9/11 is almost 10 years behind us.  Its direct effects may have passed, but the indirect effects still resonate.  Here is a fraud, foreclosure scam and legal malpractice case which arises out of the post 9/11 world.

Cullen v. Steinberg, 2010 U.S. Dist. LEXIS 62138 is a case in which plaintiff was the surviving widow of a murdered victim of 9/11.  She invested her compensation in real estate, and then fell prey to a variant of a scheme.  "In 2004, plaintiff received $ 1.9 million in compensation for her husband’s murder in the 9/11 attacks on the World Trade Center. She invested some of the money in [*4] real estate, buying residential property at 653 Jacey Drive in Fort Lee, New Jersey in 2004, and at 1400 Outlook Avenue in the Bronx in 2006."
 

"At a party in December 2006, plaintiff met Maximo (Max) Almonte, who had gone to grammar school with her. Almonte initially told plaintiff he was a stock broker; plaintiff learned in May 2007 that he was actually a felon who had been convicted of real estate fraud. Almonte moved in with plaintiff at 653 Jacey Drive two days after meeting her at the party.In late December 2006 or early January 2007, Almonte introduced plaintiff to Robert (Bob) Kotch, who, plaintiff later learned, had been convicted of mortgage fraud and had met Almonte while they were both in prison. Almonte took plaintiff to Kotch’s office in Manhattan’s Wall Street area to discuss plaintiff’s involvement in a potential real estate [*5] business in which Kotch and plaintiff would buy foreclosed homes and resell them for a profit. Kotch represented to plaintiff that if she invested $ 100,000, she would be able to earn an additional $ 90,000 in a short amount of time. Plaintiff orally agreed to this transaction during their meeting. She told Kotch she did not have the cash but that she owned the 653 Jacey Drive property and that it was not subject to any mortgage. Kotch told plaintiff that he could arrange a $ 100,000 loan for her, secured by that property."

"On or around March 13, 2007, at the request of Jason Steinberg, plaintiff signed a letter on behalf of Wholistic Change, LLC, authorizing the disbursement of $ 104,000 from the loan proceeds to "Private Lenders" [*8] (DX 5), the company Kotch purportedly was going to use to buy and sell foreclosed homes in partnership with plaintiff. It is Jason Steinberg’s practice to get written authorization from the borrower before a loan closing if any of the loan proceeds will be disbursed directly to third parties. On or around March 13, 2007, plaintiff signed an agreement with Ellissa Liebowitz of Be Approved which stated that plaintiff agreed to pay Be Approved, the broker, three percent of the total loan amount (DX 6). Both Jason and Ronald Steinberg understood the loan was being made to a corporation rather than an individual."

"Plaintiff’s second claim alleges that Jason Steinberg violated New York Judiciary Law Section 487 by deceiving or colluding to deceive plaintiff. Section 487 provides: "[a]n attorney or counselor who . . . [i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . [i]s guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action."

 Section 487 only applies to an attorney’s conduct in a pending judicial proceeding. Mahler v. Campagna, 60 A.D.3d 1009, 1012-13, 876 N.Y.S.2d 143, 147 (2d Dep’t 2009); Jacobs v. Kay, 50 A.D.3d 526, 527, 857 N.Y.S.2d 81, 83 (1st Dep’t 2008); Tawil v. Wasser, 21 A.D.3d 948, 949, 801 N.Y.S.2d 619, 620 (2d Dep’t 2005) (Judicary Law Section 487 did not apply to conduct by attorney in a real estate transaction); Henry v. Brenner, 271 A.D.2d 647, 648, 706 N.Y.S.2d 465, 466 (2d Dep’t 2000); Stanski v. Ezersky, 228 A.D.2d 311, 313, 644 N.Y.S.2d 220, 223 (1st Dep’t 1996).

None of the alleged conduct by Jason Steinberg took [*21] place in the context of a judicial proceeding. Further, I find no deceit or collusion on the part of Jason Steinberg with the intent to deceive plaintiff. Accordingly, Jason Steinberg did not violate Section 487 of the Judiciary Law of the State of New York in connection with the loan to Wholistic Change, LLC. Thus, plaintiff’s second claim fails."