Thy Partners Brothers Keeper
A six-month suspension was ordered by the New York Appellate Division for the Second Judicial Department as a result of conduct that was committed by his law partner’s brother
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 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.
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 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.
His culpability was of a lesser degree than that of the Brothers Galasso
Unlike the respondent’s partner, Peter Galasso, the respondent received no “unjust enrichment” from the defalcations by Anthony Galasso. Indeed, the respondent injected personal funds into the firm’s purchase of an office condominium, rather than funds derived from the fraudulent activities of Anthony Galasso, as Peter Galasso did.
Moreover, the respondent attempted to make restitution to his aggrieved clients—the Carroll Estate, Adele Fabrizio, and Theresa Halloran—from his personal funds, independent of, and in addition to, settlement funds obtained and disbursed as a result of litigation.
Under the totality of the circumstances, the respondent is suspended from the practice of law for a period of six months.
Peter Galasso was suspended for two years. (Mike Frisch)