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Lawyer for Holocaust Victims Claims Trust-Fund Dipping Was Inadvertent
New Jersey Law Journal
June 17, 2009
The Supreme Court of New Jersey on Tuesday heard Edward Fagan, a Livingston, N.J., lawyer who helped secure a multibillion-dollar settlement for Holocaust victims and survivors, argue why he should not be disbarred for misappropriating clients' funds.
Appearing pro se in response to an order to show cause, Fagan disputed findings made last year by a special master that he improperly disbursed upwards of $400,000 in settlement and estate funds and used them for personal expenses.
The lawyer said that the money he withdrew represented valid compensation for legal work, although he admitted his record-keeping was spotty.
Special master Arthur Minuskin last year rejected Fagan's claim that the expenditures were the result of negligence and thus should not subject him to the mandatory disbarment rule of In re Wilson, 81 N.J. 451 (1979).
Fagan was one of the lawyers who launched federal class action litigation in the 1990s that sought reparations for Holocaust crimes from Germany, German industries, Swiss banks and other entities, resulting in a $1.25 billion settlement in 1998 for more than 30,000 victims.
According to the master's report, Fagan failed to hold $82,582 in escrow given to him by client Gizella Weisshaus, a Holocaust survivor, from the estate of Jack Oestreicher; that he improperly disbursed $303,582 of Holocaust settlement funds from client Estelle Sapir; and that he misappropriated $40,000 from clients' funds to pay his New York law office rent.
"The evidence does not support the respondent's claim that he had the authority to use the Sapir settlement funds for his personal use or to pay back funds to Oestreicher or Sapir," wrote Minuskin, a former Superior Court judge, in a report that followed 25 days of hearings.
Fagan testified that he used trust accounts from various clients to pay out personal injury settlements, but Minuskin found Fagan was evasive under oath and lied in claiming he had authority to disburse the clients' funds.
Based on Minuskin's report, the Disciplinary Review Board recommended disbarment, and Tuesday's hearing was Fagan's last chance to ward off the ultimate penalty. Disbarments in New Jersey are permanent.
Fagan is ineligible to practice in New Jersey because he has not paid his registration fees. He is still licensed to practice in New York.
