Attorneys for Bronx Surrogate Lee Holzman and for the administrator of the Commission on Judicial Conduct squared off before the full commission yesterday, with the administrator’s attorney urging the panel to remove Holzman for allegedly engaging in a “cover-up” of misconduct by Michael Lippman, the former chief counsel to the Bronx public administrator.

Holzman also addressed the commission briefly near the end of the hearing.

The charges against Holzman, which were brought by the commission but drafted by its administrator, Robert Tembeckjian, were filed in January 2011. The commission alleges Holzman failed to supervise Lippman, who routinely collected legal fees from estates in advance, and sometimes took more fees than he was entitled to.

In 2006, when Holzman learned of Lippman’s misconduct, he did not fire him. Instead, he demoted him to associate counsel and allowed him to continue working on estates, using the fees he earned to pay what he owed to other estates. The commission claims Holzman should have fired Lippman immediately and reported him to the Departmental Disciplinary Committee. It also claims he should have shared what he knew with New York City’s Department of Investigation and the Federal Bureau of Investigation, which were investigating the public administrator’s office.

Lippman was finally fired in 2009 by a new counsel to the public administrator, John Reddy. In 2010, Lippman was indicted for collecting $300,000 in excessive fees (NYLJ, July 9, 2010). His trial was set to begin in August but has been adjourned at least until November.

The charges against Holzman first went before a referee, former Manhattan Supreme Court Justice Felice Shea. In July, Shea found that Holzman should have fired and reported Lippman. However, she rejected the commission’s claim that Lippman’s conduct resulted from Holzman’s failure to supervise him. She also rejected the claim that Holzman committed misconduct by approving legal fees based on inadequate information; she agreed that he did, but that this was common practice among the city’s surrogates, a problem she called “systemic.”

At yesterday’s hearing, Mark Levine, counsel for the commission, urged the full panel to remove Holzman from the bench based on the report. Levine conceded that a final order removing Holzman, who faces mandatory retirement at the end of this year, might come too late to have any practical effect, but said it was important to “send the message” that misconduct would not be tolerated.

Holzman’s attorney, David Godosky of Godosky & Gentile, argued that the commission should reject any finding of misconduct and impose no sanction.

The panel was animated throughout the hearing, peppering both attorneys with questions.

A few minutes into Levine’s argument, commission member Rolando Acosta, a justice of the Appellate Division, First Department, broke in to ask Levine what was wrong with the remedy Holzman devised in 2006 when he first learned of Lippman’s misconduct.

“The appropriate response would not have been a secret cover-up,” Levine said.

Richard Emery, a partner at Emery Celli Brinckerhoff & Abady, then asked Levine what evidence there was for Holzman’s motivation.

“The motivation was two-fold,” Levine said. “First, it was to protect his friend and colleague of almost 40 years. Second, it was that he didn’t want the scrutiny. He never ordered a wholesale look at how far this went. He trusted a thief, someone who lied to him.”

Several commission members expressed skepticism of Levine’s claim that Holzman had essentially rubber-stamped Lippman’s fee requests for years.

Acosta and Nina Moore, an associate professor of political science at Colgate University, both pointed to evidence on the record that Holzman had not always awarded the maximum allowed 6 percent fee, and seemed to have taken into account the specific work done in at least some cases.

Levine countered that Holzman had been unable to explain exactly how he decided on fees, and that in most cases he did award the maximum.

Emery later asked Levine whether Holzman should have been more suspicious of Lippman because he knew that Lippman liked to gamble.

“While that’s not the linchpin of this, you have to take it in its totality,” Levine said.

Levine also emphasized that Holzman did not take steps to share suspicions with law enforcement after 2006. Taken together, he said, Holzman’s conduct added up to a cover-up to protect Lippman and his own reputation, and warrants his removal from the bench.

‘Cover-Up’ Denied

Godosky began his argument by taking strong issue with the idea that Holzman had engaged in a “cover-up,” pointing out that Holzman had testified that he specifically told everyone in the public administrator’s office to give investigators whatever they asked for. Holzman had not shared any secret knowledge with investigators because he had no such knowledge, Godosky said.

Early in his argument, Karen Peters, presiding justice of the Appellate Division, Third Department, put a blunt question to Godosky: Isn’t it usual practice to fire someone who is caught stealing?

Godosky responded that allowing him to continue working allowed the estates from which he had collected fees to be made whole, and in many cases simply involved doing work for which he had already been paid in advance.

Several commission members pressed Godosky to justify the appropriateness of the arrangement.

Terry Ruderman, vice chair of the commission and a Court of Claims judge in White Plains, said that if Holzman had simply fired Lippman, Lippman would still have had to find a way to pay back the money he owed. Why, she asked, did Holzman help Lippman by providing him with a way to earn that money?

Godosky again emphasized that Lippman was simply being asked to do work for which he had already been paid, and that when it became clear in 2009 that his excess fees were greater than they first seemed, he was fired.

Holzman himself then took the stand to address the commission, beginning by declaring his devotion to the public interest.

“I think it’s an honor to serve the public sector,” he said. “If I was to start again, I would choose the same path. I can look each and every one of you in the eye and tell you that I did not ever do anything deliberately that I did not believe was in the best interest of the public.”

Holzman also rejected Levine’s assertion that Lippman was his friend.

“He was not my friend,” he said. “We did not socialize.”

He said he knew Lippman enjoyed gambling but that he never knew him to have money problems before.

Holzman said it was not fair to insist that he should have known about the full extent of Lippman’s misconduct in 2006, when the commission itself, which began its investigation in 2008, did not bring charges until 2011.

Moore asked Holzman whether he would have done anything differently in retrospect.

Holzman said that if he had known in 2006 what he knew in 2009, he would have fired Lippman sooner, but was adamant that he had acted appropriately given the information he had.

In a brief rebuttal, Levine said that Holzman’s account of what happened amounted to “a derogation of responsibility.”

“It’s everyone else’s fault,” Levine said.

In addition to Acosta, Emery, Peters, Moore and Ruderman, the commission consists of its chair, Thomas Klonick, a private practitioner based in Fairport; Joseph Belluck, a partner at Belluck & Fox; Joel Cohen, a partner at Stroock & Stroock & Lavan; Paul Harding, managing partner of Martin, Harding & Mazzotti; and Richard Stoloff, a partner at Stoloff & Silver.

The commission must now decide whether to accept Shea’s report and what, if any, sanction to impose.