In two separate rulings, one state and one federal judge declined to punish high-profile attorney Ira Lee Sorkin for his advocacy in a now-dismissed civil racketeering case.
Though Eastern District Judge Arthur Spatt disqualified Sorkin, of Lowenstein Sandler, and later tossed the suit, he stopped short on Jan. 10 of sanctioning Sorkin and plaintiff Annette Lorber, finding their decision to bring the case was not “wholly unreasonable.”
A day earlier, Nassau County Supreme Court Justice Jerome Murphy dismissed a related action that alleged Sorkin told “outright lies” about how he came to possess a document subject to the work product privilege between an adversary and the adversary’s attorney.
“Was Sorkin’s defense of a claim that he had utilized a document shielded by the attorney work product deceit or collusion within the intent of [Judiciary Law] §487? The Court believes not,” Murphy wrote in Winston v. Sorkin, 8227-13.
Both rulings mark the latest round for a legal brawl touched off by a July 2012 suit that Lorber brought against her estranged son-in-law, real estate developer Jonathan Winston and others. With the suit dismissed on procedural grounds, Winston countered with a challenge to Sorkin’s conduct related to possession of the privileged document and his decision to file the suit for Lorber in the first place.
The matter traces back to 1999, when the National Association of Securities Dealers—the predecessor of the Financial Industry Regulatory Authority—launched an investigation into Winston. He retained Sorkin.
When Winston later learned he was under criminal investigation, he asked Sorkin to represent him, but Sorkin cited a conflict of interest and declined.
While under investigation, Winston married Lorber’s daughter, Eve, in April 2000. Their divorce is pending, said Winston’s attorney, Judd Burstein of Manhattan.
In March 2001, Winston was indicted and later pleaded guilty to conspiracy to commit securities fraud, conspiracy to commit money laundering, agreeing to a $108 million restitution order. His five-year probation sentence expired in 2010.
In July 2012, Lorber sued her estranged son-in-law, saying, among other things, that he “fraudulently borrow[ed] or outright [stole] funds” from her totalling about $10 million.
Winston filed an August 2012 motion saying Sorkin’s previous representation of Winston disqualified him from representing Lorber. Two months later, he filed a motion to dismiss or at least disqualify Sorkin, saying the attorney came to possess a document he was not authorized to have.
The document was an incomplete memorandum from Winston’s former attorneys to end his probation that was never submitted in the criminal case. Explanations of its contents are either redacted or go without elaboration in court papers.
The original complaint had a single reference to the memo, saying, it “contains false and misleading information, including much of the same false and misleading information alleged herein.” The reference was omitted in the amended complaint.
Winston said, to the best of his recollection, he only shared the document with Eve, when their marriage was still strong.
At a conference in front of Spatt, Sorkin said the document “was given to a third party. That third party passed it on to another party and that party gave the document to me in the presence of the first third party.”
In a subsequent affidavit, Sorkin said he got a copy of the document by email from the offices of Raoul Felder, who had previously represented Eve in the divorce. In his affidavit, Sorkin said neither Felder nor an associate told him the document was privileged, adding that Felder told him either Eve or her mother gave Felder the document.
Felder said in an affidavit he did not remember the circumstances surrounding receipt of the document, and Eve did not remember ever seeing the document.
In any event, in November 2012, Spatt, sitting in Central Islip, said Sorkin’s previous representation made “trial taint” a “clear” possibility. The judge said Sorkin offered “varying accounts” of how he got the document, which was shielded by the work-product privilege. Spatt said use of the document was an “additional” ground to support Sorkin’s disqualification (NYLJ, Nov. 27, 2012).
In July 2013, Spatt dismissed Lorber’s civil racketeering claim as time barred and refused to rule on Lorber’s remaining state law claims.
Within a month of dismissal, Winston asked Spatt to impose sanctions against Sorkin and Lorber for pressing a suit that, he said, was false and they knew, or should have known, was false.
Moreover, he sued Sorkin in Nassau County Supreme Court under Judiciary Law §487, arguing that Sorkin “engaged in deceit with intent to deceive the Court,” when he explained how he obtained the draft (NYLJ, July 10, 2013). Sorkin countered he was not deceitful as a matter of law.
During the federal sanction proceedings in Lorber v. Winston, 12-cv-3571, Spatt said courts must apply a standard of “objective unreasonableness” and pointed to case law urging judicial “restraint” when considering sanction requests.
Here, Spatt said Winston was inviting him to consider the merits of the federal suit, even though he dismissed it on procedural grounds, and Lorber had since filed suit in Manhattan Supreme Court on the state claims that Spatt would not consider. Spatt refused to engage in the “heavily factual inquiry.”
When making the case for sanctions, Winston pointed to financial documents that he said Lorber either signed or sent and received from her fax machine and email. For example, he noted a 2006 fax Lorber sent to a bank permitting a $529,000 payment on a credit line, which “destroy[ed]” a “ pervasive allegation” that Winston tried to ensure she did not communicate with the bank about the credit line.
But Spatt said “it cannot be said that Lorber’s and Sorkin’s decision to bring this action was wholly unreasonable. As Lorber and Sorkin argue, it is possible, for example, that the financial documents … were forgeries” that could support Lorber’s claims.
Judiciary Law Claims
In the Nassau County Supreme Court case, Murphy called Winston’s disqualification bid connected to the draft document “superfluous” because Winston already demonstrated Sorkin had to be removed on the prior representation grounds.
“The costs incurred by counsel in prosecuting the second motion to disqualify Sorkin were self-created,” Murphy said. “The motion was not essential and, in fact, appears to have been made for the primary purpose of invoking the punitive treble damage claim of Judiciary Law §487.”
The judge added Sorkin was “well within his rights” to fight the allegation that he used a privileged work product document. He said there was “no evidence” Sorkin “intentionally sought to deceive the Court or his adversary.”
Murphy said the document “passed through a number of hands before it reached [Sorkin], and he was warranted, and seemingly duty-bound to [Lorber], to avoid the impact of her being precluded from representation of her choice in the action.”
Furthermore, the judge said the “underlying thrust” of Sorkin’s claim—that Eve received the document and gave it to Felder, who forwarded it to Sorkin—”appears to be true.”
Robert Lynn Jr. and Kenneth Gartner of Lynn, Gartner, Dunne & Covello in Mineola represented Sorkin.
“We find both decisions extraordinarily gratifying in that they put to rest, with finality, inflamed accusations against a distinguished member of the bar, whose reputation heretofore was unblemished, and which remains unblemished today,” Lynn said in a statement.
When reached for comment, Sorkin said “The judges’ decisions speak for themselves.”
“Nothing in either decision suggests that Mr. Sorkin’s conduct was admirable, and we believe that our intended appeals will result in rulings that conclude that he should be held liable for his dishonesty,” Burstein said in an email.