Matter of Langione

131 A.D.3d 199, 11 N.Y.S.3d 256
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 24, 2015
Docket2013-00214
StatusPublished
Cited by2 cases

This text of 131 A.D.3d 199 (Matter of Langione) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Matter of Langione, 131 A.D.3d 199, 11 N.Y.S.3d 256 (N.Y. Ct. App. 2015).

Opinion

OPINION OF THE COURT

Per Curiam.

Background

This matter is the corollary to an earlier disciplinary proceeding commenced against the respondent’s former law partner, Peter Galasso, which resulted in a decision by this Court suspending Peter Galasso from the practice of law for a period of two years for, inter alia, violating his fiduciary obligations (see Matter of Galasso, 105 AD3d 103 [2013], on remittitur from Ct App 19 NY3d 688 [2012], modfg in part, affg in part 94 AD3d 30 [2012]).

The charges against the respondent arise from his conduct, as a law partner of Peter Galasso, relative to the maintenance of fiduciary funds held by their firm (hereinafter the firm), incident to the practice of law. As in the case against Peter *201 Galasso, the charges against the respondent center around the undisputed misappropriation of more than $5 million from the firm’s multiple escrow accounts. The respondent, like Peter Galasso, did not directly engage in the misappropriation of client funds. Rather, fiduciary funds held by the firm were misappropriated by Peter Galasso’s brother, Anthony Galasso, the firm’s bookkeeper and office manager.

The fraudulent and deceptive conduct engaged in by Anthony Galasso is summarized in the following excerpts from the Court of Appeals decision in Matter of Galasso (19 NY3d 688, 692-693 [2012]):

“Anthony Galasso, in his capacity as office manager, deposited the funds into an escrow account at Signature Bank (the Baron escrow account). [Peter Galasso] and fellow partner James Langione were the only authorized [signatories] on the account application. However, Anthony Galasso apparently altered the application to permit electronic fund transfers and to include himself — a nonlawyer — as a [signatory].
“Between June 23, 2004 and January 17, 2007, Anthony Galasso transferred approximately $4,501,571 from the Baron escrow account into six other firm accounts maintained at Signature Bank through the use of roughly 90 Internet transfers. It seems that the Baron funds were used to replace money that Anthony Galasso had already removed from [other] firm accounts. Transferred funds from the Baron escrow account were then disbursed to [Peter Galasso], firm employees and other entities in the course of business, all without the knowledge of the firm’s principals or the consent of the Barons. In particular, approximately $360,000 in funds transferred from the Baron escrow account were used to finance the purchase of the firm’s office condominium. To escape detection, Anthony Galasso had the genuine Baron escrow account statements, generated by the bank, diverted to a post office box and fabricated false statements for review by the firm. . . .
“Anthony Galasso confessed to the theft of the above funds on January 18, 2007 and ultimately *202 pleaded guilty to two counts of grand larceny in the first degree, 10 counts of falsifying business records in the first degree and 10 counts of criminal possession of a forged instrument in the second degree. He was sentenced to 2V2 to 7V2 years’ imprisonment, as well as $2,000,000 in restitution.”

As in the case of Peter Galasso, the respondent’s culpability is predicated upon his failure to properly oversee the management of the firm’s bank accounts, including necessary supervision of the firm’s employee, Anthony Galasso.

The Grievance Committee served the respondent with a petition dated December 21, 2012, containing 12 charges of professional misconduct. Following a prehearing conference on June 13, 2013 and a hearing on October 17, 2013, the Special Referee sustained all 12 charges. The Grievance Committee now moves to confirm the report of the Special Referee, and to impose such discipline upon the respondent as this Court deems appropriate. The respondent cross-moves to disaffirm the report of the Special Referee in its entirety but submits that, in the event the charges are sustained, the appropriate sanction is a public censure. We find that the Special Referee properly sustained charges 1 through 5 and 7 through 12. However, we find that the Special Referee improperly sustained charge 6, insofar as it is duplicative of charges 2, 3, and 4, collectively. Furthermore, we find, based upon the evidence adduced, that charge 9 was sustained only to the extent that the respondent violated former Code of Professional Responsibility DR 1-102 (a) (7) (22 NYCRR 1200.3 [a] [7]).

Charge 1 of the verified petition alleges that the respondent was a signatory for an interest-bearing escrow account maintained at Signature Bank, account No. xxxxxxl064, which was entitled “Stephen Baron Galasso Langione LLP Escrow Agents” (hereafter the Baron escrow account). On or about June 11, 2004, funds totaling $4,840,862.34 were deposited into the Baron escrow account. From June 11, 2004 through mid-January 2007, there were a series of web transfers of Baron funds totaling more than $4.3 million from the Baron escrow account into various accounts maintained by the respondent and/or the firm with Signature Bank (hereinafter the firm’s Signature accounts). Following those transfers from the Baron escrow account into the firm’s Signature accounts, the Baron funds were disbursed to the respondent, other members and employees of the firm, various third persons, and various *203 business entities. Stephen and Wendy Baron, the parties ultimately entitled to receive the Baron funds, did not consent to, nor benefit from, the above-referenced disbursement of their funds. Stephen Baron and/or Wendy Baron, to date, have not received the $4.3 million disbursed from the Baron escrow account, which was to have been held in a fiduciary capacity. The respondent failed to take reasonable steps to ensure that the funds maintained in the Baron escrow account were safeguarded. By reason of the foregoing, the respondent violated former Code of Professional Responsibility DR 9-102 (a) and/or DR 1-102 (a) (7) (22 NYCRR 1200.46 [a]; 1200.3 [a] [7]).

Charge 2 alleges that the respondent was a signatory of certain interest on lawyer accounts (hereinafter IOLA accounts) maintained at Signature Bank (account No. xxxxxx639) and/or M&T Bank (account No. xxxxxx9485) (hereinafter Signature Bank IOLA account and M&T Bank IOLA account, respectively), which were attorney escrow accounts used by the firm incident to its practice of law. In or about December 2005 or January 2006, the firm settled a medical malpractice/wrongful death lawsuit on behalf of the estate of George Carroll (hereinafter the Carroll estate) for the sum of $800,000. On or about June 7, 2006, the settlement proceeds of $800,000, which were received by the firm on behalf of the Carroll estate, were deposited into the M&T Bank IOLA account. The respondent failed to take reasonable steps to ensure that the funds entrusted to the firm remained safely on deposit in the M&T Bank IOLA account until such time as the firm was authorized to disburse the funds to the legal representatives of the Carroll estate. In or about January 2007, the firm gave written notice to the legal representatives of the Carroll estate that funds had been misappropriated from the M&T Bank IOLA account, in which the funds due to the Carroll estate had been deposited.

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Related

Matter of Zucker
2017 NY Slip Op 6149 (Appellate Division of the Supreme Court of New York, 2017)
Matter of Langione
138 A.D.3d 855 (Appellate Division of the Supreme Court of New York, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
131 A.D.3d 199, 11 N.Y.S.3d 256, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-langione-nyappdiv-2015.