New York Attorney Pleads Guilty To Tax Fraud Related To Multimillion-Dollar Embezzlement From Deceased Client’s Estate
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Richard E. Zuckerman, the Principal Deputy Assistant Attorney General for the Tax Division of the Department of Justice, announced that STEVEN M. ETKIND, a New York-licensed attorney and a Certified Public Accountant, pled guilty today to conspiracy to defraud the United States and tax evasion arising from a scheme to embezzle millions of dollars from a deceased client’s estate. ETKIND pled guilty before United States District Judge John G. Koeltl.
Manhattan U.S. Attorney Berman said: “As he admitted in court today, Steven Etkind violated the law, the canons of his profession, and the trust of his client by stealing more than $3.5 million from the client’s estate. Etkind now awaits sentencing for his crimes.”
Principal DAAG Zuckerman said: “The fiduciary duty that a lawyer owes to a client is paramount to the practice of law. The Justice Department will prosecute and seek just punishment against any attorney who victimizes their clients for their own personal gain.”
According to the allegations contained in the Indictment to which ETKIND pled guilty and statements made in court:
ETKIND was a partner at a New York law firm and served as head of the law firm’s Tax, Trusts, and Estates practice group. ETKIND performed legal work for a successful entrepreneur client who, prior to his death in 2008, named ETKIND as co-executor of his $35 million estate.
The client’s will directed the creation of two charitable trust private foundations, funded with assets from the client’s estate, for the sole purpose of donating to 501(c)(3) charitable organizations, including those aimed at assisting Jewish-sponsored organizations. ETKIND was named co-trustee of these trusts.
Beginning in 2009, ETKIND and his co-conspirator set up a phony charitable organization, the United Jewish Education Foundation (“UJEF”), and used it to steal more than $3.5 million from these charitable trusts. As part of the conspiracy, ETKIND directed that donations from the trusts be first made to legitimate Jewish charitable organizations in order to give the disbursements the appearance of legitimate donations. ETKIND and his co-conspirator then redirected the funds to accounts of UJEF, the phony charity that his co-conspirator controlled.
ETKIND subsequently directed his co-conspirator to write checks, totaling $327,500, to a bank account in the name of JE Capital Holding Corp., a nominee corporate entity that ETKIND controlled exclusively. ETKIND further directed more than $3 million to be used in 2010 to purchase a 6,300 square-foot home with a swimming pool in Southampton, New York. The Southampton property was purchased for the use and enjoyment of ETKIND and his family. ETKIND later transferred title of the property to JE Trust, a nominee trust he controlled.
To conceal his embezzlement, ETKIND filed, and caused to be filed, fraudulent personal, corporate, and charitable trust returns with the Internal Revenue Service (“IRS”). During the course of a subsequent audit of UJEF by the IRS Tax Exempt & Government Entities Division, ETKIND and his co-conspirator made several false and misleading statements, including about the true ownership of the Southampton Property.
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ETKIND, 56, of New York, New York, pled guilty to one count of conspiracy to defraud the United States and one count of tax evasion, each of which carries a maximum sentence of five years in prison. As part of the plea agreement, ETKIND agreed to pay restitution in the amount of $1,208,245 to the IRS, which represents the additional tax due and owing as a result of ETKIND’s filing of false individual income tax returns for the 2009 and 2010 calendar years. Sentencing is scheduled for January 18, 2019, before Judge Koeltl.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by Judge Koeltl.
Mr. Berman and Mr. Zuckerman praised the outstanding efforts by special agents of IRS Criminal Investigation. Mr. Berman also thanked the U.S. Department of Justice’s Tax Division and the IRS’s Tax Exempt & Government Entities Division for their assistance in the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Special Assistant United States Attorneys Jorge Almonte and Jack A. Morgan (of the Tax Division) are in charge of the prosecution.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website, https://www.justice.gov/tax.