NEW YORK, May 16 (Reuters) - A New York lawyer has received
a four-year suspension for failing to detect and stop what a
federal judge has called "one of the largest
mortgage-origination frauds on record."
The Appellate Division, Second Department, on Tuesday
sustained 10 charges of professional misconduct against Thomas
Cusack. Cusack is a solo practitioner who worked as in-house
counsel for companies affiliated with Thomas Kontogiannis, a New
York real-estate developer.
Kontogiannis pleaded guilty in October 2010 to conspiring to
commit bank and wire fraud in a scheme to sell fraudulent
mortgages to secondary buyers at several banks, including
Washington Mutual and DLJ Mortgage Capital, a subsidiary of
Credit Suisse AG.
In all, the scheme cost lenders $98 million, prosecutors
According to the disciplinary ruling, Cusack, acting as an
attorney for companies controlled by Kontogiannis in
mortgage-loan closings, failed to take proper steps to document
and record the sales. That allowed Kontogiannis to later take
out additional mortgages on the properties, the ruling said.
Cusack often caved under the influence of his client,
improperly sharing legal fees and misusing funds in escrow
accounts, the ruling stated.
There was no indication that Cusack knew that his clients
engaged in criminal activity, nor did he profit from the scam,
the ruling said. However, Cusack was neither candid about the
circumstances surrounding the depletion of funds in his escrow
account, nor willing to accept responsibility for his failure to
perform usual and customary functions of a lender's attorney,
the ruling stated. "The evidence of his malfeasance is
Cusack declined to comment on the decision. Edwin Mulhern,
an attorney representing Cusack in the disciplinary proceedings,
said his client was "duped" by Kontogiannis.
"He really didn't know what was going on," Mulhern said.
"Perhaps he should have, but he didn't."
Cusack's four-year suspension begins on June 15 and will run
until Dec. 15, 2015, the ruling stated.
Last October, Kontogiannis was sentenced by U.S. District
Judge Kiyo Matsumoto to nine years in prison. That sentence is
being served concurrently with the remainder of an eight-year
sentence Kontogiannis previously received for laundering bribes
for former U.S. Congressman Randy "Duke" Cunningham.
The case is In the Matter of Thomas F. Cusack III, in the
Supreme Court of the State of New York, Appellate Division:
Second Department, no. 2009-05856.
For the Grievance Committee for the 10th Judicial District:
For Cusack: Edwin Mulhern.
(Reporting by Jessica Dye)
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