawyers Fund for Client Protection, Schwartz did not do so. Instead he kept the funds in a high yield personal account.
“When a civil action for legal malpractice resulted in a judgment of $198,000 against Schwartz in 1998, the judge in the case ordered that the money be paid from Schwartzs personal account. This resulted in a shortfall of escrow funds to cover his clients closing costs. Rather than replace the clients money with his own, Schwartz proceeded to take on new clients. Robbing Peter to pay Paul, he then used the escrow moneys collected from newer clients to pay the closing costs that were coming due for other clients. However, once Schwartzs practice was terminated upon his arrest in 2002, there were no longer any incoming funds to cover the shortfall. The escrow funds available are $460,000 short of what is needed to reimburse clients.
Schwartz will be arraigned today in First District Court, Hempstead. The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.
 mortgage fraud
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Some Sources require Registration.
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