A former Herrick Feinstein tax group chair who pleaded guilty to federal tax evasion and obstruction charges won’t be automatically disbarred because there is no “essential similarity” between his federal crimes and a purported counterpart under New York state law.
Still, the Appellate Division, First Department, panel that issued the decision—knocking back the Attorney Grievance Committee’s request for automatic disbarment of attorney Harold Levine—did choose to immediately suspend him from law practice while ordering that he show cause why a final order of censure, suspension or disbarment should not be made.
The decision means that Levine—whose case grabbed headlines after he was charged by Southern District prosecutors in 2016 with failing to report to the IRS more than $3 million in lawyer fee income—may still be disbarred at a later time. Or he could face a lesser sanction. A referee will consider his case and make a fact-specific recommendation, after which a First Department panel is expected to rule on any final sanction that may be imposed.
In issuing its decision Tuesday, a unanimous First Department panel explained that it accepted the grievance committee’s alternative request for the automatic suspension and the referee show-cause order, as it had determined that Levine’s federal convictions are for “serious crimes” as defined by state Judiciary Law § 90(4)(d).
But the bulk of the panel’s decision focused on why Levine’s plea admissions leading to federal convictions did not establish “essential similarity”—as the grievance committee argued existed—between his convictions and the state felony of first-degree scheme to defraud.
The panel’s opinion zeroed in on Levine’s plea admissions, read in conjunction with the federal indictment against him and other testimony, to determine whether he had actually admitted to scheming to defraud his former Herrick Feinstein law partners.
In the end, despite federal allegations that Levine failed to report millions in income from tax shelter and other transactions he handled at Herrick Feinstein—in a fraud that allegedly began in 2004 and lasted a decade and included misusing limited liability companies—it was Levine’s careful guilty plea wording and handling of that phase of his case that kept him from being automatically disbarred, the court said.
The panel, composed of Dianne Renwick, Judith Gische, Marcy Kahn, Cynthia S. Kern and Peter Moulton, wrote that the committee contended that there was essential similarity “based on the allegations in the indictment that respondent ‘secretly and unlawfully diverted from a major law firm’ over $3 million in fraudulently obtained fee income from tax shelter and related transactions that he worked on while serving as a partner of the law firm, that respondent caused false statements to be made to the IRS, and that respondent evaded a substantial part of his income tax due and owing to the IRS by filing a false tax return which did not include the unlawfully diverted income.”
However, the justices pointed out that Levine, in pleading guilty, “never admitted to any of the allegations in the indictment that he engaged in a scheme to defraud his law partners.”
More specifically, “his plea admissions were limited to his acknowledgment that he failed to report in excess of $10,000 in income for each of the six years at issue,” and he “did not admit to engaging in a ‘systematic ongoing course of conduct’ by which he wrongfully obtained property ‘with a value in excess of one thousand dollars’ from a defrauded party,” wrote the panel.
Moreover, when pleading guilty Levine “reserved his right to argue that he should not receive an upward adjustment [under federal sentencing guidelines] because he did not receive any income from a criminal activity, thereby disputing any statements made by the prosecution and sentencing court that he engaged in a scheme to defraud,” the justices wrote. They also noted that “the court declined to make such an upward adjustment when it calculated respondent’s sentence.”
Hal Lieberman, the attorney for Levine in the disciplinary matter and a former chief counsel for the First Department’s grievance committee (formerly called the departmental disciplinary committee), declined to comment Wednesday on the panel’s decision.
Angela Christmas, a spokeswoman for the First Department’s grievance committee, did not return a call seeking comment on Wednesday.
As a result of the criminal case launched in 2016, Levine, who was with Herrick Feinstein from 2003 to 2012, and Florida-based accountant Ronald Katz, eventually pleaded to one count each of corruptly endeavoring to obstruct and impede the IRS, and one count each of tax evasion. Four months after pleading, Levine he was sentenced to two years in prison and ordered to pay $1.5 million in restitution to the IRS for his unpaid tax debt. In his criminal case, Levine was represented by Gerald Lefcourt and Sheryl Reich at Lefcourt’s criminal defense firm in Manhattan.
Acting U.S. Attorney Joon Kim said in a 2017 statement issued after Levine pleaded guilty, “As tax professionals, both Harold Levine and Ronald Katz well knew their obligations to report their income to the IRS. As they have now admitted, they instead engaged in a corrupt scheme to evade taxes on millions of dollars of income.”
According to prosecutors and court records, the pair evaded taxes from millions in fees from tax-shelter and other related Herrick Feinstein transactions. In one instance, $520,000 in tax shelter fees were routed by Levine to RKH Real Estate Holdings, a partnership entity owned by the pair, and used to purchase a home in Levittown. The home was used as a residence for an unnamed female employee of Herrick Feinstein with whom Levine had a “close personal relationship,” according to prosecutors. The individual lived there rent-free for five years, even as Levine and Katz claimed false rental property deductions for RKH Real Estate Holdings.
In another instance, according to court documents, Levine created an invoice in Herrick’s system for $134,000 for King Louie Enterprises, an entity controlled by Katz. Levine then transferred the sum from a Herrick escrow account holding funds from a recently executed series of tax shelter transactions.
Then, $116,000 was transferred from King Louie’s account to another account, LL Real Estate Operations, which Levine controlled, the documents indicated.
And Herrick Feinstein said in a 2017 statement that Levine “hid his clandestine tax evasion scheme from the firm and the government,” and “lied to his former partners, took extensive steps to conceal his actions and obstructed justice.” The firm added, “Once the firm learned of the wrongful conduct, we promptly alerted and cooperated with the government and the grievance committee.”
After Levine left Herrick, he took over the tax group at Moritt Hock & Hamroff, another New York-based firm, for a time. It was at Moritt Hock where Levine’s legal troubles first arose in 2014, when he was sued by federal authorities seeking to block his promotion of allegedly abusive tax shelters.