The New York State Commission on Judicial Conduct has accused Bronx Surrogate Lee L. Holzman of failing to turn in to the authorities a former counsel to the Bronx public administrator after learning the attorney, Michael Lippman, had received payments exceeding those authorized by an oversight commission headed by the surrogate.

The charges became public when Surrogate Holzman waived his right yesterday to have the commission proceedings against him remain confidential.

Read documents in the commission proceedings.

The commission issued charges on Jan. 4, 2011. But while the first witness was on the stand yesterday, a judge in Manhattan ordered the hearing temporarily stayed.

In its formal complaint, the commission charged Surrogate Holzman with misapplying guidelines for the payment of counsel to the public administrator in a case linked to Mr. Lippman, who was indicted in 2010 for collecting $300,000 in excessive fees (NYLJ, July 9, 2010).

The commission’s complaint charged that in 2005-06 when Surrogate Holzman became aware that Mr. Lippman had received fees in excess of the 2002 guidelines, the judge failed to report Mr. Lippman to either law enforcement or professional disciplinary authorities.

Surrogate Holzman similarly failed to report payments that had been advanced to Mr. Lippman by a former Bronx public administrator, according to the complaint.

Surrogate Holzman’s lawyer, David Godosky fired back that Surrogate Holzman “took immediate action” in late 2005 and early 2006 as soon as he learned of any misconduct in the Public Administrator’s Office.

“Investigations by the Bronx District Attorney’s Office, the New York City Department of Investigations and the FBI all concluded that the problem was in the Public Administrator’s Office, not the Surrogate’s Court,” said Mr. Godosky, of Godosky & Gentile. Only the conduct commission has taken the position that Surrogate Holzman is “somehow responsible under a theory of respondeat superior,” he added.

Surrogate Holzman became the chairman of the Administrative Board of the Offices of the Public Administrators in 2002, the year the body formulated guidelines for the payment of counsel to public administrators. The guidelines, which are not mandatory, set compensation at 6 percent of the first $750,000 at issue in an estate case, with the percentage declining in increments to 1.5 percent for amounts exceeding $5 million.

Surrogate Holzman remained the board’s chairman through 2009 and continues to serve as a member.

The Surrogate’s Court in each county appoints both the public administrator and his or her counsel. Public administrators are responsible for distributing the assets of persons who die without a will and who have no close relative to wind up their affairs.

Mr. Lippman was indicted in 2010 for receiving a total of $300,000 in excessive fees in five cases. Also, according to the conduct commission complaint, he received improper advances on his fees from a former public administrator, Esther Rodriguez. Those advances had not been approved by Surrogate Holzman.

The commission listed nearly 50 cases in which Mr. Lippman had received either excessive fees or advances on his earnings.

After learning of the improper payments in 2006, Surrogate Holzman fired both Ms. Rodriguez and Mr. Lippman, according to the commission’s complaint, but allowed Mr. Lippman to continue working with the understanding that any fees he earned would be applied against the excessive or advance fees already paid to him.

A new public administrator and counsel were appointed, and during the next three years, Mr. Lippman, though no longer counsel, continued to work on 20 percent of the new cases that came into the office, said John J. Reddy Jr., who replaced the interim counsel in 2009.

Any amounts Mr. Lippman earned on those accounts were also used to replenish estates on which Mr. Lippman had received improper payments from Ms. Rodriguez, Mr. Reddy said.

With Mr. Reddy’s arrival, Mr. Lippman’s work on the Bronx office’s cases ceased. At the time, according to Mr. Reddy, about 300 cases remained in which either overpayments or advances had not been worked off by Mr. Lippman.

Now that number is down to 32, he said.

Mr. Reddy said that fees generated by work that he or his firm, Reddy Levy & Ziffer, performed on Mr. Lippman’s cases are used to replenish the estates that paid the excessive or advance fees to Mr. Lippman. Mr. Reddy said that to recover his own fees, he would have to sue Mr. Lippman for hundreds of thousands of dollars.

Stay Issued

Manhattan Justice Barbara Jaffe stayed the commission hearing yesterday morning while Ms. Rodriguez, the first witness, was on the stand.

Last Thursday Justice Jaffe had denied Surrogate Holzman’s Article 78 petition for a stay to enable him to secure testimony from Mr. Lippman, who is certain to invoke his right to protection against self-incrimination until the criminal case is over. The criminal case, brought by the Bronx District Attorney’s office, is still in the motion phase.

Surrogate Holzman also asked to delay the commission’s hearing until the completion of Mr. Lippman’s criminal case so the judge could obtain records compiled by law enforcement agencies in conjunction with the prosecution.

Yesterday, however, Justice Jaffe granted Surrogate Holzman’s motion to reargue the Article 78 and stayed the commission hearing until the next court date, Sept. 21.