A Brother's Thefts, Defamation and Legal Malpractice
Intertwined in this stunning story are one brother stealing millions, attorneys themselves accused of theft, a defamation lawsuit and tragedy to all.
From the NYLJ: "Artful lies, trusting coworkers and lax bank procedures allowed the long-time bookkeeper of a Garden City law firm to loot an escrow account of more than $4.3 million over a two-and-one-half-year period, according to court documents and several interviews with the alleged embezzler's brother - a partner at the firm.
"Until his confession to no less than four members of the firm, there was never a reason presented to be suspicious," said Peter J. Galasso, 51, of Galasso Langione & Botter. "[My brother] had worked for us for almost 15 years, had from all perspectives a close and loving relationship with his two children, an intimate relationship with the members and employees of the firm, and was generously compensated for his services."
The case highlights the reality that law firms, like many businesses, may be vulnerable to theft from even trusted employees. And it draws attention to the obligation of lawyers to protect their clients' funds. Peter Galasso and his partner James Langione signed a Signature Bank escrow agreement listing them as the only authorized signators and prohibiting any cash withdrawals, wire or Internet activity. The account was also not to be linked to any other accounts, and monthly bank statements were to be mailed to the firm's Garden City offices.
However, the firm claims that Anthony Galasso, before depositing the real estate proceeds, destroyed or hid the original application. In its place, he substituted an application adding himself as a signator and forged the two partners' names.
The firm's lawsuit and the indictment claim that Anthony Galasso then siphoned money from the account. According to a press release from Ms. Rice, Mr. Galasso spent the money on private jets to Atlantic City and other casinos, on payments for a 2007 Mercedes Benz E350, and on a $16,000 stay for his family at the Ritz Carlton Hotel in New York City. Ms. Rice said Mr. Galasso also used the funds to purchase more than $200,000 worth of concert and sporting event tickets, paid his son's tuition at New York University Law School, made extensive improvements to his West Babylon home, and took his family on a Disney World vacation.
The firm claims that he was able to get the money even though Signature account manager Stephen Reinhardt knew that Anthony Galasso was not an attorney or a fiduciary.
"He was able to hide his secretive machinations by diverting bank mail to a post-office box, and then giving us fabricated, authentic-looking bank statements," Peter Galasso said, adding that the firm forwarded the statements to the client, as the accruing interest seemed to be in order with what the money would have been earning. "We would look at the statements and it seemed in line with what the interest was. He was pretty diabolical."
Read on:
Mr. Liotti said that at least some of the responsibility for the lost funds lays with principals of the firm.
"If I had that much money in an escrow account, I'd be watching it very closely, like every second," said Mr. Liotti. "The lawyers can't delegate that responsibility to anyone else."
Mr. Liotti added: "I don't care if it is your brother, you have to take a look at the accounts . . . I think a full and fair investigation is in order."
Galasso Langione has also hit Mr. Liotti with a $2 million defamation suit for the following statement that appeared in the Oct. 25 Newsday:
Anthony didn't do anything that he was not instructed to do by his superiors. Whatever he did, he did with their full knowledge and consent. Dipping into company accounts was a common practice among attorneys there. Is the Galasso firm going to say they never went to a concert or sporting event using this money? I think that's something that should be addressed.
Mr. Liotti refused to comment on the lawsuit against him.