Lawyer Indicted on Wire Fraud and Money Laundering Charges for Stealing from Client Escrow Account
Defendant Also Faces Separate Securities Fraud Charges
MARTIN WEISBERG, a former corporate partner in the New York office of an international law firm, has been indicted on federal wire fraud and money laundering charges. The charges are based on WEISBERG’s alleged theft of money from an escrow account established on behalf of one of his clients for which WEISBERG served as escrow agent.1 WEISBERG will be arraigned later today before United States Magistrate Judge Robert M. Levy at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, and Mark J. Mershon, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Division.
The indictment alleges that WEISBERG assisted a corporate client establish a $30 million escrow account and advised the client that the account could not earn interest for the client’s benefit. In fact, WEISBERG caused the $30 million to be placed into an interest-bearing account. Between August 2007 and October 2007, the account earned approximately $1.6 million in interest, and WEISBERG caused approximately $1.3 million to be wired out of the account without the client’s knowledge. WEISBERG allegedly concealed the fraud by telling the client that the bank did not produce monthly account statements, and instead, WEISBERG sent letters to the client with false account balances.
The escrow fraud was uncovered in the aftermath of WEISBERG’s earlier indictment on securities fraud charges currently pending in the Eastern District of New York. Those charges stem from a conspiracy through which discounted shares of two public companies were issued to offshore nominee entities that were controlled by two individuals who, among other things, allegedly kicked back a portion of their trading proceeds to WEISBERG and others.
“Clients are entitled to trust that their lawyers will act in their best interests and will uphold the highest ethical standards,” stated United States Attorney Campbell. “Those who exploit that professional relationship to enrich themselves will be held to account.”
FBI Assistant Director-in-Charge Mershon stated, “Lawyers have a fiduciary responsibility to their clients, but stealing from a client goes way beyond failing to fulfill the canon to be a zealous advocate. It goes without saying that a lawyer has an ethical, professional, and legal responsibility not to steal from his client.”
If convicted, WEISBERG faces up to 20 years in prison on each of the wire fraud charges and 10 years in prison on the money laundering charge. He also faces a fine of up to $2.6 million.
The case has been assigned to United States District Judge Nicholas G. Garaufis.
The government’s cases are being prosecuted by Assistant U.S. Attorneys Taryn Merkl, John Nathanson, John Nowak, and Ilene Jaroslaw.
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