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The former chairman of the tax practice at Greenberg Traurig has resigned from the New York Bar for taking more than $1.2 million in kickbacks on tax shelters he recommended to wealthy clients. The incident is the latest ethical embarrassment for 1,600-lawyer Greenberg Traurig. Though largely not itself accused of wrongdoing, the Miami-based firm recently has dealt with the scandal surrounding lobbyist Jack Abramoff and also has seen some partners accused of self-dealing and other questionable conduct. Between 1999 and 2002, Jay Gordon steered a number of clients, including real estate tycoon and Metropolitan Transportation Authority Chairman Peter Kalikow, to tax shelter sponsors who in turn directly paid Gordon more than $675,000 in “referral fees.” Under New York disciplinary rules, a lawyer may accept such fees only with the consent of his client. Gordon, 49, admitted in his affidavit of resignation from the bar that he had informed neither his client nor his firm of the referral fees. He also asked one tax shelter sponsor to deposit another $600,000 referral fee in a firm retainer account. He then proceeded to convert the money into firm revenue by billing 1,120 fictitious hours. The $526,530 “fee collection credit” he received for the fake billings was considered in his compensation at the firm. A partner at Greenberg Traurig since 1996, Gordon disclosed his misconduct to the firm after he was informed in June 2004 that Kalikow intended to seek compensation from both the tax shelter sponsor and the firm for losses Kalikow suffered in the course of his participation. In September 2004, after an internal investigation, Gordon and the firm informed the court’s Disciplinary Committee of the misconduct. Gordon took a leave of absence the following month and withdrew from the partnership in November 2004. His resignation from the bar was approved last week by the New York Supreme Court’s Appellate Division, which ordered him stricken from the roll of attorneys. Such resignations are usually offered by lawyers when they face almost certain disbarment. Aside from Kalikow, clients Gordon steered to shelters included Manhattan developers Leonard and Matthew Adell, former telecommunications executive Rick Aversano, and former vitamin manufacturers Ronald and Leslie Leff. The firm and Gordon transferred all of the money they received in referral fees to the clients whose interests were affected by the payments. The tax shelter sponsors were Fortrend International, Bank One, and Distressed Assets Corp. The $600,000 referral fee placed in Greenberg Traurig’s retainer account was paid by Distressed Assets, to which Gordon referred the Leffs. Gordon also wrote an opinion letter stating that the use of Distressed Assets’ tax shelter would be accepted by the Internal Revenue Service. The firm billed the Leffs $300,000 for its work on the tax shelter transaction. Firm spokeswoman Jill Perry said the firm would not comment on the details of the matter, including the status of the legal fees, in order to protect client confidences. Frederick Hafetz of Hafetz & Necheles, who represented Gordon before the Disciplinary Committee, said that other than the involvement of tax shelters, the case bore no resemblance to recent high-profile tax shelter abuse cases involving accounting firm KPMG and law firms Sidley Austin and Jenkens & Gilchrist. Hafetz declined to comment further. A 1981 graduate of Boston University School of Law, Gordon was a partner at the now-defunct Dreyer & Traub before joining Greenberg Traurig. In 2003, he was named as a co-defendant in a government civil suit charging prominent art dealer Larry Gagosian of evading taxes on the sales of famous paintings. That suit was settled under confidential terms in the summer of 2004. In a statement, Perry said the firm took legal ethics issues seriously, conducting regular ethics trainings and due diligence on new hires. “In any case where wrongdoing is suspected, whether through our formal program or otherwise, we take action to discover the facts and respond appropriately and decisively,” she said. Greenberg Traurig has been no stranger to scandal lately thanks to Abramoff, who joined the firm in 2000 to help build a strong Washington, D.C.-based lobbying practice. He was later found to have defrauded clients, particularly American Indian tribes, of tens of millions of dollars. He pleaded guilty to criminal fraud charges earlier this year and last week began serving a nearly six-year sentence. He also is awaiting sentencing for corrupting government officials and their staff members.
Anthony Lin is a reporter for the New York Law Journal , the ALM publication in which this article first appeared.

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