Font Size: 
Holocaust Victims' Lawyer Disbarred for Trust-Fund Dipping
Attorney launched federal class action that resulted in a $1.25 billion settlement for more than 30,000 Holocaust victims
New Jersey Law Journal
June 24, 2009
The New Jersey Supreme Court on Tuesday ordered the disbarment of Edward Fagan, a lawyer who won millions of dollars in settlements for Holocaust victims but who also misappropriated some of their money to pay his debts.
Fagan told the justices during a hearing on June 16 that disciplinary authorities' handling of the evidence may have deprived him of a chance to prove that the money he took was for legal work and he asked for a remand for further fact-finding.
But the justices declined and found him guilty of knowing misappropriation of client and escrow funds.
Fagan was disbarred in New York in December for a separate offense -- shenanigans involving stolen artwork -- but under rules in that state disbarred lawyers can apply for readmission after six years. In New Jersey, disbarment is permanent.
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.
In the meantime, he also took sums from client accounts without authority, using some of it to pay the rent on his New York office, according to a finding last year by a special master, retired Superior Court Judge Arthur Minuskin.
Minuskin said 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.
Minuskin rejected an argument that Fagan was guilty only of negligence and bad record-keeping, which normally are punished by suspension or reprimand.
Fagan made the same argument to the New Jersey Supreme Court last week and repeated allegations that the Office of Attorney Ethics mishandled his records, preventing him from proving that he had done legal work for the clients that entitled him to the money.
He told the justices that the OAE examined boxes of records he had kept for safekeeping with another attorney and that by the time he could look at the documents again they were in disarray and not usable to support his contention he deserved the money.
But Justice Barry Albin suggested that even without the personal records, Fagan could have shown he had done compensable legal work by reconstructing his activities on behalf of the clients, perhaps by using court files.
Justice Robert Rivera-Soto said Fagan could have gone to courts, and perhaps even adversaries, and obtained records of work performed for, say, Weisshaus and then he could have told investigators, "see this is work I did for her, these are all services that I rendered for which I was not paid and therefore I am entitled to take money," Rivera-Soto said Fagan could have argued.
"At least we would have something that would corroborate the version of events you are giving us today," Rivera-Soto said. "I don't see it."
Fagan insisted that the evidence he had submitted was sufficient, but ethics counsel John McGill III said at the hearing that the Disciplinary Review Board had seen the evidence and had rejected Fagan's arguments. He said Fagan had made a "willful attempt to stonewall and thwart the disciplinary process since its inception in 1999."
The DRB said in its opinion that Fagan's allegations about the mishandling of his files weren't true and that he had been invited to view the records at the OAE's office and copy them but had declined.
Fagan won millions of dollars in fees in Holocaust-related cases. But he claimed the earnings were eaten up by debts to entities that had advanced him money and by a $2.6 million divorce settlement to his former wife.
Fagan told the justices, "There have been times during my professional career when I brought honor to myself, my profession, my family, to the court and to things I believed in. This isn't one of those times."
In the disbarment action in New York, Fagan was found guilty of deceiving a federal judge about a previous class action settlement, naming a nonexistent plaintiff in a suit and buying interests in stolen artwork for the sole purpose of suing over the artwork, which constitutes champerty.
