In re Langione

• Decision Date: 24 June 2015
• Docket Number: 2013-00214
• Citation: 131 A.D.3d 199,2015 N.Y. Slip Op. 05479,11 N.Y.S.3d 256
• Parties: In the Matter of James R. LANGIONE, an attorney and counselor-at-law. Grievance Committee for the Ninth Judicial District, petitioner; James R. Langione, respondent.
• Court: New York Supreme Court — Appellate Division

131 A.D.3d 199
11 N.Y.S.3d 256
2015 N.Y. Slip Op. 05479

In the Matter of James R. LANGIONE, an attorney and counselor-at-law.

Grievance Committee for the Ninth Judicial District, petitioner;
James R. Langione, respondent.

2013-00214

Supreme Court, Appellate Division, Second Department, New York.

June 24, 2015.

11 N.Y.S.3d 257

Gary L. Casella, White Plains, N.Y. (Antonia Cipollone and Matthew Lee–Renert of counsel), for petitioner.

Langione Catterson & LoFrumento, LLP, Garden City, N.Y. (Jeffrey L. Catterson of counsel) for respondent.

RANDALL T. ENG, P.J., WILLIAM F. MASTRO, REINALDO E. RIVERA, THOMAS A. DICKERSON, and CHERYL E. CHAMBERS, JJ.

11 N.Y.S.3d 258

PER CURIAM.

131 A.D.3d 200

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 A.D.3d 103, 961 N.Y.S.2d 475, on remittitur from the Court of Appeals, 19 N.Y.3d 688, 954 N.Y.S.2d 784, 978 N.E.2d 1254, modfg. in part, affg. in part, 94 A.D.3d 30, 940 N.Y.S.2d 88 ).

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

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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 N.Y.3d 688, 692–693, 954 N.Y.S.2d 784, 978 N.E.2d 1254 :

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 1, 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

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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 [two and a half] to [seven and a half] 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.

11 N.Y.S.3d 259

The Grievance Committee served the respondent with a petition dated December 21, 2012, containing 12 charges of professional misconduct. Following a pre-hearing 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 number XXXXXX1064, 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

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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] and/or 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 number XXXXXX639) and/or M&T Bank (account number 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

11 N.Y.S.3d 260

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. In or about January 2008, the firm disbursed the sum of $85,791.36 to the Carroll Estate. Upon information and belief, the Carroll Estate has not received the balance of the funds due to it, which had been received by the respondent in a fiduciary capacity. 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] and/or 1200.3[a][7] ).

Charge 3 alleges that, on or about August 9, 2006, $50,000 was deposited into the M&T Bank IOLA Account on behalf of Adele Fabrizio in connection with the settlement of a personal

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injury lawsuit in which the firm represented her. On or...