Thursday, May 13, 2021

Resignation Attempt Aggravates Sanction

The New York Appellate Division held that a securities fraud conviction does not trigger the automatic disbarment provisions of the Judiciary Law but nonetheless concluded that disbarment was appropriate under the circumstances

we find that respondent's federal securities fraud conviction cannot serve as a predicate conviction for automatic disbarment on the record before us.


Respondent has not responded to the motion and therefore has offered nothing for our consideration in mitigation. Conversely, AGC has raised several factors in aggravation. The most significant of these factors arises from respondent's conduct surrounding his November 2018 application to this Court for leave to resign for nondisciplinary reasons (see Rules for Attorney Disciplinary Matters [22 NYCRR] § 1240.22). To this point, respondent initially submitted an application for nondisciplinary resignation a mere eight days prior to the filing of criminal charges against him. At that time, respondent had already been presented with a plea agreement by the United States, which he executed two days after submitting his application to this Court. Further, in response to a request from this Court seeking clarification of his failure to respond to certain inquiries in his form affidavit (see Rules for Attorney Disciplinary Matters [22 NYCRR] part 1240, appendix E), he submitted a supplemental affidavit – after he had been criminally charged – and made no effort to advise this Court of the change in his status. This Court ultimately learned of respondent's criminal matter through its own investigation and, accordingly, dismissed his resignation application. We can only conclude that respondent's actions were undertaken in a misguided attempt to avoid disclosing to this Court and AGC that he was facing charges for his federal criminal activity, and we find that his deceptive behavior severely aggravates his already serious criminal conduct.  In sum, in order to protect the public, maintain the honor and integrity of the profession, and deter others from committing similar misconduct, we find that respondent should be disbarred in this state.

From the Department of Justice District of Massachusetts press release

Milan Patel, 50, a resident of Minnesota, was sentenced by U.S. District Court Judge Nathaniel M. Gorton to 15 months in prison and ordered to pay a fine of $50,000. In February 2019, Patel pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud.

From 2013 to 2018, Patel and co-conspirators Morrie Tobin, Matthew Ledvina and Roger Knox conspired to disguise their ownership and control of various microcap securities, and to employ paid promotional campaigns and manipulative trading techniques to artificially inflate the price and trading volume of those stocks so that Tobin and others could secretly sell their shares at a substantial profit. Patel, together with Ledvina, helped Tobin create shell companies to disguise Tobin’s control of the shares, enabling Tobin to sell the shares to unsuspecting investors.   

(Mike Frisch)

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