Disbarment For Frivolous Suit

An attorney who had filed an action seeking $6.8 billion against a number of corporations, governmental entities and financial institutions alleging “theft, retention and sale of of artwork looted during the Holocaust” was disbarred by the New York Appellate Division for the First Judicial Department. A federal district court had dismissed the underlying case as ” little more than an end run” around litigation that had been resolved in a comprehension settlement against Bank Austria.

The court here noted:

Judge Kram granted Bank Austria’s motion to sanction respondent, finding that the lawsuit, being “entirely without color”, was frivolous and in bad faith in violation of Rule 11. Judge Kram commented on, among other things, respondent’s lack of preparation and professionalism, his “glaringly inadequate filings,” and the fact that he deceived the court of “critical facts” concerning the previous class action settlement against Bank Austria in which he had substantially participated (2005 US Dist LEXIS 17411, *12). Judge Kram stated that the pleadings contained flagrant misrepresentations, that respondent falsely claimed that he was a member of the plaintiff organization AHVRAM, and that respondent attempted to circumvent the Bank Austria settlement. Judge Kram further noted that respondent, through AHVRAM, was prosecuting actions against at least six governments or entities, and stated that the findings were “bolstered by the fact that this case appears to be part of a pervasive and disturbing trend.” (2005 US Dist LEXIS 17411, *18). Finally, Judge Kram stated that respondent engaged in champerty in violation of Judiciary Law § 488 and DR 5-103, based on her conclusion that respondent purchased interests in stolen artwork solely for the purpose of bringing lawsuits involving that artwork (2005 US Dist LEXIS 17411, *17). Judge Kram fined respondent $5,000 to be paid immediately to the court, and ordered him to pay his adversary’s litigation costs and fees.

Respondent moved for reconsideration of and a stay of the court’s rulings, which the court denied on November 17, 2005. The court further determined that respondent owed Bank Austria a total of $345,520.64 in litigation costs and expenses, and ordered him to immediately pay the $5,000 fine or post a bond. On December 1, 2005, judgment was entered against respondent and in favor of the defendant in the amount of $345,520.64. On January 13, 2006, the U.S. Court of Appeals issued a mandate dismissing respondent’s appeal of Judge Kram’s August 19, 2005 sanction order and deemed any pending motions moot.

The court had earlier granted an unopposed petition to accord collateral estoppel effect to the findings of the district court. A hearing panel in the disciplinary case found that the lawyer had made false submissions to the district court and had engaged in a pattern of misconduct.The court here agreed that the lawyer had known that the putative plaintiff in the case he had brought did not exist and that the relief sought had already been secured. (Mike Frisch)