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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