If you’re a first-time homebuyer making a down payment, a seller waiting on the proceeds from a home sale or a family expecting settlement funds, you trust your attorney to safeguard your money in an escrow account. For many New Yorkers, that money represents years of savings — funds meant for a home, a fresh start or long-term security — not for misuse.
Yet far too often, clients become victims of theft when attorneys misappropriate funds from escrow accounts — special trust accounts in which lawyers are required to safeguard their clients’ money, most commonly during real estate transactions. Just last year, a former real estate attorney was sentenced to up to 10½ years in prison for stealing nearly $1.8 million from 32 clients over a three-year period. He did so by withholding sale proceeds and down payments that rightfully belonged to them.
The case was far from isolated. Since New York established the Lawyers’ Fund for Client Protection in 1982 — which reimburses clients who lose money or property due to a lawyer’s dishonest conduct — more than $112 million in stolen real estate escrow funds has been returned to victims. Clients deserve to make life-changing financial decisions without worrying about whether their money is safe.
That’s why I introduced legislation with Assemblyman Charles Lavine to establish a statewide Random Audit Compliance Program that would conduct periodic audits of law firms managing real estate escrow trust accounts…