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NEW YORK � A lawyer who helped launch major Holocaust litigation in the mid-1990s has been hit with sanctions that will run into the hundreds of thousands of dollars for his handling of a lawsuit seeking recovery from an Austrian bank of the value of artwork looted by the Nazis. Employing unusually harsh language, Southern District of New York Judge Shirley Wohl Kram assessed attorney fees against the lawyer, Edward Fagan, and also fined him $5,000, finding he had committed champerty and misled her. Fagan said that the judge’s “suggestions about my actions and my status in the case were factually incorrect and do not comport with the evidence that was before her.” He added that he would ask Kram to reconsider her ruling or, if that failed, appeal. Charles Moerdler of Stroock & Stroock & Lavan, who represented Bank Austria Creditanstalt, said that his firm’s fees had not yet been tallied, but would amount to “several hundred thousand dollars.” Kram’s sanction was not the first time Fagan’s legal work has come under fire. Claiming to represent 82,000 Holocaust victims and their heirs, Fagan was instrumental in bringing major recovery actions against German, Swiss and other businesses that resulted in settlements totaling approximately $7.7 billion. New York University School of Law professor Burt Neuborne, who was appointed by Eastern District of New York Judge Edward Korman as the lead negotiator for victims in the Swiss case, has criticized Fagan for acting as more of a publicist than a lawyer. While Fagan voluntarily cut his fee request by $2.2 million to $1.2 million, Neuborne said that Fagan also agreed, at Korman’s insistence, to donate $400,000 of his fees to families who had helped with litigation but otherwise would not have received an award. Fagan was awarded approximately $4 million for his work in the German case. The attorney was also criticized by some of his other clients for neglecting their cases after becoming heavily involved in the Holocaust matters. In one instance, a $3.2 million judgment was entered against Fagan on default where a former client claimed he had mishandled a products liability claim against Toyota Motor Corp. Kram dismissed the most recent case, Association of Holocaust Victims for Restitution of Artwork and Masterpieces v. Bank Austria Creditanstalt, 04-3600, finding it to be “little more than an end run around” a $40 million settlement Bank Austria made in 2000 to resolve Nazi-era claims. In dismissing the lawsuit, Kram slammed Fagan’s legal work as consisting of “glaringly inadequate filings, utter disregard for the court, its schedule and rules of procedure.” CHAMPERTY CLAIM More ominous for Fagan, the judge found he had misrepresented critical facts and acquired an interest in looted artwork for the purpose of bringing a lawsuit in violation of New York’s champerty statute. The statute, Judiciary Law ��, makes champerty a crime punishable as a misdemeanor. Kram wrote that it is clear from allegations in an amended complaint filed by Fagan that he had acquired a “proprietary interest in the litigation” and had “at the very least, run afoul of the disciplinary rules.” Kram also found that Fagan had made misrepresentations in his efforts to sustain the court’s jurisdiction. He falsely asserted in his papers that the word “artwork” does not appear in the earlier settlement that led to Bank Austria’s $40 million payment, she wrote. Kram also faulted Fagan for asserting that the claims relating to looted artwork were outside the settlement because the fraud was alleged to continue from the 1950s forward. As a part of a document signed in 1998 settling the earlier claims, Kram noted, all Holocaust-related claims were released against Bank Austria “‘from the beginning of time to the date of this agreement.’” Fagan vigorously disputed the notion that the claims he raised in the latest lawsuit were covered by the earlier settlement. The claims raised in the latest lawsuit, he said, related to facts that were discovered after the settlement, “had nothing to do with the class action” and concerned “a group of persons who were never to be a part of the settlement.” Fagan said the charge of champerty was erroneous as well because he did not acquire an interest in looted artwork for the purpose of bringing a lawsuit. He acquired an interest well after the lawsuit was filed, he said. Daniel Wise is a reporter with the New York Law Journal, a Recorder affiliate.

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