Business of Law

Client Sues Crowell & Moring, Claims Law Firm Can't Account for $5.5M in Escrow Money

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A real estate management company represented by Crowell & Moring sued the law firm today in New York state court.

The Manhattan Supreme Court complaint (PDF) contends that Crowell & Moring can’t account for some $5.5 million being held in escrow on behalf of Regal Real Estate and other plaintiffs and alleges that a former attorney with the firm “improperly diverted” at least some of the missing money. It asserts claims for negligence and breach of contract.

In addition to stating or implying that then-associate Douglas R. Arntsen was responsible for what it terms “the apparent theft of escrow funds,” the suit also blames the firm and a partner who oversaw Arntsen’s work for an alleged lack of adequate supervision.

Arntsen is reportedly being held in Hong Kong, as a previous post details.

“My client has a big problem—this is unbelievable,” attorney Bruce H. Lederman, who represents Regal and related entities, tells the New York Law Journal (reg. req.).

“I feel like I’ve been living a bad episode of Law & Order since last Tuesday,” the D’Agostino Levine Landesman & Lederman partner said.

Crowell & Moring declined the legal publication’s request for comment.

A subsequent Reuters article provides additional details.

Hat tip: Am Law Daily.

Updated on Oct. 5 to link to subsequent Reuters article.

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