Supreme Court, Nassau County answered yes to the question. This tragic story pits brother against brother, with the innocent and the guilty tormented alike.
From the decision in Galasso, Langione, & Botter, LLP v Galasso 2016 NY Slip Op 51308(U)
Decided on September 19, 2016 Supreme Court, Nassau County DeStefano, J.:
“In 1993, the Firm hired Peter’s brother, Anthony Galasso (“Anthony”), as a “gofer”. Within a few years, Anthony became the Firm’s office manager and bookkeeper, “responsible for all accounting and financial aspects” therefor (Affidavit in Support at ¶ 4 [Motion Seq. No. 20]).”
“In or around 1990, the Firm started banking at EAB Bank. In 2001, EAB Bank “became” Citibank (Ex “17” at pp 32, 96 [Motion Seq. No. 21]). As office manager and bookkeeper, Anthony undertook certain banking duties for the Firm. He would go to the bank to make deposits, sign checks on the Firm’s operating accounts and attend to other banking matters.[FN3] As such, Anthony “got to know” Steve Reinhardt (“Reinhardt”), a bank Vice President, and his assistant, Annie Jeter (“Jeter”), and became the “face” of the Firm at the bank (Affidavit in Opposition at ¶ 6 [Motion Seq. No. 21]).
In February 2002, Reinhardt left Citibank and became a Senior Vice President and Group Director at Signature Bank (“Signature”).[FN4] He thereafter met with Peter and Anthony and asked the Firm to transfer its accounts from Citibank to Signature (Affidavit in Opposition at ¶ 8 [Motion Seq. No. 21]). In 2002, the Firm transferred its banking business from Citibank to Signature. Anthony was in favor of moving the Firm’s accounts because he thought Reinhardt was a “nice guy” and that it was “[m]ore of the loyalty that comes with just being friendly with somebody for 10 years” (Ex. “36” at p 67 [Motion Seq. No. 21]).”
“The account applications submitted by Anthony to Signature (not including the Botter accounts), designated Anthony as an authorized signatory on the Firm’s operating accounts but not on the IOLA account. Anthony was also designated as the “primary contact” for the Firm on the operating accounts but not the IOLA account (Exs. “18”, “19”, “22” [Motion Seq. No. 21]). Each of the account applications designated a post office box as the address in which Signature was to mail its monthly statements and, further, each application required the Firm to confirm that it had received a copy of, and agreed to certain terms and conditions of, the Signature Business Account Agreement and Disclosures with respect to the IOLA and operating accounts (Affirmation in Opposition to Motion at ¶ 14 [Motion Seq. No. 21]). This was indicated by a checkmark in the appropriate box on the accounts’ applications. In addition to the three authorized accounts, Anthony opened and maintained “sham” accounts at Signature Bank [*3]without the Firm’s authorization or knowledge.[FN5] Peter and Langione contend that they never signed any of the bank documents that were submitted to Signature for the authorized accounts and that they were forged by Anthony along with the sham account applications [FN6] (Affirmation in Opposition at ¶ 20 [Motion Seq. No. 20]).”
“According to Peter, both he and Langione executed the Baron escrow application in order to open the Baron escrow account because Anthony purportedly advised Peter that “Signature required that [Langione] be a designated signator on the Baron Escrow Account” (Affirmation in Support of Motion at ¶ 35 [Motion Seq. No. 6]).[FN10] The “original” Baron escrow account application was not produced in this litigation because it was supposedly destroyed by Anthony.[FN11] In its stead, Anthony allegedly substituted a forged Baron escrow account application. The allegedly forged application submitted to Signature allowed internet transfers, listed Post Office Box 721 in Mineola, New York as the address to where bank statements were to be mailed, and designated Anthony as an authorized signatory and primary contact on the account. Reinhardt, Signature’s Executive Vice President, testified that the Baron account application should have been rejected because it violated Signature’s rules that govern the establishment of attorney escrow accounts. Amongst other things, such rules prohibit non-attorneys from being authorized signatories on a law firm’s attorney escrow account (Affirmation in Support at ¶ 29 [Motion Seq. No. 21]).”
“The second cause of action asserts a claim of unjust enrichment against the Firm and individual Defendants Peter, Langione and Botter. The claim for unjust enrichment is predicated upon alleged misuse of the Baron escrow funds which the “escrow agents have either retained or [*43]disbursed” and “which said defendants refuse to pay to Plaintiffs, and which in equity and good conscience ought not to be retained” by the Firm (see discussion supra).
The branch of the motion seeking dismissal of the unjust enrichment claim, insofar as asserted against Peter, Langione, and the Firm, is denied given this court’s order granting judgment on the Barons’ unjust enrichment claim insofar as asserted against them (see discussion supra). The motion is also denied with respect to Botter inasmuch as the submissions of the Firm Defendants failed toprima facie establish that Botter did not receive, or benefit from, directly or indirectly, any funds stolen from the Baron escrow account.
The Firm seeks dismissal of the third cause of action (conspiracy) on the ground that the Barons cannot establish the elements of the underlying fraud claim. Peter Galasso’s affidavit submitted in support of the motion for summary judgment sets forth with specific detail the manner in which Anthony perpetrated the fraud as well as the fact that Peter, Langione and Botter were unaware of what was transpiring. Given the Firm Defendants’ unopposed assertions that they did not have knowledge of the fraud, and there being no evidence to the contrary, the conspiracy to commit fraud claim must be dismissed (see Nissan Motor Acceptance Corp. v Scialpi, 94 AD3d 1067 [2d Dept 2012]).
The branch of the Firm Defendants’ motion seeking dismissal of the fourth cause of action – the Barons’ claim for conversion, is denied with respect to the Firm, Peter, Langione and Anthony inasmuch as the court has granted judgment in favor of the Barons on their conversion claim against these Defendants (see discussion supra). It is also denied insofar as asserted against Botter inasmuch as the Firm Defendants’ submissions failed to prima facie establish that Botter did not receive and refuse to return upon demand any of the fraudulently transferred Baron escrow funds.
The branch of the Firm Defendants’ motion seeking summary judgment dismissing the fifth cause of action, predicated upon Peter’s gross negligence and malfeasance in hiring and retaining Anthony and clothing him with authority to exercise control over the Baron escrow funds, “without adequate supervision or control”, is denied (Dolphin Holdings, Ltd. v Gander & White Shipping, Inc., 122 AD3d 901[2d Dept 2014]; Internationale Nederlanden (U.S.) Capital Corp. v Bankers Trust Co., 261 AD2d 117 [1st Dept 1999]) (Ex “E” at ¶ 65 [Motion Seq. No. 6]).
Regarding the sixth cause of action sounding in legal malpractice, for a defendant to succeed on a motion for summary judgment, evidence must be presented in admissible form establishing that the plaintiff is unable to prove at least one of the essential elements (Verdi v Jacoby & Meyers, LLP, 92 AD3d 771, 772 [2d Dept 2012]). Here, the Firm’s submissions fail to make such a showing and, thus, the Firm’s motion with regard to the sixth cause of action is denied.”