Two veteran lawyers who ran a boutique practice in the Bronx have had their licenses suspended for failing to supervising a bookkeeper—and personal friend of one of the lawyers—who stole more than $2.5 million from firm bank accounts, including escrow accounts.

The bookkeeper eventually paid back the money, which was siphoned from funds tied to some 200 client matters, and ultimately no clients or third parties lost cash. But lawyers Jay Zucker and Steven Kwestel admitted to several acts of professional misconduct and have stipulated, along with a state attorney grievance committee, that they should receive six-month suspensions because of their wrongdoing, according to the court.

A unanimous panel of the Appellate Division, First Department, agreed, issuing a decision that granted the lawyers’ and the First Department grievance committee’s joint motions for discipline by consent.

Zucker and Kwestel “admit that they failed to regularly supervise” the bookkeeper—referred to only as “MT” in the decision—and they admit that they did not “review or audit the firm’s bank account records, and thereby failed to take reasonable steps to safeguard client and/or third-party funds,” the panel wrote Aug. 15 in Matter of Zucker, 2017 NY Slip Op 06149.

The failures amounted to a violation of state Rule of Professional Conduct 1.15(a), the panel said. In addition, Zucker, admitted to practice in the First Department in 1990, and Kwestel, admitted in the Second Department in 1996, “failed to exercise reasonable management or supervisory authority adequate to try to prevent MT’s theft of client and/or third-party funds,” and therefore violated Rule 5.3(b)(2); they “allowed MT to execute online transfers of funds from the firm’s escrow accounts, which violated Rule 1.15(e) in that such transfers were not disbursements to named payees, and, thus … violated Rule 5.3(b)(1)”; they “designated a nonattorney as a signatory on an attorney special account in violation of Rule 1.15(e)”; and “based on their overall conduct violated Rule 8.4(h).”

Moreover, Kwestel admitted that, between 2005 and 2009, he deposited between $15,000 and $50,000 in personal funds into a firm escrow account “out of ignorance as to the pertinent disciplinary rules and not for any improper purpose … in violation of Rule 1.15(b),” the panel said.

Michael Ross, of the Law Offices of Michael S. Ross in Manhattan, represented Zucker and Kwestel before the panel. He did not return a call Wednesday seeking comment.

MT came to the lawyers’ firm, Zucker & Kwestel, with solid professional recommendations, including from Zucker’s sister, a retired attorney, the panel noted when listing “mitigating” factors put forward by the lawyers as part of their stipulation submitted with the joint motion for discipline by consent.

Another mitigating factor was that the lawyers “came to implicitly trust MT over the years,” based partially on “his diligence and personal friendship with … Zucker.”

There also were “no early warning signs of MT’s defalcations,” and “upon learning of MT’s thefts respondents took immediate action which included spending hundreds of hours reconstructing and reconciling escrow account records and obtaining reimbursement as a result of which no clients or third parties were harmed.” And they, too, were “victims of MT’s thefts,” the court said.

But aggravating factors included that Zucker and Kwestel did not report MT’s stealing to law enforcement. However, the lawyers noted that MT’s restitution of the misappropriated money “was conditioned upon [the lawyers] entering into a nonreporting agreement” with him, one that “did not prohibit [the attorneys] from answering questions from law enforcement if contacted about the thefts.”

MT was hired in 2003 to be the firm’s full-time bookkeeper and controller, wrote the panel, consisting of Justices John Sweeny Jr., Dianne Renwick, Richard Andrias, Ellen Gesmer and Marcy Kahn.

After initial training, during which Zucker and Kwestel reviewed his work, the lawyers began delegating responsibilities to MT, and eventually authorized him to be a signatory on the firm’s escrow accounts, out of ignorance of the pertinent disciplinary rules, and to execute online transfers of funds from the firm’s escrow accounts provided they approved of it.

MT frequently worked out of the firm’s New Jersey office, where Zucker and Kwestel rarely were, according to the court. Eventually he was fired, and Zucker and Kwestel retained civil counsel to negotiate repayment of the misappropriated funds.

A forensic accountant found the total of stolen funds was $2.76 million—of which $2.19 million belonged to clients or third parties, and $573,822 to Zucker and Kwestel.

“We find that a six-month suspension stipulated by the parties is an appropriate sanction in view of respondents’ admitted misconduct as well as the mitigating factors,” the panel wrote, adding the lawyers’ conduct was “non-venal.”

A call to the Attorney Grievance Committee was not returned. Orlando Reyes, a committee attorney, represented it before the panel.

Jason Grant can be reached at jgrant@alm.com or on Twitter: @JasonBarrGrant.