New York Attorney Sentenced To Six Months In Prison In Manhattan Federal Court For Fraud In Connection With A Scheme To Purchase Maxim Magazine
Preet Bharara, the United States Attorney for the Southern District of New York, announced that HARVEY NEWKIRK, formerly counsel at a law firm in Manhattan, was sentenced today to a prison term of six months for wire fraud in connection with his participation in a scheme to fraudulently induce lenders to provide tens of millions of dollars toward the purchase of Maxim Magazine and related assets (“Maxim”). A jury convicted NEWKIRK of one count of wire fraud on December 14, 2015, after a five-week trial. He was found not guilty of one count of conspiracy to commit wire fraud, and not guilty of one count of aggravated identity theft. Today’s sentence was imposed by U.S. District Judge Jed S. Rakoff.
Manhattan U.S. Attorney Preet Bharara said: “Harvey Newkirk, an attorney with a major law firm with an obligation and responsibility to practice law in good faith, instead violated the law by lying and defrauding lenders out of millions of dollars in an attempt to help his client purchase Maxim Magazine. His conviction by a jury and now his sentence to imprisonment marks the close of Newkirk’s unfortunate journey from lawyer to felon.”
As established by the evidence at the trial:
In connection with the potential purchase of Maxim by a company (the “Company”) controlled by Calvin Ramarro Darden (“Darden Junior”), from in or about August 2013 to on or about February 11, 2014, NEWKIRK told a series of lies to lenders to induce the lenders to provide tens of millions of dollars in capital toward the purchase of Maxim. In order to mislead the lenders into believing that they would receive sufficient collateral for their loans, NEWKIRK falsely promised them that Calvin Darden (“Darden Senior”), the former Senior Vice President of U.S. Operations of UPS, and a member of the Board of Directors of Coca-Cola Enterprises, Target Corporation, and Cardinal Health, Inc., would pledge his personal stock holdings in the latter three companies as collateral for the loans. In addition to knowingly making this false promise, NEWKIRK concealed from lenders that, as NEWKIRK knew, the stock owned by Darden Senior was subject to restrictions, and could not be pledged as collateral for any loans. NEWKIRK further falsely promised at least six lenders that each would have a first and sole priority interest in the purported collateral when, as NEWKIRK well knew, only one lender could have any such interest.
NEWKIRK, who represented the Company in the attempted Maxim acquisition in his capacity as an attorney at Bryan Cave LLC, engaged in the fraud in part because NEWKIRK secretly owned part of the Company’s parent company (the “Parent Company”), and would share in any of the Parent Company’s profits resulting from the acquisition. NEWKIRK hid his partial ownership of the Parent Company from Bryan Cave and others. NEWKIRK further lied to Bryan Cave about his relationship with Darden Senior, falsely claiming that Darden Senior had been NEWKIRK’s client for many years when, in truth and in fact, and as NEWKIRK well knew, NEWKIRK had never represented Darden Senior.
In the course of the fraud, NEWKIRK provided lenders with account statements that purported to show Darden Senior’s stock holdings. In truth, however, the account statements were fake documents, and Darden Senior was not providing any financial support for the purchase of Maxim. Also in the course of the fraud, NEWKIRK went to great lengths to hide from Darden Senior, and from Bryan Cave, the existence of a lawsuit filed by one lender in which that lender sought to obtain the collateral of Darden Senior that NEWKIRK had fraudulently pledged to the lender. NEWKIRK deliberately caused a default judgment to be entered against Darden Senior in that lawsuit, knowing that he had concealed the existence of the lawsuit from both Darden Senior and Bryan Cave.
Furthermore, after one of the lenders placed approximately $5.5 million in escrow at Bryan Cave, Darden Junior arranged for a fraudulent email to be sent to NEWKIRK that purported to have been authored by the lender. In response to that fraudulent email, and with knowledge that the email was in fact fraudulent, NEWKIRK released approximately $4.9 million of the lender’s money from the escrow account to fund the purchase of Maxim. Moreover, in an effort to close the deal, NEWKIRK also falsely represented to another individual that approximately $12 million, consisting of funds supposedly provided by, or secured by the personal assets of, Darden Senior, had been placed in escrow at Bryan Cave. In truth and in fact, no funds were ever held in escrow at Bryan Cave in connection with the purchase of Maxim, other than the $5.5 million placed in escrow by the lender described above, which was subsequently misappropriated by NEWKIRK. Lenders lost a total of $8 million in connection with the fraud.
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In addition to his prison term, NEWKIRK, 40, of New Rochelle, New York, was sentenced to three years of supervised release and was ordered to pay restitution in the amount of $3.1 million.
Mr. Bharara praised the investigative work of the United States Secret Service and the Federal Bureau of Investigation.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.Assistant U.S. Attorneys Andrew C. Adams and Sarah E. Paul are in charge of the prosecution.