Tuesday, June 5, 2012

A Family Affair

The New York Appellate Division for the First Judicial Department has given collateral estoppel effect to a decision of the United States District Court for the Southern District of New York and imposed a suspension of one year:

This matter stems from respondent's representation of Peter Costalas, who, along with his two brothers, James and John, were members of a family partnership that owned five buildings and twelve restaurants. Peter diverted millions of dollars in partnership finds and mortgaged buildings by use of forged signatures in order to cover losses incurred in connection with his personal trading in stock options. As a result, James and John commenced an action against Peter and his brokers. In August 1993, respondent negotiated an agreement on Peter's behalf in which Peter, among other things, assigned and transferred his interest in the partnership to John, and in return, was dismissed as a defendant in the litigation.

Thereafter, Vivia Amalfitano, James' daughter, purchased the partnership's remaining building and restaurant from John and James. In May 2001, respondent commenced an action in New York County, Supreme Court, naming Vivia and her husband, Gerard Amalfitano, Esq., as defendants, alleging that they defrauded John and James into conveying the partnership's remaining property and business, and that Peter was still a partner. The action was eventually dismissed during trial. Respondent then unsuccessfully appealed the trial court's order denying his motion to vacate (see Costalas v Amalfitano, 23 AD3d 303 [2005]).

In March 2004, the Amalfitanos commenced the above-mentioned federal action against respondent alleging that respondent's commencement and prosecution of the state court action against them constituted a violation of Judiciary Law ยง 487.

The federal court found that the attorney knowingly sponsored perjured testimony and engaged in dishonest conduct. (Mike Frisch)

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