A New York real estate lawyer who has been accused by creditors of misusing client funds has reached a plea agreement with prosecutors and will surrender for arrest next month, the Manhattan district attorney's office told a federal bankruptcy judge on yesterday, Reuters reported. In a letter to U.S. Bankruptcy Judge David Jones, prosecutors said they expect attorney Mitchell Kossoff to surrender on or about Dec. 3 and to enter a guilty plea a week later. The letter did not specify the criminal charges or include details about Kossoff's plea. Kossoff PLLC was forced into bankruptcy in May after creditors claimed Kossoff, once a fixture in the New York real estate scene, misappropriated more than $8 million from the law firm's escrow accounts. A lawyer for Kossoff, Walter Mack, declined to comment. Mack has said Kossoff would cooperate in the bankruptcy proceedings if he is granted immunity from prosecution. Kossoff has not responded directly to his creditors' claims in bankruptcy court. The DA's letter asked Jones to extend its deadline to respond to Al Togut, the chapter 7 trustee overseeing the dissolution of Kossoff PLLC. Togut is seeking grand jury materials relating to prosecutors' investigation of Kossoff and asked Jones to force the district attorney to turn them over. Once Kossoff has entered his guilty plea, the grand jury's investigation will be complete, rendering the dispute moot, prosecutors said. The office will seek a court order allowing materials to be shared with Togut, the letter added.
Twenty-six former high-level figures at LeClairRyan, including firm founder Gary LeClair, CEO Eric Gustafson and former general counsel Lori Thompson, have reached an agreement with their insurer and the bankruptcy trustee for the defunct firm to settle a set of pending claims against them for $10 million, Law.com reported. Trustee Lynn L. Tavenner, the 26 defendants, and Columbia Casualty, which issued the firm’s management liability policy, participated in an all-day settlement conference Nov. 16 in which Columbia agreed to pay the trustee $9.425 million to resolve claims including conspiracy, breach of fiduciary duty, and trade secrets against the defendants, and an additional $575,000 to satisfy claim expenses. Together, this sum equals the $10 million liability limit on the Columbia policy.
The Justice Department said yesterday that Bruce Matson, the former chief legal officer at now-defunct law firm LeClairRyan, has been sentenced to 44 months in prison after pleading guilty in July to obstructing a federal probe, Reuters reported. U.S. District Judge John Gibney of the Eastern District of Virginia in Richmond also ordered Matson to pay a $10,000 fine, according to the DOJ. Matson was accused of lying to a DOJ watchdog that was probing his alleged misappropriation of funds from title insurer LandAmerica Financial Group's bankruptcy. Prosecutors had requested 46 months in prison and a $250,000 fine, while Matson's attorneys requested a 37-month sentence. LandAmerica, one of the largest title insurance groups in the U.S., filed for bankruptcy in the Eastern District of Virginia in 2008. Matson, was assigned the role of liquidation trustee for the company's remaining assets while at LeClairRyan. He was found to have embezzled approximately $800,000 from the trust between 2015 and 2018, and misappropriated a total of $4 million, according to court papers. According to prosecutors, in 2019 Matson lied to the U.S. Trustee probing the depleted trust funds, telling them he moved the funds because of high bank fees and tax identification issues. Matson agreed to disbarment in November 2020.
A lawyer for sex abuse survivors in the Boy Scouts of America's bankruptcy said yesterday that two attorneys for the official committee representing survivors' interests in the case should be disqualified after the committee sent an "inflammatory" email about the BSA's proposed reorganization plan and sex abuse litigation settlement, Reuters reported. Ken Rothweiler of Eisenberg, Rothweiler, Winkler, Eisenberg & Jeck claimed during a virtual hearing before U.S. Bankruptcy Judge Laurie Selber Silverstein that James Stang and John Lucas of Pachulski Stang Ziehl & Jones, who represent the official committee, knew the email was inappropriate but allowed it to be sent to thousands of survivors anyway. Rothweiler told the judge during the hearing that the email, which encouraged the survivors to vote against the plan, has tainted the voting process. Sex abuse claimants have until Dec. 14 to submit votes on the plan, which would establish a trust to compensate men who say they were sexually abused as children by troop leaders. The trust currently has around $1.887 billion available for survivors. The plan is supported by one large survivor group that Rothweiler works with. However, the official committee opposes the deal, saying that the amount being offered to more than 80,000 abuse claimants is too low. The committee sent an email on Nov. 6 to around 20,000 survivors that included a letter from plaintiffs’ attorney Tim Kosnoff, who is not part of the committee. The Boy Scouts say the letter contained false and defamatory statements. Additionally, the letter directed readers to Kosnoff’s Twitter account, where he has attacked Rothweiler, among others involved in the bankruptcy.
A bankruptcy judge threatened to jail a Manhattan real estate lawyer if he doesn’t promptly provide a list of creditors and detailed financial information about his failed law firm and the $17 million it allegedly owes its clients, WSJ Pro Bankruptcy reported. Judge David Jones of the U.S. Bankruptcy Court in Manhattan said anything short of incarceration wouldn’t be enough to ensure that lawyer Mitchell Kossoff produce details on assets, contracts and leases at his law firm that would make it possible to hold a meeting of creditors. Earlier this month, the trustee liquidating Mr. Kossoff’s namesake law firm asked that Mr. Kossoff be held in civil contempt for violating disclosure orders to provide a client list and schedules. On Tuesday, the judge did so. Allowing more time and “wrangling” between Mr. Kossoff and the trustee is unlikely to be successful in securing his compliance, the judge said. Judge Jones cited an “extensive pattern of delay” by Mr. Kossoff, who is the subject of a criminal investigation by the Manhattan district attorney’s office. The judge said he didn’t envision issuing an order for Mr. Kossoff’s arrest for at least seven days. “I hope he is never incarcerated,” Judge Jones said. “I hope he complies with the court order.”
Lawyers for the Boy Scouts of America are scrambling to mitigate potential damage they say was caused by an “inflammatory” email sent to thousands of men who say they were sexually abused by troop leaders ahead of a key deadline in the youth organization’s bankruptcy, Reuters reported. U.S. Bankruptcy Judge Laurie Selber Silverstein in Delaware said during a virtual hearing on Friday that she thinks the email distributed by lawyers for the official committee representing survivors in the bankruptcy may constitute "a breach of professional ethics." The email, authored by plaintiffs’ lawyer Tim Kosnoff, urged survivors to vote against the Boy Scouts of America (BSA) reorganization plan, which rests on a proposed settlement of more than 80,000 sex abuse claims. It also included what BSA described as attacks on other lawyers in the case and inaccurate statements about the plan. BSA's lawyers said the email could have “disastrous effects” by confusing survivors and tainting their votes on the plan, which are due Dec. 14. The organization needs the votes to settle the claims and exit bankruptcy.
