United N. Mtge. Bankers, Ltd. v Bellettieri, Fonte & Laudonio, P.C.
Annotate this CaseDecided on July 12, 2007
Supreme Court, Nassau County
United Northern Mortgage Bankers, Ltd. and Don Giorgio, Plaintiff,
against
Bellettieri, Fonte & Laudonio, P.C.; Anthony Bellettieri; Robert V. Fonte; Tara A. Laudonio; JP Morgan Chase Bank, N.A., and JPMorgan Chase & Co., Defendants.
21864/06
COUNSEL FOR PLAINTIFFS
Westerman, Ball, Ederer, Miller & Sharfstein, LLP
170 Old Country Road - Suite 400
Mineola, New York 11501
COUNSEL FOR DEFENDANTS
(for Fonte & Laudonio)
Neal S. Comer, Esq.
445 Hamilton Avenue
White Plains, New York 10601 (for JP Morgan Chase)
Levi, Lubarsky & Feigenbaum, LLP
1185 Avenue 0f the Americas, 17th floor
New York, New York 10036
(for Bellettieri)
Gabriel Del Virginia, Esq.
641 Lexington Avenue, 2nd Floor
New York, New York 10022
Leonard B. Austin, J.
Plaintiffs move to confirm an ex parte order of attachment.
BACKGROUND
Defendant Bellettieri, Fonte & Laudinio, P.C. ("BF&L") were a law firm. Defendants Anthony Bellettieri, ("Bellettieri"), Robert V. Fonte ("Fonte") and Tara A. Laudonio ("Laudonio") were members of the firm.
Plaintiff United Northern Mortgage Bankers, Ltd. ("United Northern") retained BF&L to act as its closing attorney and escrow agent at mortgage closings. Toward that end, BF&L maintained a Mortgage Disbursement Account with JPMorgan Chase Bank ("Chase").
Once a closing was scheduled, United Mortgage would transfer the mortgage proceeds into the BF&L mortgage disbursement account. BF&L would then disburse those funds a closing. Since the amount that was transferred into BF&L Mortgage Disbursement account and the amount disbursed at closing should be the same, checks issued on the BF&L mortgage disbursement account should never be dishonored for insufficient funds.
In November 2006, several checks written on the BF&L Mortgage Disbursement Account relating to United Northern mortgages were dishonored for insufficient funds.
In one circumstance, Bellettieri directed that mortgage funds be transferred into a BF&L account maintained with Signature Bank ("Signature"). He then wrote checks purporting to [*2]distribute the mortgage proceeds from the BF&L Mortgage Disbursement Account maintained at Chase. As one would expect, the checks issued on the Chase account were dishonored for insufficient funds.
On December 28, 2006, Plaintiffs obtained an ex parte order of attachment permitting them to seize all accounts maintained by BF&L at Chase and Signature, any real property of BF&L and any stock in BF&L owned by Bellettieri, Fonte or Laudonio.
The Westchester County Sheriff levied on the BF&L accounts at Signature Bank on January 10, 2007 and the BF&L accounts at Chase Bank on January 11, 2007. By order to show cause dated January 17, 2007, Plaintiffs moved to confirm the attachments. ("Motion Sequence 1").
Motion Sequence 1 was adjourned several times. Because of developments which occurred after Motion Sequence 1 was made, the parties stipulated to withdraw Motion Sequence 1. It was agreed that Plaintiffs would then move on notice to all parties to confirm the attachments (Motion Sequence 2).
After Motion Sequence 1 was made, Bellettieri pled guilty to bank fraud and mail fraud in the United States District Court for the Southern District of New York, In his plea allocution, Bellettieri admitted to engaging in a check kiting scheme involving several bank accounts maintained by BF&L at Chase. Part of this scheme involved money being transferred by United Northern into the mortgage disbursement account BF&L maintained with Chase.
The BF&L accounts maintained with Chase had no balance when the Sheriff executed thereon. The Sheriff seized a BF&L account maintained with Signature Bank with a balance of $27,404.37. The Sheriff has also seized real property owned by Bellettieri and his wife at 9 Crestview Drive, Pleasantville, real property owned by Fonte and his wife located at 5 Henker Farm Lane, North Castle, New York and real property in which Fonte owns a 30% interest, Bellettieri owns as 30% interest and Fred Viscogliosi owns a 40% interest located at 45 West Red Oak Lane, Harrison, New York.
Plaintiffs move to confirm the seizure of the Signature Bank Account and the real property.
DISCUSSION
In order to obtain an order of attachment, Plaintiff must establish the existence of a meritorious cause of action, a likelihood of success on the merits and one of the grounds for attachment specified in CPLR 6201. Arzu v. Arzu, 190 AD2d 87 (1st Dept. 1993); and CPLR 6212(a).
Plaintiffs seek a preliminary order of attachment pursuant to CPLR 6201(3).
CPLR 6201(3) requires the party seeking a preliminary order of attachment to establish that (1) the defendant "...has assigned, disposed of, encumbered or secreted property or removed it from the state" or that the defendant is about to engage in one of these activities; and (2) such action was with intent to defraud creditors or to frustrate the enforcement of a judgment that plaintiff might obtain. 1 New York Civil Practice: CPLR ¶ 6201.12. See also, Societe Generale Alsacienne De Banque, Zurich v. Flemingdon Development Corp., 118 AD2d 769 (2nd Dept. 1986); and Benedict v. Browne, 289 AD2d 433 (2nd Dept. 2001).
Even if plaintiff establishes the statutory requirements for obtaining a pre-judgment attachment, the granting of such relief is discretionary. Sylmark Holdings Ltd. v. Silicone Zone International Ltd., 5 Misc 3d 285 (Sup. Ct., NY Co. 2004).
The party seeking the pre-judgment attachment must establish the defendant's fraudulent [*3]intent. Computer Strategies, Inc. v. Commodore Business Machines, Inc., 105 AD2d 167 (2nd Dept. 1984); rearg. and lv. den., 110 AD2d 743 (2nd Dept. 1985). See also, Rosenthal v. Rochester Button Co., Inc., 148 AD2d 375 (1st Dept. 1989). Fraud must be established through evidentiary facts stated in the affidavits submitted in support of the application for an attachment. Benedict v. Browne, supra; and Eaton Factors Co., Inc. v. Double Eagle Corp., 17 AD2d 135 (1st Dept. 1962).
Mere removal of property from New York or assignment or other disposition of property is insufficient to establish fraud. Computer Strategies, Inc. v. Commodore Business Machines, Inc., supra. See also, Bank of China, New York Branch v. NBM L.L.C., 192 F. Supp. 2d 183 (S.D.NY 2002).
In this case, there is no question that Bellettieri misappropriated and disposed of property.
However, Bellettieri has plead guilty to bank fraud and mail fraud in the District Court (United States v. Bellettieri, 07 Cr. 123). He is awaiting sentencing. As part of his plea agreement, Bellettieri agreed to make full restitution to all he defrauded and to forfeit his interest in the properties listed in the forfeiture provisions of the Felony Information. The properties Bellettieri has agreed to forfeit include the property Plaintiffs seek to attach.
At the plea allocution, the Assistant United States Attorney indicated that the forfeiture unit of the United States Attorney's office was engaging in ancillary proceedings to locate additional property that would be subject to the forfeiture agreement.
The amount Plaintiffs allege Bellettieri misappropriated from them in this action is slightly more than 2% of the total amount he misappropriated from all sources.[FN1]Bellettieri has resigned from the practice of law. See, Matter of Bellettieri, -A.D.3d-, 2007 WL 1296314 (2nd Dept. 2007). As part of his application to resign, Bellettieri acknowledged that (1) the Grievance Committee could require him to make monetary restitution to those whose money and/or property he misappropriated or misapplied;(2) a civil judgment could be entered on any restitution order; and (3) he waived the opportunity to be heard in opposition to such an order. Id.; and Judiciary Law§§90(6-a), 90(6-a)(f). Thus, it appears that the Grievance Committee is also pursuing restitution.
Since Plaintiffs are due a small portion of the full amount Bellettieri misappropriated and since the property Plaintiffs seek to seize from Bellettieri is subject to the forfeiture agreement, the Court believes that the confirmation of the order of seizure would be an abuse of discretion. Thus, confirmation of the order of attachment of Bellettieri's property must be denied.
Laudonio and Fonte assert that their property should not be attached inasmuch as they are innocent victims of their former partner's fraud.
The only property in which Laudonio has an interest which is the subject of the order of seizure is her interest in the money on deposit in the BL&F account maintained at Signature Bank. The papers do not establish whether this account is a mortgage disbursement account, [*4]escrow account or operating account. To the extent that this account is a mortgage disbursement account or escrow account, Laudonio has no true interest in the funds.[FN2]Regardless, this account is subject to the forfeiture agreement. This Court believes that any claims Laudonio has to these funds should be resolved in the forfeiture proceeding in the District Court.
As with Laudonio, the determination of whether Fonte has any interest in the BF&L account maintained with Signature Bank should be decided in the forfeiture proceeding.
In addition to seizing Fonte's interest in the Signature Bank Account, Plaintiffs have seized Fonte's interest in real property located at 5 Henker Farm Lane, North Castle, New York and his interest in 45 West Red Oak Lane, Harrison, New York.
The Henker Farm Lane property is most likely Fonte's residence since he owns that property as a tenant by the entirety with his wife. Fonte owns a 30% interest in the West Red Oak Lane property.
Fonte asserts that Plaintiffs should not be able to obtain a preliminary attachment because Plaintiffs have failed to establish a likelihood of success on the merits.
There is, however, a more fundamental basis for denying Plaintiffs' motion to attach Fonte's property. There is no evidence placed before the Court that Fonte is assigning, disposing, encumbering or secreting his property or his interest in the property or is about to do these acts for the purposes of defrauding creditors or frustrating the enforcement of a judgment. Since Plaintiffs have failed to establish an entitlement to a preliminary order of attachment, the application to confirm the attachment must be denied.
Accordingly, it is,
ORDERED, that Motion Sequence 1 is withdrawn; and it is further;
ORDERED, that Plaintiffs' motion to confirm the ex parte order of seizure is denied. The order of seizure dated December 28, 2006 is hereby vacated. The Sheriff of Westchester County and New York County are directed to deliver all items seized to the Defendants upon service of a certified copy of this order or as soon thereafter as practicable; and it is further,
ORDERED, that the undertaking posted on the granting of the ex parte order of seizure is hereby exonerated.
This constitutes the decision and Order of the Court.
Dated: Mineola, NY_____________________________
July 12, 2007Hon. LEONARD B. AUSTIN, J.S.C.
Footnotes
Footnote 1:During Bellettieri's plea allocation, the Assistant United States Attorney indicated that the bank with which Bellettieri did business had paid approximately $12,600,000 on kited checks. There were also approximately $7,600,000 in checks that Bellettieri had issued that the bank refused to pay once the bank realized what Bellettieri was doing. The Assistant United States Attorney also indicated that they could not yet account for between $1,000,000 and $2,000,000 in checks Bellettieri had issued.
Footnote 2:If the funds in this account are mortgage proceeds, then the funds belong to the bank that issued the commitment or the party to whom the proceeds were to be disbursed. If this is an escrow account, then the funds belong to firm clients.
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