A former Lehman Brothers Inc. broker fraudulently transferred her $1.2 million Manhattan condominium to her son less than four months after she was ordered to pay a client $2.5 million, a state appeals panel has ruled.

The four-judge Appellate Division, First Department, panel on Tuesday upheld a lower court’s ruling calling for the real estate transfer to be set aside.

Justice Peter Tom (See Profile), writing for the panel in Sardis v. Frankel, 115328/10, said ex-broker Sofia Frankel’s son Michael had not acquired the apartment as a good-faith purchaser for value, and that the transfer was merely a way to protect the apartment from Sofia Frankel’s creditors.

“It is apparent that Sofia’s conveyance of the subject Manhattan condominium apartment to her son was but one of a series of transactions undertaken as part of an ‘asset protection plan’ devised with the assistance of counsel immediately after the arbitration award was rendered against her,” Tom wrote.

Tom was joined by Justices Rolando Acosta (See Profile), David Saxe (See Profile) and Helen Freedman (See Profile).

The plaintiffs, Jeffrey Sardis and Lauren Sardis, entrusted about $19 million to Frankel while she was working as a broker, first for Goldman Sachs & Co. and later for Lehman. By 2004, they allege that they had lost close to $9.6 million of their investment due to Frankel’s fraudulent churning of their account. They initiated an arbitration proceeding before the Financial Industry Regulatory Authority.

In October 2008, just two weeks before Lehman filed for bankruptcy, they obtained a $2.5 million award against Frankel. Manhattan Supreme Court Justice Emily Goodman confirmed that award and entered judgment in July 2009, and the First Department affirmed in June 2010.

Only days after the arbitration award, Frankel met with a partner at Proskauer Rose, whose time records show that they discussed an “asset protection plan,” and that both Sofia and Michael were present.

In February 2009, according to Tom’s opinion, Sofia transferred her condominium apartment at 160 W. 66th St. to Michael for one dollar. The apartment had been appraised at close to $1.2 million in 2008. At the time of the transfer, Michael also executed a promissory note to his mother under which he would pay only interest until 2039, at which point he would pay a balance of under $1 million.

The Sardises then filed a lawsuit against Sofia and Michael Frankel in Manhattan Supreme Court alleging that the transfer was a fraudulent conveyance under the Debtor and Creditor Law.

The Frankels claimed that the transfer was actually the consummation of an oral argument between them in 1999, under which Michael would immediately take possession of the apartment, pay its carrying costs and pay for any necessary renovations, and then become its owner on his 30th birthday upon demonstrating that he was financially responsible.

Justice Eileen Rakower (See Profile) granted summary judgment to the Sardises in November 2012, and the Frankels appealed.

Like Rakower, the First Department was not convinced by the alleged 1999 oral agreement. Tom noted that the Frankels had produced no contemporaneous evidence of that agreement.

In the panel’s decision Tom wrote that Michael Frankel was not a good-faith purchaser without knowledge of the fraud.

“It is apparent that Michael was a participant in the asset protection plan from its inception, having conferred with his mother and her counsel,” he wrote. “While Michael’s affidavit piously recites, ‘I believe and submit that I have acted in good faith throughout,’ he does not deny knowledge of the arbitral award at the time the premises were conveyed.”

Even if the 1999 agreement took place, Tom said, it failed to create a contract because it was not definite and not in writing.

The Frankels “fail to demonstrate that, prior to the February 2009 conveyance of the apartment, Michael was anything more than a month-to-month tenant paying less than fair market rent for the premises,” the judge wrote.

The Sardis family is represented by Michael Burke and William Dahill, partners at Wollmuth Maher & Deutsch.

“We’re very pleased that the court upheld the trial court’s decision granting us summary judgment, and look forward to taking another step in our collection process and repairing the damage suffered by our clients,” Dahill said.

Dahill said his clients had already managed to collect “a few hundred thousand dollars” of the judgment, but that, including interest, more that $3 million remains outstanding.

Sofia Frankel is represented by Michael Paikin. Michael Frankel is represented by Gabriel Del Virginia. The attorneys could not be reached for comment.