June 16, 2005
Long Island Tops the Docket for Dishonesty in Lawyers
By JULIA C. MEAD, NY TIMES

LINK

RIVERHEAD, N.Y. - For 35 years, Richard Kops enjoyed a respectable though modest career as a lawyer, handling mostly real estate transactions and dispensing free advice to local churches. Then, in the late 1990's, as his wife of 24 years was dying of cancer, he crossed the line.

Faced with medical bills not covered by insurance, Mr. Kops dipped into client funds held in his escrow account, according to his lawyer and the Suffolk County district attorney's office. He stole a second client's money to pay back the first. Helping to support a grown daughter and her twin sons, another daughter in graduate school, and an elderly aunt, he took a third client's money, then money from a fourth.

The dodge went on for years, prosecutors said, until the amount of money his clients clamored to get back exceeded his escrow balance. By 2004, when the police went looking for him, he was living with a daughter in North Carolina and bagging groceries in a supermarket.

On Monday, wearing a threadbare jacket and no tie, Mr. Kops, 71, appeared in Suffolk County Criminal Court, a disbarred lawyer pleading for mercy. "I've committed grievous wrongs against God and mankind," he said.

As a dozen of Mr. Kops's supporters wiped away tears, Justice Robert W. Doyle sentenced him to one and a third to four years in prison.

Cases of lawyers stealing from their clients are on the rise in New York, state figures show, and most of the lawyers implicated in recent years were middle-aged men who, like Mr. Kops, practiced alone.

And, like Mr. Kops, a growing number were from Long Island.

At the Lawyers' Fund for Client Protection, the state agency that reimburses victims of dishonest lawyers, the overall number of clients seeking reimbursement from New York lawyers jumped to 627 last year from 442 in 1999. The fund paid out $5.1 million last year, including $3.7 million stemming from real estate transactions in which lawyers, including Mr. Kops, absconded with escrow funds. Nassau and Suffolk lawyers accounted for 41 percent of the thefts and other losses in real estate deals statewide during that period and half of the reimbursements made by the fund to clients, an analysis by the fund showed.

An increasing number of Long Island lawyers ended up behind bars for other reasons, too. Since 2002, Suffolk prosecutors have convicted 16 lawyers of crimes ranging from drug possession to theft. Since 2001, Nassau prosecutors have convicted 21. Together, the two district attorney offices have recovered about $3.1 million in stolen funds and obtained another $3.5 million in judgments.

Edward Heilig, the chief of the Suffolk district attorney's economic crimes bureau, said a dozen other lawyers were under investigation there.

"These guys, they start taking a little bit, thinking they're going to put it back before anyone finds out," Mr. Heilig said. "They're usually middle-aged because it takes that long to build up a practice and get a lot of clients to trust them with money. On the other hand, they have big egos, convince themselves they know what they're doing."

Roy D. Simon Jr., a professor of legal ethics at Hofstra University, called it the "bust-out factor." A midcareer lawyer with an established practice could have more than $1 million in escrow on any given day, he noted. "As long as there's a conveyor belt of new cases coming in, it'll look for a while like everything is O.K.," Professor Simon said, agreeing that this is also the flawed logic behind a pyramid scheme.

Although the overall number of dishonest lawyers represents less than one-third of 1 percent of the 215,000 in New York, the fund trustees are pushing leaders on Long Island for explanations and solutions.

"At this point, we just can't say with any certainty what causes it," said Timothy J. O'Sullivan, the executive director of the fund. He said theories include substance abuse, gambling or other personal crises.

The tough competition may also be a factor, some lawyers said. Long Island has about 14,000 lawyers, more than Brooklyn, Queens, Staten Island, and the Bronx combined, according to the New York State Bar Association.

Another reason is that the majority of lawyers on Long Island are solo practitioners with no oversight from partners or co-workers. Professor Simon said those lawyers often had access to considerable amounts of cash, given the region's competitive real estate market and large down payments, but there is often no one double-checking the books.

And, he added, the overall economy has not helped.

"A lot of lawyers got rich in the late 90's, then found themselves overextended," he said.

The Nassau and Suffolk bar association presidents said they were dismayed, but stressed that the overall incidence of misconduct by lawyers was low.

The Nassau president, Judge Susan T. Kluewer of Nassau District Court, said her executive board was doing its own study of the problem. Scott M. Karson, her counterpart in Suffolk, wrote to the fund on May 24, noting that dishonesty is not exclusive to the legal profession.

"Simply put, the profession suffers substantial damage - even if it is caused by a minuscule number of its members - in terms of maintaining the trust and confidence of our clients, our standing in the community and our collective self-esteem," he wrote. Despite that, he concluded that the best deterrent was criminal prosecution, and the best remedy was the fund itself.

The grievance committee for the 10th Judicial District, a separate agency charged with investigating complaints of lawyer misconduct in Nassau and Suffolk, saw grievances against lawyers increase to 2,979 in 2003 from 2,238 in 1994. In 2003, the committee recommended that the Appellate Division suspend eight Long Island lawyers and disbar four; in 1994, the panel urged that 17 be suspended and 15 disbarred. Faith Lorenzo, the committee's executive director, declined requests for an interview.

Last year, the state's chief judge, Judith S. Kaye, created a 28-member commission to study solo practitioners and small firms. The panel is not discussing Long Island specifically, and its report, due out by the fall, will address only statewide issues, said June Castellano, the commission's chairwoman.

But some lawyers on Long Island, speaking from experience, contended that competition was indeed a contributor.

"I personally think there is a glut, and competition for clients creates temptations," said Joan McNichol, a former president of the New York Women's Bar Association. "But I don't honestly understand the temptation. It's not my money and never think of it as my money."

She said the Appellate Division's Second Department scrutinized lawyers in its jurisdiction, but stiff competition, high caseloads and costly overhead translate into irresistible temptation.

"These midcareer attorneys, they may be feeling squeezed out of the market, so that's the effect that all those new, young attorneys are having," she said.

But Eric Schultz, chairman of the Nassau bar association's real property law committee, said: "We are in business to make money, but we're not just selling groceries or sweaters. We take an oath to uphold the law. And an escrow account is not a line of credit."