Bankruptcy Law

Lawyer facing 'world of financial claims' could be jailed for refusing to turn over records in bankruptcy

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A lawyer whose firm was forced into bankruptcy after clients complained about more than $8 million missing in escrow funds was held in civil contempt Tuesday for failing to turn over documents.

U.S. Bankruptcy Judge David S. Jones of the Southern District of New York said New York real estate lawyer Mitchell Kossoff could go to jail if a federal district judge affirms his findings, report Law360 and Reuters.

Jones said he thought no order “short of incarceration” was likely to induce compliance with his rulings, according to Law360.

“Given the world of financial claims already aimed at Mr. Kossoff and whatever assets he has, I don’t see financial sanctions could possibly be effective, and I don’t think a mere declaration or certification that he is in contempt would be sufficient, given all of the negative publicity and legal exposure he already faces,” Jones said.

Kossoff has argued through his lawyer that he is under investigation by the Manhattan district attorney’s office, and he does not want to give up his Fifth Amendment right against self-incrimination by turning over the documents.

Jones ruled against that claim Aug. 5. Kossoff was required to maintain records for his law firm, Jones said, and he has the obligation to cooperate with the bankruptcy trustee as the responsible officer for his law firm.

At the hearing Tuesday, Kossoff’s lawyer, Walter Mack, said Kossoff had turned over documents that were not privileged. Other documents were seized by the district attorney’s office, he said.

Mack promised to supply schedules of debts owed, with privilege assertions included, according to Law360.

“You won’t necessarily be overjoyed with what I have to say, but I’ll file them,” Mack said.

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