White-Collar Crime

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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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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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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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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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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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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tax headaches tax evasion taxation tax crimes.JPG‘Tis the season for… W-2s. When you get that handy-dandy form from your employer, we suggest that you file it with your federal income tax return — in timely fashion. [FN1]
And don’t forget to file any applicable state and local tax returns, too. Otherwise you could find yourself in deep doo-doo. From the Long Island Press:

Three attorneys, an accountant and a doctor were arrested Tuesday for failing to file a combined total of more than $365,000 in state personal income taxes, Nassau prosecutors said. The arrests were part of a statewide sweep by the New York State Department of Taxation and Finance (NYSDTF).

Arresting someone on a failure-to-file charge? Seems a bit extreme. But if the authorities wanted to send a message about how seriously they take tax crimes, they succeeded.

The attorneys who were charged with failure to file a personal income tax return include 47-year-old David Mollon of Great Neck, 50-year-old Kelly Talcott of Sea Cliff and Dennis O’Leary, 57, of Westbury. Facing the same charge is 53-year-old Gerald Gartner of Lawrence, a certified public accountant, and 62-year-old Avelino Rosales of Cedarhurst, a physician.

O’Leary is a personal injury lawyer — res ipsa loquitur. But Mollon and Talcott are (or were) partners at large law firms, places whose names you’d recognize.
Find out which firms, as well as how much Mollon and Talcott earned during the tax years in question, after the jump.

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Scott Rothstein George Clooney Up in the Air.jpgIn the new movie Up in the Air — which is worth seeing, if you haven’t already — Ryan Bingham, played by George Clooney, is on a quest to rack up 10 million frequent flyer miles. That’s a heck of a lot of miles. In the Walter Kirn novel the film was based on, it was a more realistic one million miles (but, as film critic Kenneth Turan notes, “that’s product placement and inflation for you”).
To some people, however, 10 million miles — or points, the credit-card version of miles, also redeemable for free air travel and other goodies — is chump change. From the Miami Herald:

[Ponzi schemer Scott] Rothstein (inset left) racked up 20,920,701 rewards points on his Amex card — and the feds want to grab them all to help pay back his victims. Generally, American Express doles out one point for every dollar charged on the card, which can be used to buy merchandise, airline tickets, hotel rooms, restaurant meals and gift cards.

So, what did Scott Rothstein do to accrue all those points?

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Bear Stearns BSC Above the Law blog.jpgCongratulations to Williams & Connolly and Hughes Hubbard & Reed, the firms that represented Ralph Cioffi, and Brune & Richard, the litigation boutique that represented Matthew Tannin.
Ed. note: This post has been corrected; an earlier version switched the defendants around. Thanks for pointing out the mistake, commenters.
Not Guilty! [Dealbreaker]
Breaking News: Bear Defendants Found Not Guilty on All Charges [WSJ Law Blog]
BREAKING: Bear Stearns Hedge Fund Managers Not Guilty [Am Law Daily]
Bear Stearns Hedge Fund Managers NOT Guilty On All Counts [Business Insider]

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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