White-Collar Crime

Former MoFo Partner Accused of Major Fraud

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You know how violent felons treat pedophiles particularly bad in the prison system? I wonder if fraudsters reserve special scorn for people who use their disabled children as part of the scam? A former partner at Morrison & Foerster may soon find out. He’s been arrested for defrauding the state of California out of hundreds of thousands of dollars by way of scam utilizing his autistic kid. The San Francisco Chronicle reports:

A former partner at a well-known law firm and his marketing consultant wife were arrested Wednesday on felony charges of bilking the San Francisco school district and private insurers out of about $400,000 via fraudulent bills for treatment of their autistic son, officials say.

The San Francisco couple, Jonathan S. Dickstein and Barclay J. Lynn, both 43, surrendered Wednesday and are expected to appear in court this morning for arraignment on 30 counts of fraud, theft and conspiracy, authorities say.

We can and will blame the alleged perpetrators of this fraud. But where was the government oversight?

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Is Teaching at Law School a Form of Community Service? Bill Lerach Thinks So

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Victims of what anti-law-school bloggers have dubbed “the law school scam” might argue that working for a law school, or at least the kind of law school that saddles students with debt and can’t get them jobs, is closer to a crime than community service. There is certainly an argument that law professors who aren’t part of the solution are part of the problem.

But the notorious William Lerach, the securities plaintiffs’ lawyer turned convicted felon, believes that law teaching is a noble calling — and wants the community service credit to show for it….

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Lawyer of the Day: Lawyer-Scammer Gets Scammed — and Has His Scam Unravel

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Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap.

The Washington Post reports:

Three years into his own scheme of dipping into clients’ funds, Maryland malpractice lawyer Bradley Schwartz received an e-mail from a man claiming to represent a manufacturing company in Singapore, offering him legal work…

What happened next, according to Montgomery County prosecutors, is that the scammer got scammed.

Schwartz pleaded guilty and now awaits sentencing. Oh, it is sweet when a thief gets his just reward…

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Musical Chairs: BuckleySandler Snags Talent from Mayer Brown

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The financial services boutique of BuckleySandler, which launched just a little over a year ago, is expanding at a rapid clip. At the time of launch, it had about 50 attorneys (most of them from the firm formerly known as BuckleyKolar); now it’s approaching 100.

The two latest hires are noteworthy. From the BLT:

BuckleySandler is continuing its push to recruit top-level lateral partners. Today, the firm brought on David Krakoff, who previously co-chaired Mayer Brown’s white collar litigation practice, and Christopher Regan, also a former Mayer Brown partner.

Let’s learn a little more about them, shall we?

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A Trio of Misbehaving Lawyers: Some Updates

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Bad boys, bad boys, whatcha gonna do? Left to right: John Michael Farren, Scott Rothstein, Michael Margulies.


For some reason, today brings lots of news about lawyers and the criminal justice system. And we’re not talking about lawyers representing clients, but lawyers who are the clients: John Michael Farren, the former White House lawyer accused of attempting to murder his wife; Scott Rothstein, the Florida attorney who ran a massive Ponzi scheme; and Michael Margulies, the former Lindquist & Vennum partner who misappropriated millions in client money. We’ve decided to hit this rogues’ gallery in a single, omnibus post.

Let’s start with John Michael Farren, the former Bush Administration lawyer and Xerox general counsel charged with attempted murder and first-degree strangulation of his wife, Skadden counsel Mary Margaret Fadden. As reported by the ABA Journal, John Farren has posted $750,000 bail and been released to the “Institute of Living” — which sounds like a fancy spa where you eat seaweed and do yoga, but is actually a mental hospital in Hartford.

The news coverage also reveals that the wealthy couple’s divorce has been finalized. How were their millions distributed?

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Lawyerly Lairs: Partner Accused of Misappropriating Money to Overhaul Minnesota Mansion

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Back in the summer of 2008, we wrote a post entitled “Summer Associates of the Day: Sapphic Summers in Lesbianic Lip-Lock.” The title of the post pretty much says it all.

Well, it turns out that a partner at the same firm, Minneapolis-based Lindquist & Vennum, may have been misbehaving too. The Pioneer Press reports that Michael S. Margulies, a leading Twin Cities real estate lawyer, has been accused of professional misconduct — in the form of “misappropriat[ing] significant sums from a limited number of clients and from the firm,” according to a statement by the firm. Margulies has withdrawn from the firm’s partnership, reported his conduct to Minnesota’s professional responsibility office, and agreed to be disbarred. He has also resigned from the St. Paul Planning Commission, where he served several terms under different mayors.

What prompted this alleged theft? It seems that Michael Margulies, former head of Lindquist’s real estate group, may have loved real estate not wisely, but too well. From the Pioneer Press:

Margulies, 56, of St. Paul, and his personal company, Triad Services, were sued in Ramsey County District Court by a real estate development company for which he had worked as an attorney, secretary and treasurer. In the lawsuit, CMB Minnetonka LLC alleged that Margulies “made numerous illicit withdrawals” from CMB’s bank account and line of credit at Highland Bank and used the money — $1.5 million or more — for his own purposes.

Specifically, the suit claims Margulies spent the money to overhaul the historic mansion at 516 Summit Ave. in St. Paul that he owned with his former wife.

So he allegedly did it all for love of a house. Was it worth it? Just how nice is this pile o’ bricks?

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Lawyers of the Day: Arthur Cutillo, Michael Kimelman, and Jason Goldfarb

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Michael Kimelman Mike Kimelman Michael Kimmelman Arthur J Cutillo Arthur Cutillo Ropes Gray headshot.JPGToday the winners of Lawyer of the Day honors are obvious. Congratulations to Arthur Cutillo, Michael Kimelman, and Jason Goldbfarb, three attorneys who stand accused of involvement in the infamous Galleon Group insider trading scheme.

Both Cutillo and Kimelman have distinguished pedigrees, with ties to two top firms. Cutillo (left), a holder of an M.S. in chemical engineering as well as a J.D. (both from Villanova), was an associate at the white-shoe firm of Ropes & Gray. Kimelman (right), a partner at Incremental Capital LLC, once worked as an associate at super-prestigious Sullivan & Cromwell.

Check out Cutillo’s firm bio and Kimelman’s LinkedIn profile over here.

The third charged lawyer, Jason Goldfarb, apparently worked as a personal injury lawyer in Brooklyn. He allegedly served as a conduit of information between Cutillo and Zvi Goffer — the former Galleon employee apparently referred to as “Octopussy” at the SEC, because “he had his arms in so many insider” trading schemes.

More on our three honorees, after the jump.

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Breaking: Arrest at Ropes & Gray in Galleon Insider Trading Case

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Arthur J Cutillo Arthur Cutillo Ropes Gray headshot.JPGThe news was first reported by CNBC. See Dealbreaker for more details.
We have phone calls and emails in to Ropes & Gray and are waiting to hear back. We will keep you posted on further developments.

If you have more info, please email us. Thanks.

UPDATE (10:00 AM): According to Bloomberg, the FBI has arrested Arthur Cutillo (pictured). He is no longer on the Ropes & Gray website, but you can find his bio via Google Cache. Interestingly enough, he was an IP litigator, not a corporate attorney.

CNBC is now reporting that a Ropes & Gray employee allegedly provided inside information about various “going private” transactions the firm was involved in. Some of these transactions apparently involved companies heavily dependent upon intellectual property, such as technology companies.

UPDATE (10:10 AM): In case the Google Cache entry is removed, we have posted Arthur Cutillo’s bio after the jump. He graduated from Rutgers (undergrad) and Villanova (law), and he worked at Merck before joining Ropes.

UPDATE (10:15 AM): Here is a statement from Ropes & Gray:

We are deeply disappointed to learn about this situation, which suggests an extreme breach of this person’s duty of trust to our clients and to the firm. We cannot comment in detail on an ongoing investigation but we are moving quickly to protect our clients and are cooperating fully with authorities.

UPDATE (12:15 PM): U.S. Attorney Preet Bharara (S.D.N.Y.) is giving a press conference discussing the charges. One of the other individuals charged, Michael Kimelman, once worked as an associate at Sullivan & Cromwell.

UPDATE (4:30 PM): We’ve honored Artie Cutillo, Michael Kimelman, and a third lawyer, Jason Goldfarb, as our Lawyers of the Day.
Art Cutillo’s Ropes bio and Mike Kimelman’s LinkedIn profile, after the jump.

Seven Arrested In Insider Trading Case [Dealbreaker]

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Lawyer of the Day: Scott Rothstein

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scott rothstein.jpgAs we’ve noted in Morning Docket for the past two days, lawyer Scott Rothstein is in all kinds of trouble in Florida. From what we understand, it’s Marc Dreier redux, the sunshine state version.

We’re still trying to wrap our heads around the story, but as the Bard would say, the sh** hath hitteth the fan this week.
The WSJ Law Blog is similarly perplexed by the scandal (See What’s Going on at Rothstein Rosenfeldt? Part I and Part II).

Scott Rothstein, a founding partner of Rothstein Rosenfeldt Adler, has been out of the country for the last few days, making this all even more confusing. He just flew back into Miami an hour ago and police have surrounded his firm. We give you context after the jump.

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Breaking: Madoff Sentenced to 150 Years

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Bernie Madoff has been sentenced to 150 years.

Judge Denny Chin said that the sentence was necessary to deter other people from entering into these kinds of schemes.

The Judge apparently said that he was struck that there was no letter written in support of Bernie Madoff. On the other hand, the judge received 141 pages of letters from Madoff victims.

Madoff allegedly said:

They have accused me and my wife of not being sympathetic. She cries every night, I am also tormented.

Umm … crying doesn’t make you sympathetic. I think instead of turning on the waterworks, Madoff should try not stealing billions of dollars.

But Madoff did apparently say: “I am sorry.”

But the pitchfork rally doesn’t have to end here. Next up: what prison will Madoff be heading to? A “club-fed” facility, or someplace where Madoff might expect “more bareback.”

For extensive and ongoing coverage of L’Affaire Madoff, surf over to our sister site, Dealbreaker.

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