A New York-licensed attorney and former partner at a New York law firm pleaded guilty today to conspiracy to defraud the United States and tax evasion arising from a scheme to embezzle millions of dollars from a deceased client’s estate, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Geoffrey S. Berman for the Southern District of New York.
“The fiduciary duty that a lawyer owes to a client is paramount to the practice of law,” said Principal Deputy Assistant Attorney General Zuckerman. “The Justice Department will prosecute and seek just punishment against any attorney who victimizes their clients for their own personal gain.”
“As he admitted in court today, Steven Etkind violated the law, the canons of his profession, and the trust of his client by stealing more than $3.5 million from the client’s estate,” said U.S. Attorney Berman. “Etkind now awaits sentencing for his crimes.”
According to court documents and statements made in court, Steven M. Etkind was a partner at a New York law firm’s tax, trusts and estates group and a Certified Public Accountant. Etkind performed legal work for a successful entrepreneur client, who passed away in 2008, naming Etkind as the co-executor of his $35 million estate.
The client’s will directed the creation of two charitable trust private foundations, funded with assets from the client’s estate, for the sole purpose of donating to 501(c)(3) charitable organizations, including those aimed at assisting Jewish-sponsored organizations. Etkind was named co-trustee of these trusts.
Beginning in 2009, Etkind and his co-conspirator set up a phony charitable organization, the United Jewish Education Foundation (UJEF), and used it to steal more than $3.5 million from these charitable trusts. As part of the conspiracy, Etkind directed that donations from the trusts be first made to legitimate Jewish charitable organizations in order to give the disbursements the appearance of legitimate donations. Etkind and his co-conspirator then redirected the funds to accounts of UJEF, the phony charity that his co-conspirator controlled.
Etkind subsequently directed his co-conspirator to write checks, totaling $327,500, to a bank account in the name of JE Capital Holding Corp., a nominee corporate entity that Etkind controlled exclusively. Etkind further directed more than $3 million to be used in 2010 to purchase a 6,300 square-foot home with a swimming pool in Southampton, New York. The Southampton property was purchased for the use and enjoyment of Etkind and his family. Etkind later transferred title of the property to JE Trust, a nominee trust he controlled.
To conceal his embezzlement, Etkind filed, and caused to be filed, fraudulent personal, corporate, and charitable trust returns with the Internal Revenue Service (IRS). During the course of a subsequent audit of UJEF by the IRS Tax Exempt & Government Entities Division, Etkind and his co-conspirator made several false and misleading statements, including about the true ownership of the Southampton Property.
United States District Judge John G. Koelt scheduled Etkind’s sentencing for January 18, 2019. Etkind faces a statutory maximum sentence of five years in prison on the conspiracy charge and five years in prison for tax evasion. He also faces a period of supervised release, restitution, and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Berman praised the outstanding efforts by special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Jorge Almonte and Jack A. Morgan of the Tax Division, who are prosecuting the case, as well as the IRS’s Tax Exempt & Government Entities Division for their assistance in the investigation.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Author: September 6, 2018