By Manhattan District Attorney Cyrus R. Vance, Jr., announced the indictment of ELI LUSKI, 53, as well as brothers JAY KATZ, 68, and DAVID KATZ, 62, a former attorney, for conspiring to steal and launder approximately $5 million from the escrow accounts of Manhattan-based attorneys over the course of six years. LUSKI, JAY KATZ and DAVID KATZ, are charged in a New York State Supreme Court indictment with several counts of Grand Larceny in the Second Degree and Conspiracy in the Fourth Degree. LUSKI and JAY KATZ are additionally charged with Money Laundering in the First and Second Degrees, and Residential Mortgage Fraud in the Second Degree.(1)
“As alleged, these defendants – one of whom was himself an attorney when much of the criminal conduct occurred – conspired to steal and launder millions of dollars from attorney escrow accounts over the course of a six-year conspiracy,” said District Attorney Vance. “Not only did these individuals allegedly steal from an attorney escrow account under David Katz’s control, they are also charged with recruiting other attorneys to engage in similar behavior with respect to escrow accounts controlled by those attorneys. The alleged conspirators even stole funds that a Court expressly ordered an attorney to hold in safekeeping on behalf of a client with dementia.”
According to court documents and statements made on the record in court, from January 2010 to February 2016, LUSKI, JAY KATZ, and DAVID KATZ conspired to enlist attorneys to steal money held in attorney escrow accounts, which contain funds that attorneys hold in trust for their clients and others. The defendants are charged with conspiring to steal approximately $5 million from three escrow accounts, and directing the stolen funds to designated bank accounts.
Beginning in January 2010, DAVID KATZ, at the time a licensed attorney in New York, allegedly misappropriated more than $900,000 from his own attorney escrow account and transferred the majority of the funds to LUSKI. On June 25, 2013, DAVID KATZ was disbarred from the practice of law by the Departmental Disciplinary Committee for the First Judicial Department for similar conduct.
After stealing from DAVID KATZ’s attorney escrow account, LUSKI, JAY KATZ, and DAVID KATZ allegedly enlisted two other attorneys to steal funds from their own escrow accounts on the defendants’ behalf. Over the course of the next three years, LUSKI, JAY KATZ, and DAVID KATZ, assisted by one of the co-conspirators, stole more than $3 million from that attorney’s escrow account through unauthorized transfers to the defendants’ personal and business accounts, and to third parties’ accounts on behalf of the defendants. The defendants, with the help of the second co-conspirator, are additionally charged with stealing nearly $500,000 from an escrow account containing funds that a Court expressly ordered that attorney to hold for safekeeping on behalf of a client suffering from dementia.
Upon receiving the funds, LUSKI and JAY KATZ worked together to launder more than $1 million through check-cashing businesses and through one of JAY KATZ’s businesses, Banner Realty Company. The majority of the stolen funds was used to pay for LUSKI’s personal living expenses, including millions of dollars in credit card payments, and the purchase of a home in Morganville, New Jersey. LUSKI and JAY KATZ are also charged with defrauding the mortgage company that financed the purchase of the New Jersey home by providing false information about LUSKI’s assets and financial condition, as well as the source of the down payment for the home, which came from the stolen escrow funds.
Assistant District Attorneys and Senior Investigative Counsels Sarah M. Sacks and Vimi Bhatia are prosecuting the case under the supervision of Assistant District Attorneys Garrett Lynch, Deputy Chief of the Major Economic Crimes Bureau; Christopher Conroy, Chief of the Major Economic Crimes Bureau; and Executive Assistant District Attorney David Szuchman, Chief of the Investigation Division. Senior Investigator Gerald Bergold assisted with the investigation under the supervision of Supervising Investigator Jonathan Reid, Assistant Chief Rackets Investigator Michael Wigdor, and Chief Investigator Walter Alexander. The following individuals also assisted in the investigation: Investigator Kelly Wilbur and Senior Rackets Investigators Jose Vazquez, Shannon Rowe, Anthony DiCaprio and Joseph Monroig provided assistance with the investigation, as did Investigative Analyst Hyatt Mustefa, Trial Preparation Assistant Katharine Witteman, and others.
DA Vance also thanked the Monmouth County (NJ) Prosecutor’s Office, which assisted with the investigation.
[1] The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.