No Restitution Where Attorney Acting As Investment Advisor

An attorney who did not practice law by rather served as an investment advisor was disbarred by the New York Appellate Division for the First Judicial Department

Respondent does not practice law, but operates a tax preparation and consulting business in Florida. Buono, a retired government employee, and her husband sought financial advice from respondent, whom they had used as a tax preparer and financial adviser for the previous five years. Respondent advised Buono to invest in a hedge fund he had formed and managed, Green Oak Hedge Fund, Ltd. (Green Oak), assuring her that it was conservative and safe, and employed a trading strategy that was guaranteed not to lose money. However, according to Green Oak’s offering materials and its limited liability partnership agreement, which were never provided to Buono, the fund utilized an options trading strategy and involved a high degree of risk, including the possibility that investors could lose part or all of their investment.

The attorney made numerous misrepresentations and Buono lost her investment

Although respondent has no prior disciplinary history, his misconduct was intentional and involved repeated, material misrepresentations to Buono and she lost most of her savings. There also is significant evidence of aggravation, namely that respondent testified falsely at his deposition before the Committee, that he engaged in similar misconduct with respect to other Florida investors and has not satisfied the two judgments they obtained against him, and he improperly transferred the funds of a deceased tax client into a joint brokerage account.

But no order of restitution

As to the Hearing’s Panel additional recommendation that respondent’s reinstatement be conditioned upon his making full restitution to Buono with interest, this Court cannot issue an order directing restitution pursuant to Judiciary Law § 90(6-a)(a). Respondent’s fraudulent solicitation of investment funds from Buono occurred in his role as a financial adviser, not in connection with the practice of law as contemplated by the statute.

(Mike Frisch)