Holzman.RefereeReport

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					STATE OF NEW YORK
COMMISSION ON JUDICIAL CONDUCT

In the Matter of the Proceeding
Pursuant to Section 44, subdivision 4,
of the Judiciary Law in Relation to

         LEE L. HOLZMAN,

Surrogate, Bronx County.




BEFORE: FELICE K. SHEA, REFEREE

APPEARANCES:

Brenda Correa, Esq.
Mark Levine, Esq.
For the Commission

David Godosky, Esq
For the Respondent
                                   REFEREE'S REPORT


                              PRELIMINARY STATEMENT

               By order dated January 25,2011, I was designated as referee to hear and

report proposed Findings of Fact and Conclusions of Law to the Commission with regard

to the charges of misconduct against respondent. A hearing was held before me on

 September 12,2011,' December 14,15,16 and 19,2011, and January 3, 4,5,6,9,10,

 11, 12, 13 and 17,2012. The Commission called eight witnesses and respondent called



 1 The  hearing was stayed by order ofthe New York State Supreme Court on September 12, 2011
 and further stayed by the Appellate Division, First Department, on October 5, 2011. The stay was
 lifted on December 6, 2011.
seven witnesses, including himself.· In addition, there was an affidavit by a character

witness for respondent admitted by stipulation (Ex. DDD).2 One hundred and seventy-

one exhibits were received in evidence.. Counsel for the Commission submitted a post-

hearing memorandum together with charts and proposed findings of fact and conclusions

of law. Counsel for respondent submitted an answering memorandum and proposed

findings of fact and conclusions of law together with an addendum and charts. Counsel

for the Commission submitted a reply memorandum received by me on June 5, 2012.


                                COMPLAINT AND ANSWER

                In its Formal Written Complaint, the Commission alleges, and respondent

does not deny, that he was admitted to the practice of law in 1966, that he has been the

Surrogate of Bronx County since 1988, and that his term of office expires on December

31,2012. 3

                Respondent denies Charge I, Paragraph 5, in which it is alleged that from

in or about 1995 to in or about April 2009, in numerous cases, respondent approved legal

 fees payable to Michael Lippman, Counsel to the Bronx Public Administrator, based on

"boilerplate" affidavits oflegal services that did.not comply with Surrogate's Court

 Procedure Act ("SCPA") §11 08(2)(c) and without consideration of the statutory factors

 set forth in SCPA §1108(2)(c). Paragraph 6, which respondent admits, sets forth that



 2"Ex." refers to exhibit in evidence at the hearing.

 3The Complaint erroneously gave respondent's retirement date as December 31,2011, and is
 deemed amended to reflect the correct date.

                                                  2
SCPA §11 08(2)(c) requires that awards of legal fees to Counsel to the Public

Administrator be supported by affidavits of legal services setting forth in detail the

services rendered, the time spent, and the method or basis by which requested

compensation was determined. Respondent also admits Paragraph 7 of the Complaint

which states that SCPA §11 08(2)(c) requires the Surrogate, when fixing legal fees for

Counsel to the Public Administrator, to consider the time and labor required, the

difficulty of the questions involved, the skill required to handle the problems presented,

the lawyer's experience, ability and reputation, theamount involved and benefit resulting

to the estate from the services, the customary fee charged by the bar for similar services,

the contingency or certainty of compensation, the results obtained and the responsibility

involved. Respondent admits Paragraph 8 in which the Commission alleges that in

October 2002, the Administrative Board for the Offices of the Public Administrators of

New York State issued guidelines for the compensation of counsel requiring public

administrators to insure that counsel's requests for legal services comply with SCPA

§1108(2)(c). Respondent admits that part of Paragraph 9 alleging that the Administrative

Board Guidelines recognize that it is the responsibility of the Surrogate to fix reasonable

compensation of counsel in accordance with SCPA §11 08(2)(c), but denies that part of

 Paragraph 9 alleging that the guidelines set a sliding scale of maximum recommended

 legal fees depending on the size of the estate. Respondent denies Paragraph 10 which

 charges that from 1995 to April 2009, in numerous cases, respondent approved fees for

 Mr. Lippman based on affirmations oflegal services that did not comply with SCPA



                                               3
§1108(2)(c). Respondent denies knowledge or information sufficient to form a belief as

to Paragraph II which sets forth that, in numerous cases, Mr. Lippman requested the

maximum legal fee recommended in the Administrative Board Guidelines regardless of

the complexity of the case. Paragraph 12, denied by respondent, charges that in numerous

cases respondent approved legal fees for Mr. Lippman without considering the statutory

factors set out in SCPA § II 08(2)(c). Respondent denies Paragraph 13 which alleges that

from 1995 to April 2009, in numerous cases, respondent awarded Mr. Lippman the

maximum legal fee recommended by the Administrative Board Guidelines regardless of

the size or complexity of the estate.

              Charge II, Paragraph IS, denied by respondent, alleges that in or about 2005

and 2006, despite his knowledge that Michael Lippman had taken unearned advance legal

fees without court approval and/or fees in excess of the Administrative Board Guidelines,

respondent failed to report Mr. Lippman to law enforcement authorities or to the First

Department Disciplinary Committee and continued to award Mr. Lippman legal fees in

subsequent cases at the maximum recommended by the Administrative Board Guidelines

and/or without considering the SCPA §1108(2)(c) factors. Respondent denies the

allegations in Paragraph 16 that in 2006 he learned that in numerous cases Mr. Lippman

had taken advance legal fees of 100% of the maximum recommended by the Guidelines

without approval of the court, except that respondent admits that at some point in time he

 learned that Michael Lippman had received advance legal fees. Respondent denies the

 allegation in Paragraph 17 that in late 2005 or early 2006 he learned that in numerous



                                              4
cases Mr. Lippman had been paid in excess ofthe maximum legal fees recommended by

the Guidelines. Paragraph 18 charges that notwithstanding this knowledge, respondent

did not report Mr. Lippman either to law enforcement authorities or to the Departmental

Disciplinary Committee. Respondent denies knowledge or information sufficient to form

a belief with respect to Paragraph 18 except that he admits he did not report Mr. Lippman

to law enforcement or to the Departmental Disciplinary Committee. In Paragraph 19, it is

alleged that in or about 2006 respondent implemented a system by which Mr. Lippman

would repay advance and/or excess legal fees he had previously collected. Respondent

denies knowledge or information sufficient to form a belief as to Paragraph 19 except that

he admits that he implemented a system by which Mr. Lippman would repay advance

legal fees he had collected. In Paragraph 20, it is charged that respondent directed that

Mr. Lippman be kept on staff to "work off' the advance and excess legal fees and that a

new Public Administrator and Counsel were appointed to oversee the repayment system.

Respondent admits Paragraph 20 except he denies that part alleging that at respondent's

direction Mr. Lippman was kept on staff to "work off' excess legal fees. Respondent

denies knowledge or information sufficient to form a belief with respect to Paragraph 21

wherein it is charged that from in or about 2006 to in or about 2009 Mr. Lippman turned

over legal fees earned to repay unearned advance and/or excess legal fees he had

collected on prior matters. Respondent denies Paragraph 22 charging that in awarding

 fees to Mr. Lippman that were used for repayment, respondent failed to apply individual

 consideration to each estate as required by SCPA §11 08(2)(c). Paragraph 23 states that



                                              5
Mr.' Lippman continued to work as one of the counsels to the Public Administrator until

2009 when John Reddy, new Counsel to the Public Administrator, terminated his

services. Respondent admits Paragraph 23 except that he denies that John Reddy had the

authority to terminate Mr. Lippman's services without respondent's authorization.

              Charge III, Paragraph 25, denied by respondent, alleges that from in or

about 1997 to in or about 2005, respondent failed to adequately supervise the work of

court staff and appointees, including the Public Administrator Esther Rodriguez, resulting

in Counsel to the Public Administrator Michael Lippman taking advance legal fees

without filing an affirmation of legal services and/or taking advance legal fees in excess

of the maximum recommended by the Administrative Board Guidelines; numerous

lengthy delays in the administration of estates; numerous estates with negative balances;

estate funds placed in imprudent and/or unauthorized investments; the Public

Administrator's employment ofa close acquaintance who billed estates for services not

rendered and/or overbilled estates. Respondent denies knowledge or information

 sufficient to form a belief as to Paragraphs 26 and 27 in which it is alleged that from 1997

 to 2005, in numerous cases, the Public Administrator paid and Mr. Lippman took advance

 legal fees without court approval, without affinnations oflegal services, in excess of the

 maximum recommended by the Administrative Board Guidelines, and that in numerous

 cases Mr. Lippman failed to refund money to the overcharged estates and in numerous

 cases he refunded money to the overcharged estates. Respondent denies Paragraph 28

 which states that from 1997 to 2005 respondent failed to properly supervise his



                                              6
appointees with the result that cases were not timely processed and a number of cases

.remained open between five and ten years. Respondent denies Paragraphs 29, 30 and 31

which allege that from 1997 to 2005 respondent failed to ensure that the Public

Administrator filed adequate monthly statements of accounts and adequate bi-annual

reports as required by SCPA §11 09, and as a result, respondent failed to recognize that

 numerous individual estates had negative balances. Respondent admits Paragraph 32

 which alleges that from 1997 to 2005, respondent received quarterly reports from the

 accountant, Paul Rubin, which failed to contain information on the holdings of individual

 accounts, reporting instead the aggregate moneys held by the Public Administrator in a

 commingled account. Paragraph 33, denied by respondent, sets forth that as a result of

 respondent's failure to properly supervise his appointees, the Public Administrator

 invested approximately $20 million of estate moneys in auction-rate securities, an

 imprudent investment not authorized by SCPA §1107 and!or contrary to Administrative

 Board Guidelines. Respondent denies knowledge or information sufficient to form a

 belief as to Paragraphs 34 and 35. Paragraph 34 charges that in February 2008, the

 auction-rate securities market froze with the result that the securities could not be sold

 and distributions made to the estates whose assets had been invested in the securities.

 Paragraph 35 states that in October 2008, by agreement between the Attorney General of

 the State of New York and two banks, the banks agreed to redeem the illiquid securities.

 Respondent denies Paragraph 36 which alleges that as a result of respondent's failure to

 properly supervise his appointees, the Public Administrator, Esther Rodriguez, hired her



                                               7
boyfriend, John Rivera, as an independent contractor and permitted him to overbill estates

and/or to bill estates for services not rendered.

               Respondent denies knowledge or information sufficient to form a belief as

to Charge IV, Paragraph 38, alleging that from about 200 I to 2003, respondent failed to

disqualify himself from cases in which Michael Lippman appeared, notwithstanding that

Mr. Lippman raised more than $125,000 in campaign funds for respondent's 2001

campaign for Surrogate, Bronx County.

               In Paragraphs 14,24,37 and 39 of the Complaint, the Commission alleges

that by reason of the facts alleged respondent has committed misconduct in violation of

Article 6, Section 22, subdivision a, of the Constitution Qfthe State of New York; Section

44, subdivision I, of the Judiciary Law; and Sections 100.1, 100.2(A), 100.2(B),

100.2(C), 100.3(B)(l), I00.3(C)(1), 100.3(C)(2), 100.3(C)(3), 100.3(D)(2) and

I00.3(E)(l) of the Rules of the Chief Administrator of the Courts Governing Judicial

Conduct ("Rules"). Respondent denies the allegations of Paragraphs 14, 24, 37 and 39.

               Appended to the Formal Written Complaint are Schedules A through E

listing Surrogate's Court cases allegedly probative of the charges.

               Respondent has pleaded three Affirmative Defenses as follows: FIRST,

respondent alleges that the Complaint must be dismissed as it fails to state a claim, cause

of action or violation of the Rules. SECOND, respondent alleges that the Complaint must

be dismissed as the factual allegations therein are unconstitutionally vague, overly broad

 and fail to advise respondent of the specific cases or actions upon which the alleged



                                                8
violations are predicated. THIRD, respondent alleges that the charges violate his due

process rights. Respondent demands dismissal of the Formal Written Complaint.

                  The Affirmative Defenses were not addressed by respondent at the hearing

nor were they briefed in his post-hearing memorandum. The Affirmative Defenses are

deemed abandoned.

                                           BACKGROUND

                  The surrogate has jurisdiction over all proceedings and actions "relating to

the affairs of decedents, probate of wills, [and] administration of estates." New York

State Constitution Art. 6, §12(d). In New York City, the surrogate appoints a Public

Administrator ("PA") to administer the estates of persons who die intestate without an

heir willing and able to do so (SCPA §1102). Pursuant to SCPA §Il 08(2)(a), New York

City surrogates also appoint counsels to the PA to represent intestate decedents' estates

where no individual is available to file letters of administration. The PAis paid a salary

by the City of New York (SCPA § II 05). SCPA §II 08(2)(b) provides that "reasonable

compensation" is to be paid counsel out of the administered estate. At anyone time

during the years encompassed by the complaint, the Bronx PA's office handled between

 $30 and $57 million in estate funds (Tr. 95 4 ; Ex. 33).

                   Michael Lippman began working as counsel to the Bronx County PAin

 1970 (Tr. 2237). In 1974, respondent became law secretary to Bronx County Surrogate




 4   "Tr." refers to the hearing transcript.

                                                  9
Bertram Gelfand and he later served as head of the surrogate court's law department (Tr.

1938). Respondent knew Mr. Lippman during the years they worked in the same

courthouse (Tr. 1970-72) and when respondent was elected surrogate, he retained Mr.

Lippman as counsel to the PA (Tr. 1973). Mr. Lippman served as counselor associate

counsel until April 2009 (Tr. 1516).

              Michael Lippman was indicted by the district attorney of Bronx County on

July 7, 2010 of scheme to defraud 1st degree (l count), offering a false instrument for

filing 1st degree (4 counts), falsifying business records I st degree (4 counts), grand

larceny 2nd degree (2 counts), grand larceny 3rd degree (3 counts) and conflict of interest

(I count). The charges are based on five cases in which Mr. Lippman represented the

Bronx PA's office (Ex. 00). His case is scheduled for trial on August 14,2012. Mr.

Lippman was called by respondent to testify at the hearing. He asserted his Fifth

Amendment right to remain silent (Tr. 2239).

               Respondent appointed Esther Rodriguez as Deputy Public Administrator in

 1991 (Tr. 21-23). In 1997, respondent promoted Ms. Rodriguez to the position of Bronx

PA (Tr. 35). Ms. Rodriguez' employment was terminated in 2006 (Tr. 932). Esther

Rodriguez testified at the hearing                                 after pleading guilty to

 two felonies committed during her tenure as Bronx PA (Tr. 17-18; Ex.17). Israel (John)

 Rivera, employed by Esther Rodriguez to clear out homes of decedents, was also indicted

 (Tr. 426).




                                               10
              CHARGE I

              The Commission alleges that from 1995 to April 2009, respondent

approved affidavits of legal services from Michael Lippman that did not comply with

SCPA §1108(2)(c) and awarded him legal fees without considering the· factors

enumerated in SCPA §1108(2)(c).

              A. Requirements for Affidavits of Legal Services and Awarding Legal
                 Fees

              SCPA § II 08(2)(c), in effect at all relevant times, reads as follows:

               "Any legal fees allowed by the court [to counsel to Public
              Administrators within the City of New York] shall be
              supported by an affidavit of legal services setting forth in .
              detail the services rendered, the time spent, and the method or
              basis by which requested compensation was determined. In
              fixing the legal fees, the court shall consider the time and
              labor required, the difficulty of the questions involved, the
              skill required to handle the problems presented, the lawyer's
              experience, ability and reputation, the amount involved and
              benefit resulting to the estate from the services, the customary
              fee charged by the bar for similar services, the contingency or
              certainty of compensation, the results obtained, and the
              responsibility involved."

              The Court of Appeals considered SCPA §1108 (2)(c) in Matter ofFeinberg,

5 NY3d 206, 214 (2005) and stated: "The purpose of the statutory affidavit and

individualized consideration requirements is to ensure that beneficiaries of estates that, by

definition, lack interested parties capable of offering independent review are paying only

for the actual cost of administering the estates."

               SCPA §1128 authorizes the promulgation of Guidelines for compensation

of counsel to public administrators to be made by the Administrative Board for the


                                               11
Offices of the Public Administrators of New York State. The 2002 Amended Guidelines

re~ommend that, in the absence of extraordinary circumstances, PAs in New York City

shall require their counsel to limit their request for comperisation to a maximum legal fee

of 6 % of the value of estates under $750,000 with decreasing percentages for estates

larger than $750,000 (Ex. NN).5 The Guidelines direct PAs to require their counsel to

support their request for compensation with an affidavit complying with SCPA

§1108(2)(c). The 2002 Guidelines go on, in its Interim Report, to explain the Guideline

schedule. It states: "The adopted schedule provides the 'customary fee charged... for

similar services' in the overwhelming majority of estates that are administered by the

Public Administrators and establishes a cap on ... legal fees ... " (Ex. NN, p. 2). The

Interim Report then states that in setting the new schedule, the Board considered factors

in addition to the amount of fees currently requested by counsels to the PA. The Board

also considered that in this area of the law, a legal fee should not be based on time spent

alone. The Board "balanced the fact that each estate pays for its legal services against the

economic reality that most estates administered by the Public Administrators are

relatively modest and that the Public Administrators would be unable to retain competent

counsel to provide legal services in many of these estates if counsel did not have the

opportunity to receive more significant compensation in more substantial estates. The

'rule of thumb' that the schedule adopts is a product of ... [a broad] consensus" (Ex. NN,

pp.2-3). The Interim Report ends by stating that the surrogate retains complete discretion


5   Prior to 2002, the customary legal fee was 6%.

                                                 12
to fix reasonable counsel fees in accordance with the factors listed in SCPA §1108(2)(c).

              B. The Sufficiency of Michael Lippman's Affidavits of Legal Services

              The first sentence of SCPA § II 08(2)(c), supra, p.ll, provides that the

affidavit oflegal services must set "forth in detail the services rendered, the time spent,

and the method or basis by which requested compensation was determined."

                                                                                       6
               The Commission contends that respondent accepted affirmations from

Michael Lippman that were devoid of information documenting the actual legal work

done in each case. The Commission characterizes Mr. Lippman's affirmations as

"boilerplate" and maintains that they do not provide an adequate basis for awarding legal

fees.

               Respondent asserts that he is thoroughly familiar with the statutory

requirements for affidavits of legal services by counsel to the public administrator. He

points to the affidavits oflegal services by PA counsel in other counties and argues that a

comparison demonstrates that the affirmations from Mr. Lippman were very similar to

those of counsel from Kings, Queens and New York County and that they all conformed

to the requirements ofSCPA §1108 (2)(c). Moreover, he claims that the cases in.

Schedule A were "cherry picked" by the Commission and that the Guidelines, as set forth

in Mr. Lippman's affirmations, were the "basis for the requested compensation."

               Respondent maintains that the statute does not require that affirmations of




6 The terms "affinnations of legal services" and "affidavits of legal services" are used
interchangeably.


                                                 13
legal services contain contemporaneous time records, which he argues is the

Commission's real issue, and that none of the affidavits of counsel from other counties

contain such records. Respondent asserts that the affirmations of legal services submitted

to him by Mr. Lippman informed him of the specific acts performed by Mr. Lippman in

the performance of his duties of legal representation. Respondent asserts further that in

Matter ofFeinberg, 5 NY3d 206 (2005), the Court of Appeals approved affidavits

identical to those in dispute as conforming to the statute and that the Commission is

judicially estopped from claiming otherwise.

              A review of affirmations of legal services by Mr. Lippman in 30 cases listed

in Schedule A that were admitted in evidence shows that they are similar. 7 All of the

affirmations are 20 pages or more in length and contain 55 or more paragraphs. In each

affirmation, there is estate specific information describing the assets of the estate, the

name of the public administrator, information about next of kin, whether the assets

included personal property, whether the assets included real property, date of death and

address of decedent, and when legal services commenced. There is a statement of the

total number of hours Mr. Lippman claimed to have worked, the estate assets reported in

the accounting, and the legal fee requested. In a large majority of the 30 cases in

Schedule A, the fee awarded was 6% of the value of the estate assets or close to it.

               The parties dispute how much and how many legal fees awarded in the




7 Many of them contain the same typographical errors - e.g., "loses" instead of "losses" in 29 of
the 30, "preformed" instead of "performed" in 27, "desecration" instead of "discretion" in 11.

                                                14
Schedule A cases varied from the 6% guideline. There is disagreement as to what should

be included in. the valuation of estate assets and disagreement as to whether the

accounting figures or the trial balance figures govern. What is undisputed by both parties

is that in the overwhelming number of cases, respondent used the "rule of thumb"

Guideline figure in fixing legal fees for Michael Lippman.

                  Most of the paragraphs in the affirmations are based on a "template" (Tr.

2455) and do not include estate specific information. Typical is the affirmation in Estate

ofDiane Glasco (Ex. 7[b]) about which there was extensive testimony (Tr. 2420-505).

                  Mr. Lippman begins his affirmation with the statutory criteria for fixing

legal fees for counsel to the PA (~~2, 3,4, 5,6, 11) and the Administrative Board

Guidelines sliding scale limits (~4). He provides his professional qualifications (~~12,

13). In Paragraphs 15 to 42 the affirmation lists, in detail, the general procedures of the

PA's office. the services, legal and non-legal, that Mr. Lippman and his associates

generally perform or may perform if needed. For example, he avers that he reviews all

files to determine whether estate taxes need to be paid and, if so, prepares and files the

return   (~39).   Paragraphs 40 to 42 describe Mr. Lippman's tickler and record keeping

systems; Paragraphs 36 to 38 set.forth the procedures in the PA's office for the sale of a
                                                             r
 decedent's personal property and state that counsel is available to assist with any

 problems that may arise. (In the Glasco case there was no personal property.) There are

 paragraphs describing non-legal work performed by the PA's office where Counsel might

 assist with any "problems or questions which may arise" (~20). Examples of non-legal



                                                 15
work are in Paragraph 17 (Tr. 2425); Paragraph 20 (Tr. 2428); Paragraphs 24A, 24C,

24E, 24F, 36 (Tr. 2435); Paragraphs 31A, 31C, 31D, 31F (Tr. 2433-34). In Paragraphs

43 to 49, Mr. Lippman describes ancillary functions he may perform in assisting the PA

in dealing with the public and with public agencies. He may give advice (~~44, 46) and

assist in collecting assets (~45). In Paragraph 47, Mr. Lippman affirms that he has been

consulted concerning computerizing the Public Administrator's office and has attended

presentations concerning possible computerized systems. He also affirms that he has

designed forms and standardized letters for the PA's office (~49). Paragraphs 50 to 57

describe services counsel for the PA performs in every estate over $30,000. 8 In

Paragraphs 50 to 62, Mr. Lippman lists routine services he performed for this particular

estate. For example, he checked Surrogate's Court records to determine whether the

decedent left a will and attempted to locate next of kin (~50); he prepared a petition for

Letters of Administration (~51); he reviewed the file of the decedent to see if the decedent

had any debts   (~55).   In Paragraphs 58 to 62, Mr. Lippman affirms that he reviewed the

 file and correspondence in order to prepare the Final Account which consists of schedules

 of assets, income, expenses, debts and kinship with supporting documentation. He also

 describes other tasks to be performed to wind up all estates. In the last section of the

 affirmation, Mr. Lippman states the assets and income received by the Glasco estate, the

 number of hours he spent on the matter, and the legal fee requested    (~~63-64).




 8 Formal administration is required only for estates over $30,000 (SePA §1301). Before 2008,
 large estates requiring formal administration were those over $20,000.

                                               16
             Respondent testified that he approved affirmations of legal services by

Michael Lippman in more than 1,000 cases in the years he has been surrogate in Bronx

County (Tr. 2468). In the years encompassed by the Formal Written Complaint there

would have been hundreds of such cases. Respondent claims that the affidavits of legal

services in Schedule A were "cherry picked" by the Commission, but he offers no

particulars or other affidavits of Michael Lippman's that are different in relevant ways.

He recognizes that "these affidavits of service, a very substantial part of them, were the

same in every case" (Tr. 2016)..

              The fact that the affinnations are long and contain many paragraphs of non-

estate specific information is not determinative of their legal sufficiency. Nor will the

recitation of non-legal work performed by the PA or by counsel to the PA disqualify the

affirmations. (It should be noted, however, that legal fees cannot be awarded for work

that can be performed by a layperson [Estate afHarris, 29 Misc3d 1219A (2010)].) It is

not disputed that "the time spent" is included in Mr. Lippman's affirmations. The

paragraphs in the affirmation setting forth the SCPA requirements and the Administrative

Board Guidelines for fixing legal fees suffice to provide "the method or basis by which

requested compensation was determined." Respondent is correct that the statute does not

demand contemporaneous time records. What is critical is whether Mr. Lippman's

affirmations "set forth in detail the services rendered" as required by statute.

               Mr. Lippman's affirmations oflegal services contain no details as to the

legal services performed. They do not document what actual work was done in the



                                              17
particular case. There is no indication of what legal issues were involved, how complex

they were, or what was done to resolve them. There is no information showing how the

hours claimed were spent with regard to the specific estate. I find that the affirmations do

not "set forth in detail the services rendered" as required by statute.

              The affirmations oflegal services in evidence from New York County,

Kings County and Queens County during the time period contemplated in the Formal

Written Complaint, with one exception (Ex. U), show even less detail (Ex. Q, R, S, T, V,

W, EE, FF, GG, HH, II, 11 and KK). Some of the affirmations do not include the number

of hours counsel claims to have spent (e.g. Ex. FF, GG, HH). Many have no estate-

specific information other than the name of the estate. Some rely on the following: "In

this estate as can be determined from the court files all of the services that are expected

and should be rendered to an estate of this size and difficulty were performed by counsel

and his staff' (e.g. Ex. II, 11). Some offer to provide details oflegal services on request

(e.g. Ex. Q). The affidavits of counsel to the PAs in other counties of New York City

during the same time period do not set forth in detail the legal services rendered as

required by SCPA § 11 08(2).

               Respondent asserts that in Matter ofFeinberg, 5 NY3d 206 (2005), the

 Court of Appeals approved affidavits identical to those in dispute as conforming to the

 statute and that the Commission is judicially estopped from claiming otherwise.

 Respondent misapprehends the rulings in the Feinberg case. The issue in Feinberg was

 whether the Brooklyn Surrogate committed misconduct when he fixed numerous legal



                                                18
fees in the absence of any affidavits of legal services. The affidavits of counsel from

other counties, including those of Michael Lippman (Ex. UU-l through UU-7 in this

proceeding) were in evidence at the Feinberg hearing. By stipulating to their admission,

the Commission did not stipulate to their sufficiency, as respondent asserts. On appeal,

the Court of Appeals stated: " ...the other surrogates reviewed the required affidavits of

service provided by counsel" (emphasis added) (Matter ofFeinberg, 5 NY3d at 211).

The word "required" meant necessary. The question of the sufficiency of the affidavits

was not litigated and by using the word "required" the Court of Appeals did not, as

respondent contends, give its stamp of approval to the affidavits of Michael Lippman.

Similarly, respondent stretches my words, when, as Referee in the Feinberg case, my

report commented on the affidavits of counsel in other counties. There can be no

estoppel effect to an issue that was not before the Commission or the Court of Appeals in

Feinberg.

               A preponderance of the evidence shows that in hundreds of cases, between

 1995 and April 2009, respondent approved legal fees for Michael Lippman based on

affirmations that did not set forth in detail the services rendered as required by statute.

               C. Did Respondent Consider the Factors Listed in SCPA §1108(2)(c) in
                  Awarding Legal Fees to Michael Lippman?

               The second sentence of SCPA § 11 08(2)(c), supra p. 11, requires the

 surrogate, in fixing legal fees, to consider the following factors: "the time and labor

 required, the difficulty of the questions involved, the skill required to handle the

 problems presented, the lawyer's experience, ability and reputation, the amount involved


                                               19
and benefit resulting to the estate from the services, the customary fee charged by the bar

for similar services, the contingency or certainty of compensation, the results obtained,

and the responsibility involved."

              The Commission argues that respondent, in fixing counsel fees for Mr.

Lippman, did not give individualized consideration to each case as required by law.

              Respondent is thoroughly familiar with the SCPA. He testified at the

hearing with a copy of the SCPA at his side and alluded many times to sections of the

statute from memory. He knows that the law requires individualized consideration of

applications for counsel fees from counsel to the PA.

              Respondent testified that in awarding legal fees to Mr. Lippman, it was his

practice to review the entire file to see what proceedings there had been and whether any

had been contested (Tr. 2015-16). He would look at the accounting before fixing the fee

(Tr. 2469). He would review the affirmation oflegal services (Tr. 2016). He "would not

read those portions ...which were the same in every affi'rmation" but only "those portions

which were case specific" (Tr. 2164), Respondent testified that he accepted Mr.

Lippman's representation as to the time spent (Tr. 2469) unless an interested party

objected (Tr, 2018). When asked specifically about how he fixed the legal fee in the

 Glasco case, respondent testified that he looked at the accounting and focused on

 particular schedules (Tr. 2501). When asked to explain the extent and nature of the legal

 work done by Mr. Lippman as reflected in those schedules (Tr. 2493) and others (Tr.

 2498-99) respondent was unable to do so. Respondent could not explain with specificity



                                              20
how Mr. Lippman spent the 56 hours he alleged he worked on the Glasco estate (Tr.

2459-507).

             On direct examination, respondent was asked by his attorney about his fee

award to Mr. Lippman of more than $100,000 in the Estate ofHelen Marks (Ex. 126; Tr.

2335-45). The affirmation oflegal services in the Marks case containsMr. Lippman's

statement that as of December 12,2003, he had spent in excess of 400 hours in the

performance of legal services (Ex. 126). Respondent had reviewed the court file before

the hearing and had made handwritten notes (Tr. 2335). He testified that "1. .. certainly

remembered this case, because it was a novel case" involving a complicated kinship issue,

thus implying a reason for the large legal fee and the 400 hours oflegal work alleged (Tr.

2339). However, respondent's testimony showed that at the time Mr. Lippman submitted

his affirmation the kinship hearing had not yet been held (Tr. 2338-39). Respondent

could not explain what legal work Mr. Lippman had done during the 400 hours claimed in

the affirmation other than to suggest that in a large estate it may take more time to collect

the assets and that a kinship hearing requires time beforehand in which to assemble

documents (Tr. 2343).9

              The affirmations oflegal services submitted to respondent by Michael

Lippman, of which the Glasco and Marks cases are representative, did not give

 respondent all of the information needed to give informed consideration to Mr.



 9The Guardian ad Litem in the Marks case submitted an affirmation of legal services on
 December 11, 2007 supported by contemporaneous time records documenting 52.41 hours spent,
 most of it on kinship issues (Tr. 2344-45; Ex. 126).


                                              21
Lippman's fee applications. Mr. Lippman's affirmations included the amount involved in

the estate and the time required. The affirmations also included a statement of Mr.

Lippman's ability, experience and reputation. Respondent testified (Tr. 2505) that "the

customary fee charged by the bar for similar services," one ofthe statutory factors, is the

Administrative Board Guideline fee of6% (Ex. NN).IO Respondent gave individualized

consideration to the fee applications before him to the extent that he did not automatically

award the "rule of thumb" 6%. In exceptional cases he awarded less. See, e.g. Ex. 63, 65

and 143. But respondent's practice oflooking through the case file, the accounting, and

the estate specific parts of the affirmation oflegal services did not give him what he

needed to make individualized fee judgments for the estates he was charged with

protecting. The record reflects, and respondent acknowledges, that he accepted Mr.

Lippman's figures and generally awarded 6% of the estate assets - the maximum

permitted under the Administrative Board Guidelines (Ex. NN; Tr. 1984,2012,2474,

2505). Respondent's contention that he considered all the statutory factors in awarding

counsel fees to Michael Lippman is refuted by the evidence. The affidavits of legal

services submitted to him by Mr. Lippman did not provide a detailed statement of the

legal services rendered and thus lacked important information needed for individualized

consideration.




 10   It is not clear that "the bar" in the statute refers only to counsel to Public Administrators or
 whether surrogates should consider as well fees charged by other practitioners.

                                                      22
                D. Favoritism

                Although respondent and Michael Lippman had a close relationship (see

infra pp. 45-47), I am not persuaded that respondent's decisions in fixing legal fees for

Michael Lippman were influenced, or gave the appearance of being influenced, by their

relationship.

                E. Discussion

                The purpose of the statutory requirements ofSCPA §1108(2)(c) and

individualized consideration of each case, as stated by the Court of Appeals, is to ensure

that beneficiaries of an estate "are paying only for the actual cost of administering the

estate." Matter ofFeinberg, 5 NY3d 206,214 (2005). The legislative history and

background of SCPA §1108(2)(c), enacted in 1993, are reviewed in Matter afFeinberg

(Id. at 209-10), where the Court noted past efforts to end excessive fee awards to PA

counsel and the need to assure that legal fees are commensurate with the services

provided. Nonetheless, the Administrative Board Guidelines of2002 continue to be

selectively applied by the surrogates of New York City in a thwarting of both the statute

and the Feinberg ruling. I I


II The Guidelines were amended effective May 1,2012, after the hearing concluded. The new
Guidelines are not in evidence, but were discussed in their proposed form (Tr. 1982-83,2012)
and they are cited in respondent's Post-Hearing Memorandum. The 2012 Guidelines have not
changed the recommendation as to how legal fees should be computed. There is still obeisance to
the statute and a 6% maximum fee together with a sliding scale for large estates. The new
Guidelines have taken a step toward closer alignment with SCPA §11 08 (2)(c) by requiring PA
counsel to keep contemporaneous time records available to the parties upon request. (Unlike the
new Guidelines, the Report of the Administrative Board on the Issuance of Guidelines approved
April 20, 2012 included the court among those to whom the contemporaneous time records were
to be made available.) It is to be noted that respondent was Chair of the Administrative Board

                                              23
               The Guidelines are internally inconsistent in that they instruct compliance

with SCPA § II 08(2)(c), but at the same time they recommend a "rule of thumb" legal fee

of 6% of estate assets to take account of the costs of administering smaller, less profitable

estates, and the need to retain competent counsel (Ex. NN).12 Counsel to PAs also point

to general legal work, and non-legal work, they do for the PA which is not compensated

as a justification for the "rule of thumb" fee. See, e.g. Ex. V. In addition, although it is a

specialized practice, there is indication in the record that much of the work of counsel to

the PA is routine and repetitive (Tr. 2011, 2013).

               The Guidelines, as applied by the surrogates of New York City, are

intertwined with the deficient affidavits of legal services which are the target of Charge 1.

Interpreting the 6 % cap to be the minimum as well as the maximum legal fee awarded in

nearly every case 13 and using the suggested "rule of thumb," enables legal fees to be

awarded without relationship to legal work done. When the fee will almost always be 6%

of the value of the estate, the need to know the actual legal work done and the

complexities of the legal issues diminishes. An affidavit oflegal services that fails to set

forth in detail the services rendered disguises any lack of correlation between the work




that enacted Guidelines for the Offices of Public Administrators effective 2002, and a member of
the Board that enacted the 2012 Guidelines.

 12 Michael Lippman's annual earnings from PA legal fees between 2001 and 2005 varied
 between a high of$I,496,140 and a low of$768,500 (Ex. 93). He also had a private practice.

 13 Respondent testified, "[I]n the overwhelming majority [of cases], the fee schedule was, in
 essence, almost both a minimum and a maximum ... " (Tr. 2012).

                                                 24
done and the fee awarded.

               Statutory compliance and transparency should be the norm. There could be

benefits even under the "rule of thumb." Statutory compliance might better inform a

surrogate when a case is unusual and the "rule of thumb" should be departed from. There

might be more objections to legal fees from parties, including the Attorney General 14, if

they could see a detailed account of legal services rendered.

               But statutory compliance and transparency are not the norm and the

problem is systemic and longstanding. 15 Because policy and fiscal issues are implicated,

the disconnect between the Guidelines and its authorizing statute might be addressed by

the Legislature. 16

               The practice of awarding legal fees to counsel to PAs as a uniform

percentage of estate assets is entrenched. The surrogates in other counties of New Yark



 14 The New York State Attorney General is a party to PA proceedings because the State has an
 interest in unclaimed assets and in charitable bequests (Tr. 1991-92).

 15 An illustration of how routine in Bronx County was the awarding of the 6% maximum
 Guideline fee is seen in the remedial system/repayment plan respondent instituted in 2006 in an
 attempt to repay estates overcharged by Michael Lippman. See irifra. pp. 30-34. All repayments
 of Mr. Lippman's overcharges were automatically calculated at the Guideline figure. Just as
 telling, when John Reddy (counsel to the PA in Manhattan for 23 years) came to the Bronx in
 2009 and analyzed 250 estate ledgers, all his calculations of fee overcharges and funds remaining
 in estates for future fees were made using 6% and the sliding scale. See Ex. 92(a); Tr.1439ff. No
 attempt was made in either case to consider each case individually.

 16In Matter ofAlayon, 28 Misc3d 311, 323 (2010), afJ'd 86 AD3d 644 (2d Dept 2011), the
 Brooklyn Surrogate commented on the structurally unworkable system presently in place. She
 recommended that the legislature lodge the power to appoint PAs with the Mayor and that the
 Mayor designate salaried staff counsel, either in house or Corporation Counsel, to do the
 agency's legal work.



                                                 25
City accept affidavits of legal services in a format similar in essence to the ones in dispute

here. 17 On this record, where it has been established that during the relevant years the

surrogates in New York City have accepted affidavits of legal services devoid of detailed

documentation of legal services performed, and have been doing so for many years, and

where the Guidelines give shelter to the practice, respondent did not engage in

misconduct as alleged in Charge 1.

                 F. Conclusion

                 I conclude that Charge I is not sustained.


                 CHARGE II

                 The Commission charges that in 2005 and 2006, despite his knowledge that

Michael Lippman had taken unearned advance legal fees without court approval and/or

excessive legal fees, respondent failed to report Mr. Lippman to law enforcement

 authorities or to the Departmental Disciplinary Committee of the Appellate Division,

 First Department, and further, respondent continued to employ Michael Lippman after

 knowledge of his wrongdoing.

                  A. Factual Background

                  The credible evidence shows that in 2004, in reviewing accounts,

 respondent noted higher than usual charges for the clean out of a decedent's estate (Tr.

 2032). He ascertained from Esther Rodriguez that she was using John Rivera, a friend

 with whom she had had a romantic relationship, to do the clean out work (Tr. 137-38,


 17   The record does not contain affidavits of service from Richmond County. But see Tr.2217.

                                                  26
314-15,355,357,2032-33). Respondent suggested to Ms. Rodriguez that she use a

bidding system to find a vendor and that she hire the person who submitted the lowest bid

(Tr. 2033). When the price for the service did not go down, and respondent found out

that the Department ofInvestigation (DOl) was investigating and about to indict Mr.

Rivera (Tr. 312,929,2033), he directed Ms. Rodriguez to stop employing John Rivera to

clean outthe homes of decedents (Tr. 2032-33, 137-38, 312, 314-15, 355, 357, 929). Ms.

Rodriguez promised respondent to cease employing Mr. Rivera (Tr. 357-58).

              In late October or early November 2005, respondent asked Mark Levy, his

Chief Court Attorney, to investigate the operations of the PA's office and how it selected

and paid its vendors (Tr. 929-30). Mr. Levy reported back to respondent that clean out

work was now being performed by a corporation, that John Rivera was the incorporator,

and that Ms. Rodriguez was paying Mr. Rivera in cash from the office's operating

account at a higher rate than other vendors (Tr. 931,2032-35). On January 4, 2006,

respondent told Esther Rodriguez that he would fire her if she did not resign (Tr. 362-63,

2035). Within 20 minutes she submitted a letter of resignation (Tr. 932, 2035).

               A few days after Esther Rodriguez resigned respondent met with Steven

Alfasi, the Deputy PA, and asked Mr. Alfasi what he thought were problems in the PA's

 office (Tr. 643). Mr. Alfasi reported that "Michael Lippman was problematic ...that he

 was running the office or trying to run the office as if it was his own" (Tr. 643). Mr.

 Alfasi also informed respondent that according to Paul Rubin, the PA's accountant, Mr.

 Lippman had taken advance legal fees resulting in negative estate balances totaling



                                              27.
$300,000-$400,000 (Tr. 644).18 In addition, Mr. Alfasi reported to respondent that Mr.

Lippman was taking legal fees from estates before accountings were filed in

contravention of respondent's longstanding directive that no legal fees were to be paid

until after an accounting was filed (Tr. 2040-42). During the time period relevant to the

Fonnal Written Complaint, respondent's directive with regard to payment of counsel fees

was that 75% could be paid when the accounting was filed (generally at least seven

months after Letters of Administration issued) and the remaining 25% was to be held in

an escrow account until the decree was entered (Tr. 949,1980-81,2407-08). Respondent

testified that the purpose of the protocol was "One, ...to give counsel an incentive to act

expeditiously ... [a]nd ... second, .in the event that counsel failed to complete the

job, ...there would still be funds ... for another attorney ... " (Tr. 1981). After hearing Mr.

Alfasi's report, respondent became concerned that more than the Rivera matter could be

awry at the PA's office and he asked Mark Levy to investigate (Tr. 728, 933-34, 2043).

               Mr. Levy learned that a computer system in the PA's office managed a large

commingled bank account holding all estate assets, with sub-accounts for individual

estates. A computer generated trial balance report, also known as a ledger, could give a

 snapshot of all transactions for individual estates (Tr. 62, 936, 1437). Mr. Levy regularly

 reported his findings to respondent (Tr. 939). Mr. Levy proceeded to look at estates with




 18 A negative balance results when more money has been taken from an estate account than has
 been deposited (Tr. 943).



                                                28
negative balances over $1,000 19 and came across information showing that Michael

Lippmann was commingling his privately retained legal matters with the PA's estates-

i.e. using the facilities of the PA's office to service 17-29 of his private clients (Tr. 941-

42). Respondent immediately directed Mr. Lippman to take his private matters out of the

system and Mr. Lippman agreed to do so (Tr. 944).

               In examining trial balance reports of estates with negative balances, Mr.

Levy discovered cases where the negative balances were caused by legal fees taken in

advance of the accounting by Mr. Lippman (Tr. 946-47). Respondent testified that, "Mr.

Levy initially was of the opinion that the protocol had been violated ... at least to the

extent of $100,000" (Tr. 2045). Respondent met with Mr. Lippman in January 2006, and,

with Mr. Levy present, Mr. Lippman admitted that he had not followed respondent's

directions with regard to the timing of legal fees, but he "didn't think" respondent would

mind (Tr. 2045-47). Respondent, to the contrary, believed Mr. Lippman did not disclose

his violation of the fee protocol because he knew respondent would not approve (Tr.

2047,2549). Respondent considered Mr. Lippman's violation of the fee protocol to be "a

betrayal of trust" (Tr. 2549).

               Respondent determined that he no longer wanted Michael Lippman to serve

as Chief Counsel to the PA (Tr. 2047), and in late January 2006, he offered the position to

 Mark Levy (Tr. 2048). Mr. Levy started work as Chief Counsel to the PAin April



 19 Small negative balances were normal. An estate might need to buy a death certificate, which
 costs $15, before assets were collected and the sum would be advanced and debited from the
 estate's balance in the commingled account (rr. 859).

                                                29
2006 (Tr. 948-49). Mr. Lippman remained on as associate counsel.

              Respondent asked Mr. Lippman to provide him with lists showing the

estates where less than the Guideline legal fee had been received, estates where Mr.

Lippman had taken the Guideline fee and estates where Mr. Lippman had taken excess

legal fees - fees that were larger than the 6% fee that could be ultimately awarded (Tr.

954-57,2049-52). This third list identified estates where Mr. Lippman had been paid fees

which he "thought would ultimately be outside of the guidelines" (Tr. 2051; see also Tr.

956-57, 2517-18). Mr. Lippman provided the three lists to respondent and Mr. Levy           ,

before April 2006 (Tr. 954-55). Each list was a "couple of pages" long and gave estate

names and monetary amounts (Tr. 954-55). Within a month, Mr. Lippman provided

amended lists (Tr. 957).2° Mr. Lippman represented to respondent that the estates would

"wash out," meaning what he owed would be balanced by what he would be owed, taking

the lists of estates as a whole (Tr. 953, 2528). Mr. Levy looked at the lists and had

questions as to their accuracy, but he did not have time to analyze them (Tr. 958,961).

               The FBI spoke to respondent in 2006 about Mr. Lippman's legal fees (Tr.

2378,2526) but respondent did not share information with them. Respondent also knew

that the 001 had investigated and performed audits of the PA's office on a number of

occasions (Tr. 2521-24).

               In May 2006, respondent appointed John Raniolo to be the new PA (Tr.



 20 The Commission represents, in its Post-Hearing Memorandum, p.3l, fn.11 that, "None of the
 witnesses at the hearing were able to recall the precise names of the estates and the monetary
 figures set forth on Lippman's lists. No witness could produce a copy of the lists."

                                                30
474, 477). At the same time, respondent put into effect a remedial system/repayment

plan21 under which Michael Lippman would repay any advance and excess fees he had

collected by transferring all legal fees that he earned going forward, as associate counsel,

to estates he had overcharged in the past (Tr. 488, 493-96, 662, 804-05, 897, 900, 975,

985-87,2539-40). With the exception of one instance where respondent allowed Mr.

Lippman to use a legal fee to pay a health insurance premium (Tr. 1085,2539), all legal

fees earned by Mr. Lippman from April 2006 until April 2009, when Mr. Lippman was

terminated (Tr. 1503-04, 1515-17), were transferred to estates to which Mr. Lippman

owed money (Tr. 502-03, 597, 662, 730, 897). Respondent instructed Mr. Raniolo that

when Mr. Lippman gave him an accounting for an estate from which "he was entitled to a

fee, Mr. Lippman was also going to give ... [him] a name or names of estates in which to

deposit that fee into" (Tr. 488). Mr. Levy and Mr. Raniolo were using the list of estates

owed money given to respondent by Mr. Lippman, but over time they were finding

additional estates not on the list that were owed money (Tr. 985).

               In June 2006, Mr. Levy and Mr. Raniolo suggested to respondent that

Michael Lippman's employment be terminated (Tr. 1083-84). In 2007 or early 2008, the

issue of discontinuing Michael Lippman as associate counsel was revisited (Tr. 607-08,

 1086). Respondent rejected the suggestion on the ground that Mr. Lippman had to pay

 back the money he owed to the open estates in the PA's office (Tr. 607-08).




 21The Commission refers to the arrangement as a "repayment plan"; respondent refers to the
 arrangement as a "remedial system."

                                               31
             By the spring of 2008, respondent and Mr. Levy were concerned about the

number ofMr. Lippman's cases that remained open (Tr. 985,1082). Mr. Levy had not

been able to analyze the case files and independently compute the extent of what Michael

Lippman owed due to the backlog inherited from Mr. Lippman and due to the time

consuming nature of calculating overpayments (Tr. 961, 987, 989,1082-83,1232,2553-

54). Mr. Levy was operating on a crisis basis, looking at cases one by one (Tr. 961,983,

987,2553-54) and giving priority to "people who were screaming on a regular basis, to

have their cases ... addressed" (Tr. 987). Cases were moved forward on a "matching"

basis. Mr. Levy testified "it would be a good idea ...to file a case where...there's more

fee available with a case where there's too much fee [that] was taken. So, they both can

go in as zero" (Tr. 973). As cases of fee overcharge not on Mr. Lippman's original lists

came to their attention (Tr. 985), respondent and Mr. Levy became aware that "Mr.

Lippman probably was more over extended than we thought" (Tr. 986; see also Tr. 1082-

83, 1232).

              Respondent concluded that the office of counsel to the PA needed more

help (Tr. 986, 1082). In the fall of200& respondent and Mr. Levy called John Reddy,

who had been counsel to the PA in New York County for 23 years, and expressed interest

in having Mr. Reddy and· his firm move to the Bronx (Tr. 1102, 1426-27). Mr. Reddy

needed time to wind lip his work for the Manhattan Surrogate (Tr. 1427). Mr. Levy

advised Mr. Reddy oqhe disarray in the Bronx PA's office and that there had been visits

by the DOl and the FBI (Tr. 1102-03). Mr. Levy told Mr. Reddy that the goal "was to



                                             32
make sure that by the time the judge's term was completed, that absolutely no person or

estate had been in any way prejudiced by ... [Mr. Lippman's] conduct" (Tr. 1102). Mr.

Reddy asked for more information so that he could assess how big the project would be

and whether there would be money remaining in Mr. Lippman's cases to pay legal fees

and make distributions to family members (Tr. 1457-58). Mr. Levy gave Mr. Reddy the

three lists Mr. Lippman had prepared in 2006 and 250 trial balance reports ofMr.

Lippman's open cases (Tr. 1103, 1432-33).22 Over a period of several weeks, with help

from people in his office, Mr. Reddy analyzed the 250 ledgers and prepared an Excel

spreadsheet (Ex. 92[a]). Mr. Reddy found that Michael Lippman "was taking money at

will, haphazardly ...the Public Administrator's office was writing checks to Michael

Lippman randomly, ... on demand.. Jt was a random taking of money back and forth, in

and out of different estates ...the norm was to bill the estate early ...to take..all of the fees

within the first few months ... and then return money when it was clear that money had to

be returned, but sometimes those returns were years after the checks for the accounting

had been issued" (Tr. 1497). In 15 to 20% of the 250 cases Mr. Reddy analyzed, Mr.

Lippman was paid the entire legal fee before an accounting was filed (Tr. 1500). "[He]

was moving fees around in order to cover the fees that he had taken from an estate, so that

 he could close them" (Tr. 1521). "[T]here were estates where Michael Lippman had

 taken more than he was entitled to" (Tr. 1521). There was evidence from Esther



 22 Mr. Reddy testified that "250 estates is an enormous portion of the Public Administrator's
 work...probably three full years of decedents ... 90% of the Public Administrator's business are
 the small estates. This is ... an accumulation of the top 10%" (Ir. 1496-97).

                                                 33
Rodriguez and Lonnie Elson, the PA's bookkeeper, that Mr. Lippman waited for the mail

to be delivered, and as assets came in, he would request checks to be cut (Tr. 72-73, 250-

51 ).23 Mr. Lippman often took legal fees before doing any legal work causing estates to

incur negative balances (Tr. 409, 634-35, 862; Ex. 34, 35, 36). It would be normal for

about 10% of open cases to have negative balances from such items as the payment of

taxes or the purchase of a death certificate, but as Mr. Lippman regularly took advance

legal fees, the number of estates showing negative balances rose to 40% (Tr. 860, 880).

In addition, Mr. Lippman "almost regularly" misstated the attorney's fees he had received

in the accountings he submitted to the court (Tr. 1501). Mr. Reddy's analysis (Ex. 92[a],

an estimate of the status of the 250 ledgers given to him, showed 60 cases where Mr.

Lippman had overcharged estates (Tr. 1451), negative balances which when added up

totaled over $450,000 (Ex. 92[a]) in legal fees that were in excess of the Guidelines (Tr.

1438-39,1486-87), and net fees which still could be earned by those estates of$149,000

using the figure 6% of the value of the estate's gross assets (Tr. 1487-89). None of the

calculations included interest (Tr. 1615).

                  When Mr. Reddy began work as counsel to the PA in April 2009,
      ,
 respondent gave Mr. Reddy permission to fire or retain personnel. Mr. Reddy fired

 Michael Lippman and had the office locks changed (Tr. 1516). Lonnie Elson, a civil

 servant, was transferred from his bookkeeping job to less sensitive duties (Tr. 1511-12).




 23   It was Mr. E1son'sjob to cut the checks. Only the PA, Esther Rodriguez, and her Deputy had
 check-signing authority (Tr. 71-72, 763-64)).

                                                  34
              In April 2009, Mr. Reddy also determined to fire Paul Rubin, the PA's

accountant (Tr. 1517-18). Previously, Mr. Reddy had contacted Keith Schwam, who was

the investigator with the DOl in charge of monitoring the offices of the Public

Administrator in New York City (Tr. 1518-19). Mr. Reddy gave Mr. Schwam and his

DOl colleague a copy of the spreadsheet (Ex. 90[a]) and explained to them how to read

and interpret the PA's trial balance reports (Tr. 1519). DOl had been looking at PA

ledgers for years "but couldn't come to a conclusion as to what was really going on, in

part because they're cryptic" (Tr. 1519). Mr. Schwam, seeking further information as to

the extent of the malfeasance in the PA's office, asked Mr. Reddy to wear a wire to

record the conversation he was to have with Paul Rubin. Mr. Reddy agreed to do so (Tr.

1520-22).24 When Mr. Reddy confronted Paul Rubin shortly after April 15, 2009 (Tr.

1518), Mr. Rubin acknowledged that he knew Michael Lippman was taking larger legal

fees than he was entitled to. He was angry with Mr. Lippman "because, on larger estates

where Paul [Rubin] had done [tax] work, he couldn't get his $15,000.00, because Michael

had already taken the entire attorney's fee" (Tr. 1522). Paul Rubin told Mr. Reddy that he

regretted not doing so, but "he didn't go to the Surrogate to tell him what was going on"

(Tr. 1522).

               In those cases where Mr. Lippman had overcharged the estates, Mr. Reddy

planned to finish the cases and look to Michael Lippman for repayment (Tr. 1490-91). As

 he and his staff went through open estates case by case, they found many inaccuracies and


 24 No recording was made because there was a problem with the recording equipment (Tr. 1522).

                                              35
omissions in Mr. Lippman's files (Tr. 1526). They found more open cases than they had

anticipated (Tr. 1525) and they needed to amend a number of Mr. Lippman's accountings

(Tr. 1501). Mr. Reddy's office prepared affidavits amending the accountings to reflect

the dates fees were paid to Mr. Lippman and the true amounts (Tr. 1502-03). In every

case, the parties to the proceedings were notified of the misrepresentations (Tr. 1503).

              As of January 6, 2012, when Mr. Reddy testified at the hearing, all but

nineteen of Mr. Lippman's cases had been closed out (Tr. 1530). Mr. Reddy estimated

that his office performed legal services with a value of between half a million and a

million dollars on cases for which Michael Lippman had been paid (Tr. 1569-70). In

addition, Mr. Lippman still owed between $125,000 and $150,000 to overcharged estates

(Tr. 2560-62). Again, none of these figures included interest (Tr. 1615).

               B. Failure to Report to Departmental Disciplinary Committee (ODe)

               The Commission alleges that respondent violated Section 100.3(D)(2) of

the Rules of Judicial Conduct, which provides: " A judge who receives information

 indicating a substantial likelihood that a lawyer has committed a substantial violation of

the Code of Professional Responsibility shall take appropriate action." The Commission

 contends respondent's duty, in 2006, was to fire Michael Lippman and report his

 misdeeds to the DDC and to law enforcement. Respondent maintains that the remedial

 system he put in place was appropriate action.

                According to the Advisory Committee on Judicial Ethics, "ajudge must

 report a lawyer's alleged misconduct to a disciplinary authority" when "the alleged



                                              36
substantial misconduct rose to such an egregious level that it seriously called into

question the attorney's honesty, trustworthiness or fitness as a lawyer" (Adv Ops 10-85,

07-29). The purpose pfthe reporting requirement is to "protect the public from attorneys

who are unfit to practice law" (Adv Op 10-85, as amended 12/9/11).

               The Commission argues that by 2006, respondent knew that Michael

Lippman had been paid advance legal fees and excess legal fees in many estates,

involving large sums of money, in violation of a court directive and that these were

serious acts of misconduct that respondent had a duty to report to the DDC. 25

               Respondent contends that in 2006 he was not aware of any misconduct on

the part of Michael Lippman that mandated referral to the DDC. He maintains that when

he received information that Michael Lippman had been paid advance fees, a breach of

protocol, he took appropriate action by instituting a remedial system whereby Mr.

Lippman was demoted to associate counsel and all his future fees would go to the estates

that were out of protocol. Respondent notes, and the Commission has stipulated, that the

PA had legal authority to pay advance legal fees to her counsel (Tr. 1657-58).

               The protocol for the payment oflegal fees to counsel for the PA was put

into place by Surrogate Holzman to protect the estates under his jurisdiction. See supra, p.

28. An authorized advance legal fee of75% was routinely paid at the time of the




25 The Commission also argues that Mr. Lippman's conduct in filing misleading accountings and
 affirmations should have been reported to the DOC as well, but the evidence shows that these
 acts were not brought to respondent's attention until 2009 and were not apparent on the face of
 Michael Lippman's filed documents.

                                               37
accounting pursuant to respondent's protocol. The final fee was not fixed until the decree

was signed when the case came before the surrogate. The legal fees paid to Michael

Lippman in advance of the accounting, often in advance of any legal work being done,

were unauthorized and improper advance fees that violated respondent's protocol.

Sometimes they were also excess fees when they totaled more than 6 % of estate assets.

The improper fees caused large negative balances in many estates and put the estates at

risk. It is doubtful that any distributee or beneficiary, ifhe or she could have known,

would have agreed to lend Michael Lippman money from a decedent's estate for long

periods of time at his pleasure, without interest, and with the risk that he might not return

the money. When respondent characterizes Mr. Lippman's conduct, as he knew it in

2006, as a "breach of protocol," he fails to tell the whole story.

              As discussed more fully at pages 28-30, supra, respondent was aware of the

following in 2006: From his conversation with Deputy PA Steven Alfasi, respondent

knew that Mr. Alfasiregarded Mr. Lippman as a problem in the PA's office (Tr. 643).

He was told by Mr. Alfasi that Michael Lippman was being paid legal fees in advance of

accountings in violation of respondent's protocol (Tr. 2040-42). Respondent was also

told the PA's accountant reported negative balances in estates of$300,000-400,000

caused by advance legal fees paid to Mr. Lippman (Tr. 644). Respondent's Chief Court

Attorney, Mark Levy, told respondent that Michael Lippman was commingling his

retained matters with the PA's estates and Michael Lippman admitted doing so (Tr. 941-




                                              38
42,944).16 Mr. Levy's investigations, reported to respondent in early 2006, showed an

estimated $100,000 in unauthorized advance fees (Tr. 2045). When respondent

confronted Mr. Lippman, Mr. Lippman gave respondent an explanation which respondent

did not believe (Tr. 2047, 2049). He felt his trust had been betrayed (Tr. 2049). In

response to a request from respondent, Mr. Lippman provided respondent with three lists

purportedly showing those estates where he had not yet been paid the full Guideline fee,

those estates where the Guideline fee had been paid, and those estates where the fee paid

Mr. Lippman was in excess of the Guideline fee (Tr. 2051, 956-57, 2517-18). The lists

had monetary figures next to the names of the estates (Tr. 954-55). Respondent knew that

law enforcement authorities were investigating payments of Mr. Lippman's legal fees (Tr.

2378, 2526). In addition to the above facts, respondent knew in 2006 "that paperwork

was not Mr. Lippman's strong point" (Tr. 2046) and he knew "for a long period of time

that Mr. Lippman liked to gamble" and frequented gambling establishments (Tr. 2550-

 51 ).

               There is a dispute between respondent and the Commission as to whether,

 in 2006, respondent knew that Mr. Lippman had been taking excess legal fees in addition

 to unauthorized advance fees, as the Commission claims, or, on the other hand, whether

 respondent reasonably believed that Mr. Lippman had merely taken legal fees earlier than

 he should have, as respondent claims.



 26Using the PA's office to service his private clients saved Mr. Lippman overhead and
 bookkeeping costs at the City's expense. It undoubtedly also added in some degree to the PA's
 backlog.

                                                39
              In 2006, the full extent of Mr. Lippman's depredations was not known to

respondent. However, he knew that Mr. Lippman had deceived him, lied to him, and

cheated the PA's office. He was told by his Chief Court Attorney that Mr. Lippman had

taken unauthorized fees of at least $100,000. He had information that there were estates

with negative balances of $300,000-$400,000 caused by legal fees paid to Mr. Lippman.

He knew, from experience, that negative balances put estates at risk of being unable to

distribute funds when called upon to do so. Respondent knew that Mr. Lippman had

repeatedly violated his directive that no legal fee was to be paid until the accounting was

filed. He saw a list, more than one page long, which identified estates in which Mr.

Lippman documented that he had received fees in excess of the 6% guideline - in other

words, fees in excess of what he would ultimately be entitled to when all the legal work

was done, the assets were known and the fee was fixed at the end of the case. This third

list was Mr. Lippman's self-reported list of the excess fees he had taken. 27

               If respondent had believed that the excess legal fees and the unauthorized

advance fees on the lists Mr Lippman submitted were due to small and explainable

miscalculations, he would have asked Mr. Lippman to refund the money owed. He would

not have needed to institute the remedial system/repayment plan whereby Mr. Lippman

would repay the estates he had overcharged out of future legal fees. We cannot



27  The fact that Mr. Lippman told respondent that the lists of underpayments and overpayments
 would wash out is largely irrelevant. All of the cases on the three lists were open cases where
 legal work remained to be done. The underpayments represented fees taken that were calculated
 to be eventually at or under the 6% guideline. They were not available to cancel out the excess
 payments at the hand of a bookkeeper because the legal work had not yet been done.

                                                40
know the exact total of excess legal payments Mr. Lippman put on his list (as noted in

footnote 20, the lists are lost), but I conclude that in 2006 at the time respondent put the

remedial system/repayment plan into effect, he knew that Mr. Lippman had been paid

excess fees as well as unauthorized advance fees, that the advance fees and excess fees

came to a large sum, and that the number of overcharged estates was significant.

               The taking of excess fees was gross misconduct on the part of Michael

Lippman. Moreover, taking advance fees at a time when he was not entitled to do so in a

large number of cases in violation of respondent's directive was also gross misconduct

even when the fees in theory and ultimately might be within the Guidelines. The advance

fees were unearned fees, paid to Mr. Lippman at a: time before he had done the legal work

to support the fees paid. They were, in effect, an interest free loan taken without

permission. From the perspective of the victimized estates put at risk, the difference

between an advance unearned fee and a fee in excess of the Guidelines might be

indistinguishable.

               It is undisputed that respondent knew that Michael Lippman had repeatedly

violated the important fee protocol respondent had set in place. Violation of a court

directive subjects an attorney to discipline and is reportable misconduct. DR 7-106(A);

 Matter ofRodeman, 65 AD3d 350 (4 th Dept 2009); Matter ofNajdovski, 18 AD3d 27 (l51

 Dept 2005); Matter ofMuto, 291 AD2d 188 (l st Dept 2002).

               The Code of Professional Responsibility in effect in 2006 prohibited an

 attorney from charging excessive fees (DR 2-1 06[A J) and from violating a court directive



                                               41
(DR 7-1 06[A D. In 2006, respondent had information that would have made him skeptical

of the accuracy of Mr. Lippman's three lists. But even taking the lists at face value, when

combined with all the other information in respondent's possession, respondent had

evidence that there was a substantial likelihood that Mr. Lippman had committed

substantial violations of the Code of Professional Responsibility. I find that the

probability and egregiousness of substantial misconduct by Mr. Lippman was so high that

it seriously called into question Mr. Lippman's honesty, trustworthiness and fitness to

practice law. In order to protect the estates in his court from an attorney unfit to practice

law, respondent had a duty to report Mr. Lippman to the DDC.

              C. Failure to Report to Law Enforcement

               The Commission charges respondent with failure to report Michael

Lippman to law enforcement authorities in 2006. The Commission asserts that Michael

Lippman's conduct indicated a strong possibility of criminality and that by failing to

notifY law enforcement, respondent committed misconduct and violated the Rules of

Judicial Conduct.

               Respondent argues that he was careful not to interfere with ongoing

investigations so as not to misuse the prestige of his office and that the actions he took

were measured and appropriate.

               The information in respondent's possession in 2006 strongly pointed to

 larcenous conduct on the part of Mr. Lippman. Respondent knew that investigations by

 law enforcement were underway. The prestige of his office would not be misused by



                                              42
assisting law enforcement agencies. Respondent had a duty to share the infonnation he

had with law enforcement. .

              D. Appropriateness of the Remedial SystemlRepayment Plan

              Based on the infonnation available to respondent in 2006, the Commission

maintains that respondent had a duty to fire Mr. Lippman and that the remedial

system/repayment plan instituted by respondent was inappropriate and did not comply

with Section 100.3(D)(2) of the Rules.

               Respondent argues that his remedial system was appropriate based on the

infonnation available to him in 2006. Respondent contends that in 2006, he knew of no

law or statute violated by Mr. Lippman in receiving advance fees. He asserts that what he

learned in 2006 was a breach of protocol by Mr. Lippman, a violation of a directive to the

PA about when fees should be paid and in what percentage. He states that Mr. Lippman

gave a reasonable explanation for his breach of protocol. Respondent points to the

evidence in the record that the DOl, the FBI and the City Comptroller (the auditing

agency) had taken no action. He also notes that in 2006 he demoted Mr. Lippman from

chief counsel to associate counsel. Respondent maintains that the remedial system was

 designed to benefit the damaged estates and that, indeed, it did so.

               I find that what respondent knew in 2006 was far more than a breach of

 protocol, as is set out in detail at pp. 28-30, supra. I find that the remedial

 system/repayment plan implemented by respondent in 2006 was not an appropriate

 response to Michael Lippman's large scale taking of advance and excess fees.



                                                43
              First and foremost, by allowing a lawyer who overcharged estates, cheated

the PA's office, lied to him and breached his trust to continue to represent the PA in the

administration of estates, respondent put at further risk the estates under his care.

Respondent's mistake was compounded by the details of the system he set up whereby he

directed that Michael Lippman be the person to decide which overcharged estates to

repay. Furthermore, decisions were made as to the order in which cases were to be closed

out on a "matching basis" - Mr. Lippman's new fee would be matched to the amount of

overcharge on a case on the list. Moreover, the beneficiaries of the estates were never

told that their funds had been "borrowed" by Mr. Lippman or what the reasons were for

delay in closing their estates. 28 In the end, the system collapsed of its own weight.

Although some of the overcharged estates were repaid, new cases of overcharged estates

were discovered, the amount Mr. Lippman owed was far more than respondent had been

aware (Tr. 1087), and progress in clearing the backlog was slow.

               The remedial system/repayment plan was not an appropriate way for

respondent to deal with Michael Lippman's malfeasance.

                It was misconduct not to terminate Michael Lippman in 2006.

               E. Compliance with the Statutory Requirement for Individualized
                  Consideration of Fee Applications

               That part of Charge II alleging that during the repayment period, 2006-

 2009, respondent failed to give individualized consideration to Mr. Lippman's fee



 28The repayments were not noted in the estates' accountings until John Reddy became counsel to
 the PA in 2009 (Tr. 996-97,1045,1502-03).

                                               44
applications is dealt with under Charge 1. The calculations of overcharge and repayment

during the repayment period were made using the guideline fee of 6% and fees were

generally fixed at 6%.

              F. Relationship Between Surrogate Lee L. Holzman and Michael M.
                 Lippman, Esq.

              In Charge II, the Commission asks that respondent be disciplined because in

2006, by failing to report Michael Lippman to the DOC and to law enforcement, and

instead setting in place a repayment plan, respondent allowed a social, political or other

relationship to influence his judicial conduct or judgment in violation of Section 100.2(B)

of the Rules of Judicial Conduct.

              Michael Lippman started work as counsel to the Bronx County PA in 1970

(Tr. 2238). In 1974, respondent came to work in the Bronx County courthouse as Law

Secretary to the then Bronx County Surrogate and later was appointed head of the

Surrogate Court's Law Department where he served until he became Surrogate in 1988

(Tr. 1938). During the years that the two men worked in the same courthouse, they saw

each other frequently on court business (Tr. 1972-73). When respondent was elected

Surrogate, he retained Mr. Lippman as counsel to the PA (Tr. 1973).

               During the ensuing years, respondent and Michael Lippman had a close

 working relationship. In addition to appointing Mr. Lippman as chief counsel to the PA,

 respondent conferred with him about the staffing needs of the PA's office and, in

 consultation with Mr. Lippman, selected the attorneys who served as associate counsels

 (Tr. 1976,2638-39). Staffing changes in the PA counsel's office would be done in


                                              45
consultation with Mr. Lippman (Tr. 1976-77). Respondent decided which of the

attorneys, if any, 'would serve as co-counsel with Mr. Lippman on each case (Tr. 2623-

25).29 Mark Levy, respondent's Chief Court Attorney, testified that in January 2006,

while Mr. Levy was working in respondent's chambers, "Mr. Lippman came in and said

to the Surrogate, 'Do I still have a job?'" (Tr. 958). This incident bespeaks Mr.

Lippman's familiarity with the Surrogate and his chambers.

              On occasion, respondent and Michael Lippman saw each other outside the

courthouse as well. Respondent knew that Mr. Lippman had season's tickets to Yankee

Stadium, and testified that "over the years there were at least three or four years that I

went to Opening Day games with Mr. Lippman" (Tr. 1977). Respondent could recall at

least twice when the two men had lunch together with other parties present (Tr. 1978).

Mr. Lippman attended the wedding of respondent's eldest daughter (Tr. 1979). Mr.

Lippman gave a party at his upstate home for more than 100 people to celebrate

respondent's re-election (Tr. 263-64). Mr. Lippman also made telephone calls "for a

couple of months" in an effort to raise money for respondent's 2001 re-election (Tr. 264-

65).

               When respondent learned that Esther Rodriguez had disobeyed his direction

 to stop using John Rivera as a vendor, he summarily fired her (see supra, p. 27). When

 respondent learned that Michael Lippman had taken excess and advance fees and had




 29 On some cases, while he was Chief Counsel, Mr. Lippman served as counsel alone. On others,
 there was co-counsel and Mr. Lippman shared in the fee (Tr. 2639).

                                               46
disobeyed a direction of the court, respondent retained his services as associate counsel

and permitted him to represent estates for three more years, albeit Mr. Lippman's fees

were used to make refunds. The damage to the estates from the pilfering ofMr. Rivera

was miniscule compared to the damage to the estates by Mr. Lippman as it was known to

respondent in 2006.

              I conclude there was proof by a preponderance of the evidence that the long

and close relationship between respondent and Michael Lippman influenced respondent's

decision in 2006 not to fire Michael Lippman and his decision not to report Michael

Lippman to the DDC and to law enforcement, and instead to set up a repayment plan.

               G. Conclusion

               Charge II, Part (I) is sustained.

               Charge II, Part (2) is not sustained consistent with my conclusion in Charge

I that respondent accepted affidavits of legal services from Michael Lippman that did not

comply with SCPA § II 08 (2)(c), generally awarded the Guideline fee, but that

misconduct should not be found.


               CHARGE III

               Charge III alleges that from 1997 to in or about 2005 respondent failed to

adequately supervise the work of Esther Rodriguez, Michael Lippman and others,

resulting in (I) Michael Lippman taking advance and excess legal fees without an

affirmation oflegal services and without court approval, (2) numerous and lengthy delays

 in the administration of estates, (3) numerous estates with negative balances, (4) estate


                                               47
funds being placed in imprudent, unauthorized investments, and (5) the PA's employment

of a close friend who billed for services not rendered and overbilled estates.

              A. Duty To Supervise

              The Surrogate's Court is under the jurisdiction of, and is funded by, the

New York State Office of Court Administration (OCA) (Tr. 1978). The Public

Administrator's office is part of the Surrogate's Court, but it is a New York City agency

and the Public Administrator is a City Commissioner. Salaries in the PA's office are paid

by New York City (SCPA §11 05(3)) and it is audited by the City Comptroller (Tr. 1978).

Under SCPA §III 0, the City is answerable for the faithful execution by the public

administrator of the duties of his/her office and is financially liable for the'misconduct or

negligence of its employees.

                 In New York City, the surrogate appoints the PA and Deputy PA (SCPA

§ 11 02(1)) as well as counsel to the PA (SCPA §1108(2)(a)). Respondent has the

authority to fire as well as hire those officials (Tr. 2379, 2389; SCPA §1102). SCPA

§11 09 requires the PA to file monthly and semi-annual status reports with the surrogate.

The PA files an annual audit with the surrogate, the mayor, the city and state comptroller

and the attorney general (SCPA §1109). SCPA §1107(3) authorizes the surrogate to

examine the PA's bank books and other bank documents. The surrogate is responsible

 for fixing legal fees for counsel to the PA which are paid from individual estates (SCPA

 §1108(2)(c)).

                 There was general agreement among the witnesses at the hearing, including



                                              48
respondent, that the surrogate has a duty to supervise the office ofthe PA. The question

is what are those supervisory duties and what, if any, supervisory duties did respondent

fail to perform that resulted in what the Commission calls a shambles in the PA's office

(Reply, p. 31)7

              B. The Taking of Advance and Excess Legal Fees by Michael Lippman
                 Without an Affirmation of Legal Services

              The taking of advance and excess legal fees by Michael Lippman without

court approval has been proven by a preponderance of the evidence and is documented in

the discussion of Charge II, supra pp. 28ff. When Esther Rodriguez, the PA, paid Mr.

Lippman legal fees in advance of the accounting, which was forbidden by respondent, no

affirmations oflegal services were submitted to her. Affirmations oflegal services were

not expected or required to be submitted to the PA. On the other hand, no fee for legal

services was fixed by respondent without an affirmation oflegal services. Respondent

required affidavits oflegal services in all cases. The gravamen of this part of Charge III

is that respondent's lack of supervision permitted Mr. Lippman to take unauthorized fees.

              The procedures in place in the PA's office during the relevant time period

made it difficult to detect Mr. Lippman's malfeasance. Many times the checks payable to

Michael Lippman, drawn by the bookkeeper Lonnie Elson and generally signed by Esther

Rodriguez, represented fees from several estates with no estate identifying information on

the check (Ex. 1,4,5,8, II, 12; Tr. 86, 168, 196,229,232). Mr. Lippman was paid

attorney's fees in "odd denominations ... a $30,000 ... fee ...was usually taken as some

combination of checks" (Tr. 1442). Mr. Lippman "never seemed to take all the money


                                             49
from a single source, he took a little bit of money from all different sources as he went

along" (Tr. 1446). The computer system did not have the capacity to track fee payments

by running the check number (Tr. 1447).

              The trial balance report or ledger for an individual estate, run from the PA's

computer, showed the moneys that had come in and moneys that had been paid out of an

estate. The trial balance reports were the basis for the accountings prepared for the

surrogate by the PA's office. They would show any legal fees that were taken in advance

and refunded. The accountings were prepared by Michael Lippman and signed by Esther

Rodriguez (Tr. 54,207,214-15). The trial balance reports were not submitted to the

surrogate (Tr. 389-90, 715,1702).30

               Respondent argues that because the PA was a party appearing before him in

court, he had no right to examine an internal document of the PA's office. J reject that

argument. After problems in the PA's office were brought to his attention in 2006, he

directed Mark Levy, his Chief Court Attorney, to obtain trial balance reports in order to

investigate the negative balances caused by improper attorney's fees about which he had

been informed. Respondent's supervisory powers gave him the authority to examine

internal documents in the PA's office. However, there was no proof of a need to examine

trial balance reports on a routine basis. The evidence indicates that it would have been

 improper to do so (Tr. 2025; see also Matter ofAlayon, 28 Misc3d 311, 320, aff'd on



30 Nor were trial balance reports presented to the surrogates from other counties in New Yark
City (Tr. 1702,2211,2293-94,2384).


                                               50
other grounds 86 AD3d 644 [2d Dept 2011]).

              The accountings filed with the court did not list the dates and amounts of

legal fees paid. That is the procedure in New York County (Tr. 2306-07) and the
                                                         \


procedure instituted in the Bronx when John Reddy took over as counsel (Tr. 1502-03).

However, there is no reason to believe that Michael Lippman would have accurately

listed the details of his fees had the details been required. As noted, Mr. Lippman

regularly misstated his fees (Tr. 1501-03).

              The Commission argues that respondent failed to train Esther Rodriguez,

the PA, so that she would scrutinize the accountings more thoroughly and otherwise

perfonn her duties more competently. However, the collaboration of the PA was not

inadvertent. The record shows she knew when she signed the checks that she was paying

Michael Lippman unauthorized advance and excess legal fees (Tr. 73,250-54).

Accordingly, it cannot be said that better training would have made a difference.

               I find that the Commission has not proved by a preponderance of the

evidence that before 2006 respondent should have known of, or that supervisory failings

 on his part resulted in, the taking of advance and excess legal fees by Michael Lippman.

               C. Delays in the Administration of Estates

               The Commission charges that in numerous cases, including the 26 in

 Schedule E, respondent's failure to supervise resulted in excessive delays in the

 processing and closing out of cases. There was testimony from several witnesses about

 backlogs in the wake of Esther Rodriguez' tennination in 2006 - e.g., Alfasi (Tr. 648);



                                              51
Levy (Tr. 108).

              In some cases, an explanation for delay emerged when it became apparent

that court files subpoenaed by the Commission were incomplete. In the Surrogate's

Court, every proceeding is filed separately. For example, there can be an administration

file and a separate file for a wrongful death action brought in Supreme Court, both for the

same estate. The wrongful death action may be the explanation for years of delay, which

cannot be seen from the administration file alone. However, in a number of Schedule E

cases there were long delays without satisfactory explanations. In the following cases,

there appeared to be excessive, unexplained delays: Estate of Babineau (Ex. 3); Estate of

Danziger (Ex. 43); Estate ofFleming (Ex. 45); Estate ofFrankelino (Ex. 46); Estate of

Echevarria (Ex. 47); Estate of Vandermark (Ex. 48); Estate ofAlcantara (Ex. 96); Estate

ofBlanch (Ex. 100); Estate ofChesterfield (Ex. 107); Estate ofLederman (Ex. 124);

Estate ofScott (Ex. 139); Estate of West (Ex. 145); Estate of White (Ex. 146).

               Respondent argues that delay in handling cases is a matter for court

administration and he had no complaints from "any governmental agency" raising the

issue of backlog in the PA's office (Tr. 2316-17). He also contends that the 26 cases in

Schedule E were culled by the Commission from thousands. Using the testimony of John

Reddy that 250 would be his estimate of three years oflarge estates in the PA's office

(see Fn. 22, supra), the number from 1997 to 2005 could be estimated at 670. Exhibit

MM, Audit Reports, corroborates Mr. Reddy's estimate as a reasonable ballpark number.

Respondent also argues that since the PA appears before him as a party it is incumbent



                                             52
upon him not to examine its internal documents.

              The issue of untoward delay has been before the Commission and the Court

of Appeals most recently in Matter afGi/patrie, 13 NY3d 586 (2009), which held that

although primarily a matter for administrative correction, lengthy, inexcusable caseload

delays on the part of a judge may be subject to discipline when the judge fails to act in

response to administrative warnings. Here, the Commission does not charge respondent

directly with delays in disposing of the PA's cases. It charges respondent with failure to

supervise Esther Rodriguez and Michel Lippman, his appointees, resulting in unwarranted

delays. But Gi/patric is instructive in pointing to the difficulties of determining whether

delay is inexcusable and whether the problem should be dealt with administratively. In

the case of estates administered by the PA's office, cases take longer than usual to resolve

because there can be many different proceedings brought with regard to an estate (Tr.

2014-15).

               Here, the lines of administrative responsibility are not clear. There was no

evidence of what entity or person in the OCA is respondent's administrative judge. To

whom does respondent report on the number of pending cases and the length of time they

have remained open? Does OCA have statistics on cases open for extended periods of

time in respondent's court? Did respondent receive warnings about languishing cases?

The record does not tell us. As noted supra at footnote 14, the Attorney General is a

party to PA cases, but there is no evidence that the Attorney General complained of delay

 in surrogate court matters. The City plays a supervisory role and its audit reports are very



                                              53
detailed (see Ex. MM) but there is no indication in the audit reports in evidence that the

issue of delay was noted.

              Respondent has overall responsibility for the running of his court. He has

the power to hire and fire the PA and her counsel. But the nature of his supervisory role

is general and is shared with the City who pays the PA and her staff.

              The evidence shows that Esther Rodriguez, who is not a lawyer, relied on

Michael Lippman in the making of her semi-annual status reports (Ex. 30[b]-[c]; Tr. 342-

43). Before 2006, Michael Lippman had a reason to keep estates open - all excess legal

fees had to be refunded before he could present a decree for judicial signature. Michael

Lippman knew that respondent never signed a decree unless the legal fee was within the

Guidelines. In addition, Michael Lippman was receiving a benefit from the use of the

advance/excess fee money as estates remained open for extended periods of time (Tr.

2577-78). Thus, there was an incentive for Mr. Lippman to delay and find explanations

 for delay. On the semi-annual reports prepared by Mr. Lippman (Ex. 30[b]-[f]) there

were explanations, albeit not always detailed, in every case. The explanations respondent

 received satisfied him at the time (Tr. 2029-30, 2577).

               The proof is not compelling that the delays were pervasive and excessive

 enough to demonstrate a lack of supervision amounting to misconduct. The link between

 the delays and respondent is attenuated because the semi-annual reports to respondent,

 based on infonnation from Michael Lippman, showed acceptable reasons for the cases

 that were slow in being closed. Until 2006, respondent, believing in the ability and



                                              54
probity of his appointees, relied on the PA's reports.

              D. Negative Balances

              In the Fonnal Written Complaint, the Commission charges that respondent

failed to ensure that the PA filed adequate monthly statements of accounts and adequate

bi-annual reports as required by SCPA §1109. It also charged that the quarterly reports

submitted by the accountant, Paul Rubin, did not contain infonnation on individual

estates. the Commission alleges that as a result ofrespondent's failure to require

adequate reports, he failed to recognize that numerous individual estates had negative

balances.

               There was ample proof that numerous estates had negative balances during

the applicable time period as a result of the payment to Michael Lippman of advance and

excess legal fees. See supra, pp. 27-28. There was no proof offered by the Commission

that the reports accepted by respondent did not meet the statutory requirements of SCPA

§1109. The reports in evidence (Ex. 30 [b]-[cD are adequate. SCPA §1109 does not

require that reports by the accountant itemize each estate separately.

               Respondent examined the reports and audits submitted to him and followed

 up when he noted cause to do so (Tr. 2404). He investigated and responded to complaints

 he received (Tr. 2404-05). The Commission has not pointed to any required reports that

 were not made or any that did not comply with statutory requirements. The Commission

 has not proved, or even suggested, that respondent ignored a report that hinted at

 wrongdoing. None of the reports received by respondent revealed the advance and excess



                                               55
fees paid to Michael Lippman. The FBI and DOl, whom he knew to be investigating the

PA's office, had drawn no problem to his attention.

             I find that the negative balances caused by Mr. Lippman's fee overcharges

and respondent's failure to recognize them were not shown to be the result of

respondent's failure to properly supervise by requiring adequate reports.

              E. ImprndentlUnauthorized Investment of Estate Funds

              Esther Rodriguez, the PA, was not an expert in financial matters and the

brokerage account in the PA's office was supervised by Paul Rubin, the PA's accountant

(Tr.288-92). Ms. Rodriguez testified that Paul Rubin gave her advice regarding

investing estate funds (Tr. 92), and Steven Alfasi, the Deputy PA, corroborated that Paul

Rubin advised on investments (Tr. 666). Paul Rubin denied that he gave investment

advice (Tr. 1324), but his actions belied his testimony.

             .At a time before January 2006, Paul Rubin introduced Esther Rodriguez to

Jason Reback, a friend of his who was a licensed broker (Tr. 294-96, 665-68). Mr.

Reback suggested moving the PA's brokerage account, containing about $10,000,000 (Tr.

293) to a new company (Tr. 295-98). Mr. Rubin assured Ms. Rodriguez that the new

accounts would be "safe" and "liquid" (Tr. 295-96). Paul Rubin and Jason Reback

advised Esther Rodriguez that auction-rate securities were an appropriate investment and

could be liquidated within 24 hours (Tr. 669-70). Esther Rodriquez signed an agreement

 with Jason Reback that authorized investment in auction-rate securities (Tr. 301-02, 669-

 70). Esther Rodriguez did not know what an auction-rate security was (Tr. 303). She did



                                             56
not review the brokerage statements but gave them to Paul Rubin to review (Tr. 291).

Paul Rubin was the person who dealt with the broker (Tr. 292).

              In February 2008, after John Raniolo had been appointed PA, the court

ordered a distribution of $1.2 million from an estate invested in auction-rate securities

(Tr. 671, 677). The PA's office asked Jason Reback to liquidate the estate's assets but the

broker could not comply because that "there was an illiquidity issue" (Tr. 525, 671).

When the markets "froze", John Raniolo and Steven Alfasi discussed the matter with

respondent (Tr. 526,673-74) and contacted the City Comptroller'sOffice (Tr. 527,674).

After an exchange of correspondence between the New York City Law Department, the

PA and the Comptroller's office (Ex. 20-27), the City agreed to pay the distributees (Ex.

27). In January 2009, the PA's office reimbursed the City (Ex. 25; Tr. 688, 690-92).

               The PA's accountant believed that the auction-rate securities were in tax-

free money market accounts or tax-free bonds protected by the State or City (Tr. 1332-33,

 1374-75). The auction-rate securities were on the books of the PA for a substantial

period of time and the Comptroller of the City of New York noted no concern in its audit

 until after the market "froze" (Tr. 675; Ex. 27). The accountings and other documents

 submitted to respondent for review did not identity auction-rate securities as estate

 investments (Tr. 2074-75).

               The record before me does not make clear that the auction-rate securities

 were "an investment that was risky and imprudent, not authorized by the SCPA § 11 07

 and/or contrary to the Administrative Board Guideline'; as charged in the Formal Written



                                               57
Complaint. SCPA §1107 instructs public administrators to deposit all moneys collected

in designated banks within five days of receipt. The Commission does not claim that all

PA estate funds must remain on deposit and may not be prudently invested. The record

reflects that the PA had a brokerage account before she invested with Jason Reback (Tr.

297). The 2002 Administrative Board Guidelines (Ex. NN) are silent with regard to PA

 investments. The Guidelines in effect prior to 4002 are not in evidence. The 1995

Guidelines, referred to in the Commission's Post- Hearing Memorandum at page 116,

approve Treasury Bills. The record does not reveal whether the 1995 Guidelines have

 been superseded or remained in effect during the time period relevant in this proceeding.

 The Commission has not proved a violation of established standards or limitations for

 investment by a PA in New York City.

               Respondent claims, as John Raniolo seemed to testify (Tr. 522), that the

 controlling statute for PA investments is Estates, Powers and Trusts Law §11-2.3(a), the

 Prudent Investor Rule. This statute is very general. It permits diversification; it states

 that no particular investment is either prudent or imprudent per se; and it provides that a

 fiduciary's investment decision is to be judged as of the time it is made and not by its

 outcome.

               In any event, respondent had no involvement in the making of the

 investment. Surrogates generally may not advise PAs with regard to investment decisions

. because they must rule on requests by litigants to impose surcharges (Tr. 2216). The

 accountings respondent received referred to the investment as a type of "money market



                                               58
account" (Tr. 2075). When respondent discovered the problem of the "frozen" securities,

he took action to make the affected estate whole.

              I find a lack of proof by a preponderance of the evidence that respondent's

failure to supervise resulted in an imprudent and/or unauthorized investment.

              F. Employment by the PA of a Friend Who Billed for Services Not
                 Rendered and Overbilled Estates

              As detailed, supra p. 27, Esther Rodriguez surreptitiously continued to

employ a vendor who overbilled, after respondent had directed her to stop employing

him. As a result, respondent fired Ms. Rodriguez on January 4, 2006. Respondent acted

promptly as information became available.

              I find that misconduct on the part of the vendor, John Rivera, and on the

part of Ms. Rodriguez for continuing to employ him, was not proven to be the result of

respondent's failure to properly supervise.

              G. Discussion

              The Commission, in Charge III, claims that respondent's failure to

adequately supervise Esther Rodriguez and her staff resulted in chaos and corruption. I

conclude that respondent badly misjudged Esther Rodriguez and Michael Lippman. He

trusted them and he relied on them, and, as he recognizes, they betrayed him and their

public trust. The proof does not establish that respondent's failure to supervise his

app~intees resulted   in chaos and corruption.

               H. Conclusion

               I conclude that Charge III is not sustained.


                                                 59
              CHARGE IV

              Charge IV alleges that from about 2001 to 2003, respondent failed to

disqualify himself from cases in which Michael Lippman appeared, notwithstanding that

Mr. Lippman raised more than $125,000 in campaign funds for respondent's 2001

campaign for Surrogate, Bronx County.

              The Commission did not prove that Michael Lippman raised more than

$125,000 for respondent's 2001 campaign. There was testimony from Esther Rodriguez

that Mr. Lippman made telephone calls from his desk in the PA's office for "a couple of

months" (Tr. 264) before the 2001 election asking for campaign contributions from

lawyers (Tr. 264-65). Responqent testified, in answer to a question whether Mr Lippman

raised funds for him: "I have no knowledge of that" (Tr. 2400). However, respondent

admitted on cross-examination that he had testified earlier, "I had general knowledge that

he [Lippman] was trying to raise funds" (Tr. 2400-01).

               Section 100.3(E)(l) of the Rules Governing Judicial Conduct provides: "A

judge shall disqualify himself or herself in a proceeding in which the judge's impartiality

might reasonably be questioned ... " The Commission cites opinions by the New York

Advisory Committee on Judicial Ethics in support of its contention that for two years

after the 200 I campaign ended, respondent should have disqualified himself in any case

in which Michael Lippman appeared. Advisory Opinion 03-64 calls for ajudge's recusal,

subject to remittal, for two years beyond the election if an attorney is exercising "a

 continuing fund-raising function ... for the duration of the campaign .. .in effect, operating



                                               60
as fund-raising chairperson ... or as a fund-raising committee..." A later opinion,

Advisory Opinion 08-152, clarifies when an attorney's campaign conduct requires recusal

by a judge. "[O]nly 'active' conduct in support of a judicial campaign requires recusal

(citations omitted). Typically, such active conduct involves a leadership role in the

candidate's campaign committee, such as 'campaign manager, campaign coordinator,

finance chair or treasurer' (citation omitted)."

              Although not charged, the Commission argues, citing Advisory Opinion 01-

07, that even if Michael Lippman's involvement with fundraising were viewed as limited,

respondent would have been obliged to recuse himself from Mr. Lippman's cases until

Primary Day, which was September 25,2001. The Commission notes that Exhibit 96

contains an accounting and affirmation of legal services filed by Mr. Lippman on August

24, 2001, and Exhibit 83 contains an accounting and affirmation of legal services filed by

Mr. Lippman on August 7, 2001. Respondent points out that by June 2001, when he was

unopposed, he was assured of re-election (Tr. 2401). Confirming that the election was

over, Michael Lippman held a victory party on July 14,2001 for more than 100 people at

his upstate home that respondent attended (Tr. 263-64, 1979, 2401).

               The evidence at the hearing falls short of proving Charge IV by a

preponderance of the evidence.

               I conclude that Charge IV is not sustained.




                                              61
              PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW

              Proposed Findings of Fact as to Charge I

              1.      SCPA §1108(2)(c) requires that legal fees allowed by the court to

counsel to Public Administrators within the City of New York shall be supported by an

affidavit of legal services setting forth in detail the services rendered, the time spent, and

the method or basis by which requested compensation was determined. The statute goes

on to provide that in fixing the legal fees, the court shall consider the time and labor

required, the difficulty of the questions involved, the skill required to handle the problems

presented, the lawyer's experience, ability and reputation, the amount involved and

benefit resulting to the estate from the services, the customary fee charged by the bar for

similar services, the contingency or certainty of compensation, the results obtained, and

the responsibility involved.

               2.     The Court of Appeals considered SCPA §1108 (2)(c) in Matter of

Feinberg,S NY3d 206, 214 (2005) and stated: "The purpose of the statutory affidavit

and individualized consideration requirements is to ensure that beneficiaries of estates

that, by definition, lack interested parties capable of offering independent review are

paying only for the actual cost of administering the estates."

               3.      SCPA §1128 authorizes the promulgation of guidelines for

compensation of counsel to public administrators to be made by the Administrative Board

for the Offices of the Public Administrators of New York State. The 2002 Amended

Guidelines (Ex. NN) recommend that, in the absence of extraordinary circumstances, PAs



                                               62
in New York City shall require their counsel to limit their request for compensation to a

maximum legal fee of 6 % of the value of estates under $750,000 with decreasing

percentages for estates larger than $750,000. It directs PAs to require their counsel to

support their request for compensation with an affidavit complying with SCPA

§1108(2)(c). The 2002 Guidelines goes on, in its Interim Report, to explain the Guideline

schedule. It states: "The adopted schedule provides the 'customary fee charged ... for

similar services' in the overwhelming majority of estates that are administered by the

Public Administrators and establishes a cap on .. .legal fees ...." The Interim Report then

states that in setting the new schedule, the Board considered factors in addition to the

amount of fees currently requested by counsels to the PA. The Board also considered that

in this area of the law, a legal fee should not be based on time spent alone. The Board

"balanced the fact that each estate pays for its legal services against the economic reality

that most estates administered by the Public Administrators are relatively modest and that

the Public Administrators would be unable to retain competent counsel to provide legal

services in many of these estates if counsel did not have the opportunity to receive more

significant compensation in more substantial estates. The 'rule of thumb' that the

schedule adopts is a product of ... [a broad] consensus ..." The Interim Report ends by

 stating that the Surrogate retains complete discretion to fix reasonable counsel fees in

 accordance with the factors listed inSCPA §II 08(2)(c).

               4.     The affirmations oflegal services by Mr. Lippman in 30 cases listed

 in Schedule A that were admitted in evidence are similar (Ex. 7[b], 16[b]-1, 28[b]-1,



                                              63
43[b], 44[b]-1,47[b]-I, 63[b], 65[b]-2, 71[b]-I, 73[b], 77[b]-I, 99,104,105,109,110,

113,115,120,121,122,125,126,131,133,138,140,141, 143, 144).

               5.      All of the affinnations are 20 pages or more in length and contain 55

or more paragraphs. In each affinnation, there is estate specific infonnation describing

the assets of the estate, the name of the public administrator, infonnation about next of

kin, whether the assets included personal property, whether the assets included real

property, date of death and address of decedent, and when legal services commenced.

There is a statement of the total number of hours Mr. Lippman claimed to have worked,

the estate assets reported in the accounting, and the legal fee requested.

               6.      In a large majority of the 30 cases in Schedule A, the fee awarded

was the Guidelines "rule of thumb" 6% of the value of the estate assets or close to it.

                7.     Most of the paragraphs in theaffinnations are based on a "template"

(Tr. 2455) and do not include estate specific infonnation. Typical is the affinnation in

Estate ofDiane Glasco (Ex. 7[b]; Tr. 2420-505).

                8.      Mr. Lippman begins his affinnation in the Glasco case with the

statutory criteria for fixing legal fees for counsel to the PA ('\1'\12, 3, 4,5,6, 11) and the

 Administrative Board Guidelines sliding scale limits ('\14). He provides his professional

 qualifications ('\1'\112-13). In Paragraphs 15 to 42 the !lffinnation'lists, in detail, the

 general procedures of the PA's office and the services, legal and non-legal, that Mr.

 Lippman and his associates generally perfonn or may perfonn if needed. For example, he

 avers that he reviews all files to detennine whether estate taxes need to be paid and, if so,



                                                  64
prepares and files the return (~39); Paragraphs 40 to 42 describe Mr. Lippman's tickler

and record keeping systems; Paragraphs 36 to 38 set forth the procedures in the PA's

office for the sale of a decedent's personal property and state that counsel is available to

assist with any problems that may arise. (In the Glasco case there was no personal

property.) There are paragraphs describing non-legal work performed by the PA's office

where Counsel might assist with any "problems or questions which may arise"             (~20).


Examples of non-legal work are in Paragraph 17 (Tr. 2425); Paragraph 20 (Tr. 2428);

Paragraphs 24A, 24C, 24E, 24F, 36 (Tr. 2435); Paragraphs 31A, 31C, 310, 31F (Tr.

2433-34). In Paragraphs 43 to 49, Mr. Lippman describes ancillary functions he may

perform in assisting the PAin dealing with the public and with public agencies. He may

give advice   (~~44,   46) and assist in collecting assets   (~45).   In Paragraph 47, Mr.

Lippman affirms that he has been consulted concerning computerizing the Public

Administrator's office and has attended presentations concerning possible computerized

systems. He also affirms that he has designed forms and standardized letters for the PA's

office   (~49).   Paragraphs 50 to 57 describe services counsel for the PA performs in every

estate over $30,000. In Paragraphs 50 to 62, Mr. Lippman lists routine services he.

performed for this particular estate. For example, he checked Surrogate's Court records

to determine whether the decedent left a will and attempted to locate next of kin            (~50);   he

prepared a petition for Letters of Administration (~51); he reviewed the file of the

 decedent to see if the decedent had any debts (~55). In Paragraphs 58 to 62, Mr. Lippman

 affirms that he reviewed the file and correspondence in order to prepare the Final



                                                  65
Account which consists of schedules of assets, income, expenses, debts and kinship with

supporting documentation. He also describes other tasks to be performed to wind up all

estates. In the last section of the affirmation, Mr. Lippman states the assets and income

received by the Glasco estate, the number of hours he spent on the matter, and the legal

fee requested (~~63-64).

              9.     Respondent approved affirmations of legal services by Michael

Lippman in more than 1,000 cases in the years he has been surrogate in Bronx County

(Tr. 2468). In the years encompassed by the Formal Written Complaint there were

hundreds of such cases. The affidavits in Schedule A are a representative group, and

respondent recognizes that "these affidavits of service, a very substantial part of them,

were the same in every case" (Tr. 2016).

               10.    The fact that the affirmations are long and contain many paragraphs

of non-estate specific information is not determinative of their legal sufficiency. Nor will

the recitation of non-legal work performed by the PA or by counsel to the PA disqualifY

the affirmations. It is not disputed that "the time spent" is included in Mr. Lippman's

 affirmations. The paragraphs in the affirmation setting forth the SCPA requirements and

 the Administrative Board Guidelines for fixing legal fees suffice to provide "the method

 or basis by which requested compensation was determined." The SCPA does not demand

 contemporaneous time records.

               11.    What is critical is that Mr. Lippman's affirmations oflegal services

 contain no details as to the legal services performed. They do not document what actual



                                              66
work was done in the particular case. There is no indication of what legal issues were

involved, how complex they were, or what was done to resolve them. There is no

information showing how the hours claimed were spent with regard to the specific estate.

The affirmations do not "set forth in detail the services. rendered" as required by statute.

               12.    The surrogates in other counties in New York City approved legal

fees to counsel based on affirmations using a similar "template" containing the same or

less estate specific information than those filed in Bronx County (Ex. Q, R, S, T, V, W,

EE, FF, GG, HH, II, JJ, KK). They do not set forth in detail the legal services rendered as

required by SCPA §11 08(2).

               13.    The Court of Appeals in Matter ofFeinberg, 5 NY3d 206 (2005),

did not approve the affidavits oflegal services of Michael Lippman which were in

evidence in that proceeding. The issue of the sufficiency of the affidavits was not before

the Court.

               14.    A preponderance of the evidence shows that in hundreds of cases,

between 1995 and April 2009, respondent approved legal fees for Michael Lippman

based on affirmations that did not set forth in detail the services rendered as required by

statute.

               15.    Respondent gave individualized consideration to each fee application

to the extent that he looked at the entire file (Tr. 2015-16), at the accounting (Tr. 2469),

 and at the case specific portions of the affirmation oflegal services (Tr. 2164). He

 focused on particular schedules (Tr. 2501). He accepted Mr. Lippman's representation as



                                               67
to the time spent unless there were objections (Tr. 2469).

              16.    Respondent was unable to determine the extent and nature of the

legal work done by Mr. Lippman in the Glasco case (Ex. 7[b]) and could not explain with

specificity how Mr. Lippman spent the 56 hours he alleged he worked on the Glasco

estate (Tr. 2459-507).

               17.    On direct examination, respondent was asked by his attorney about

his fee award to Mr. Lippman of more than $100,000 in the Estate ofHelen Marks (Ex.

126; Tr. 2335-45). The affirmation oflegal services in the Marks case contains Mr.

Lippman's statement that as of December 12,2003, he had spent in excess of 400 hours

in the performance oflegal services (Ex. 126). Respondent had reviewed the court file

before the hearing and had made handwritten notes (Tr. 2335). He testified that "I. ..

certainly remembered this case, because it was a novel case" involving a complicated

kinship issue, thus implying a reason for the large legal fee and the 400 hours of legal

work alleged (Tr. 2339). However, respondent's testimony showed that at the time Mr.

Lippman submitted his affirmation the kinship hearing had not yet been held (Tr. 2338-

39). Respondent could not explain what legal work Mr. Lippman had done during the

 400 hours claimed in his affirmation other than to suggest that in a large estate it may take

 more time to collect the assets and that a kinship hearing requires time beforehand in

 which to assemble documents (Tr. 2343). The Guardian ad Litem in the Marks case

 submitted an affirmation oflegal services on December 11,2007 supported by

 contemporaneous time records documenting 52.41 hours spent, most of it on kinship



                                              68
issues (Tr. 2344-45; Ex. 126).

              18.    The affirmations oflegal services submitted to respondent by

Michael Lippman, of which the Glasco and Marks cases are representative, did not give

respondent all of the information needed to give informed consideration to Mr.

Lippman's fee applications. The affirmations of legal services did not provide a detailed

statement of the legal services rendered and thus lacked the information needed for

individualized consideration.

               19.    Respondent and Michael Lippman had a close relationship (see infra

pp. 45-47) but respondent's decisions in fixing legal fees for Michael Lippman were not

influenced, nor did they give the appearance of being influenced, by the relationship.

               20.    The purpose of the statutory requirements ofSCPA §1108(2)(c) and

individualized consideration of each case, as stated by the Court of Appeals, is to ensure

that beneficiaries of an estate "are paying only for the actual cost of administering the

estate" (Matter ofFeinberg, 5 NY3d at 214).

               21.    The Administrative Board Guidelines of2002 have been and

continue to be selectively applied by the surrogates of New York City in a thwarting of

 both the statute and the Feinberg ruling.

               22.    The Guidelines are internally inconsistent in that they instruct

 compliance with SCPA §l108(2)(c), but they also recommend a "rule of thumb" legal fee

 of 6% of estate assets to take account of the costs of administering smaller, less profitable

 estates, and the need to retain competent counsel (Ex. NN, p. 2).



                                              69
              23.    The Guidelines, as applied by the surrogates of New York City, are

intertwined with the deficient affidavits of legal services which are the target of Charge 1.

Interpreting the 6% cap to be the minimum as well as the maximum legal fee awarded in

nearly every case and using the suggested "rule of thumb" enables legal fees to be

awarded without correlation to legal work done.

              24.     Respondent, together with other surrogates in New York City (Tr.

2295,2385,2217), has chosen to use the "rule of thumb," or close to it, in most cases (Tr.

2011-14). For many years New York City surrogates have also accepted affidavits of

legal services which fail to set forth in detail the legal services performed by counsel to

the PA.

               25.    Statutory compliance and transparency should be the norm, but they

are not. The problem is longstanding and systemic. Because policy and fiscal issues are

implicated, the disconnect between the Guidelines and its authorizing statute might be

addressed by the Legislature.

               26.    The practice   or awarding legal fees to counsel to PAs as a uniform
percentage of estate assets is entrenched. The surrogates in other counties in New York

City accept affidavits of legal services in a format similar in essence to the ones in dispute

 here. On this record, where it is established that during the relevant years the surrogates in

 New York City have accepted affidavits devoid of detailed documentation of legal services

 performed, and have been doing so for many years, and where the Guidelines give shelter

 to the practice, respondent did not engage in misconduct as alleged in Charge 1.



                                               70
             Proposed Conclusions of Law as to Charge I

              I.    Charge I is not sustained.

             Proposed Findings of Fact as to Charge II

              I.     In 2004, in reviewing accounts, respondent noted higher than usual

charges for the clean out of a decedent's estate (Ir. 2032). He ascertained from Esther

Rodriguez that she was using John Rivera, a friend with whom she had had a romantic

relationship, to do the clean out work (Ir. 137-38,314-15,355,357,2032-33).

Respondent suggested to Ms. Rivera that she use a bidding system to find a vendor and

that she hire the person who submitted the lowest bid(Ir. 2033). When the price for the

service did not go down, and respondent found out that DOl was investigating and about

to indict Mr. Rivera (Ir. 312, 929, 2033), he directed Ms Rodriguez to stop employing

John Rivera to clean out the homes of decedents (Ir. 2032-33, 137-38, 312, 314-15, 355,

357,929). Ms. Rodriguez promised respondent to cease employing Mr. Rivera (Ir. 357-

58).

              2.     In late October or early November 2005, respondent asked Mark

Levy, his Chief Court Attorney, to investigate the operations of the PA's office and how

it selected and paid its vendors (Ir. 929-30). Mr. Levy reported back to respondent that

clean out work was now being performed by a corporation, that John Rivera was the

incorporator, and that Ms. Rodriguez was paying Mr. Rivera in cash from the office's

operating account at a higher rate than other vendors (Ir. 931, 2032-35). On January 4,

2006, respondent told Esther Rodriguez that he would fire her if she did not resign (Ir.



                                             71
362-63,2035). Within 20 minutes she submitted a letter of resignation (Tr. 932, 2035).

              3.     A few days after Esther Rodriguez resigned, respondent met with

Steven Alfasi, the Deputy PA, and asked Mr. Alfasi what he thought were problems in the

PA's office (Tr. 643). Mr. Alfasi reported that "Michael Lippman was problematic ...that

he was running the office or trying to run the office as if it was his own" (Tr. 643). Mr.

Alfasi also informed respondent that according to Paul Rubin, the PA's accountant, Mr.

Lippman had taken advance legal fees resulting in negative estate balances totaling

$300,000-$400,000 (Tr. 644). In addition, Mr. Alfasi reported to respondent that Mr.

Lippman was taking legal fees from estates before accountings were filed in

contravention of respondent's longstanding directive that no legal fees were to be paid

until after an accounting was filed (Tr. 2040-42). After hearing Mr. Alfasi's report,

respondent became concerned that more than the Rivera matter could be awry at the PA' s

office and he asked Mark Levy to investigate (Tr. 728, 933-34, 2043).

              4.      Mr. Levy proceeded to look at estates with negative balances over

$1,000 and came across information showing that Michael Lippman was commingling his

privately retained legal matters with the PA's estates - i.e., using the facilities of the PA's

office to service 17-29 of his private clients (Tr. 941-42). Respondent directed Mr.

Lippman to take his private matters out of the system and Mr. Lippman agreed to do so

(Tr. 944).

               5.     In examining trial balance reports of estates with negative balances,

 Mr. Levy discovered cases where the negative balances were caused by legal fees taken in



                                               72
advance of the accounting bY'Mr. Lippman (Tr. 946-47). Respondent testified that, "Mr.

Levy initially was of the opinion that the protocol had been violated... at least to the

extent of $100,000" (Tr. 2045). Respondent met with Mr. Lippman in January 2006.

Michael Lippman admitted that he had not followed respondent's directions with regard

to the timing of legal fees, but he "didn't think" respondent would mind (Tr. 2045-47).

Respondent, to the contrary, believed Mr. Lippman did not disclose his violation of the

fee protocol because he knew respondent would not approve (Tr. 2.047, 2549).

Respondent considered Mr. Lippman's violation of the fee protocol to be "a betrayal of

trust" (Tr. 2549).

               6.     Respondent determined that he no longer wanted Michael Lippman

to serve as Chief Counsel to the PA (Tr. 2047), and in late January 2006, he offered the

position to Mark Levy (Tr. 2048). Mr. Levy started work as Chief Counsel to the PA in

April 2006 (Tr. 948-49). Mr. Lippman remained on as associate counsel.

               7.     Respondent asked Mr. Lippman to provide him with lists showing

the estates where less than the Guideline legal fee had been received, estates where Mr.

Lippman had taken the Guideline fee and estates where Mr. Lippman had taken excess

legal fees - i.e., that were larger than the 6% fee that could be ultimately awarded (Tr.

954-57,2049-52). This third list identified estates where Mr. Lippman had been paid fees

which he "thought would ultimately be outside of the guidelines" (Tr. 2051; see also Tr.

956-57,2517-18). Mr. Lippman provided the three lists to respondent and Mr. Levy

before April 2006 (Tr. 954-55). Each list was a "couple of pages" long and gave estate



                                               73
names and monetary amounts (Tr. 954-55). Mr. Levy looked at the lists and had

questions as to their accuracy, but he did not have time to analyze them (Tr. 958, 961).

              8.      The FBI spoke to respondent in 2006 about Mr. Lippman's legal fees

(Tr. 2378, 2526) but respondent did not share information with them. Respondent also

knew that the DOl had investigated and performed audits ofthe PA's office on a number

of occasions (Tr. 2521-24).

              9.      In May 2006, respondent appointed John Raniolo to be the new PA

(Tr. 474, 477). At the same time, respondent put into effect a remedial system/repayment

plan under which Michael Lippman would repay any advance and excess fees he had

collected by transferring all legal fees that he earned going forward, as associate counsel,

to estates he had overcharged in the past (Tr. 488, 493-96, 662, 804-05, 897, 900, 975,

985-87,2539-40). With the exception of one instance, all legal fees earned by Mr.

Lippman from April 2006 until April 2009, when Mr. Lippman was terminated (Tr. 1503-

04, 1515-17), were transferred to estates to which Mr. Lippman owed money (Tr. 502-03,

597,662, 730, 897). Respondent instructed Mr. Raniolo that when Mr. Lippman gave

him an accounting for an estate from which "he was entitled to a fee, Mr. Lippman was

 also going to give ... [him] a name or names of estates in which to deposit that fee into"

 (Tr. 488). Mr. Levy and Mr. Raniolo were using the list of estates owed money given to

 respondent by Mr. Lippman, but over time they were finding additional estates not on the

 list that were owed money (Tr. 985).

                10.    In June 2006, Mr. Levy and Mr. Raniolo suggested to respondent



                                               74
that Michael Lippman's employment be tenninated (Ir. 1083-84). In 2007 or early 2008,

the issue of discontinuing Michael Lippman as associate counsel was revisited (Ir. 607-

08, 1086). Respondent rejected the suggestion on the ground that Mr. Lippman had to

pay back the money he owed to the open estates in the PA's office (Ir. 607-08).

              II.    By the spring of 2008, respondent and Mr. Levy were concerned

about the number ofMr. Lippman's cases that remained open (Ir. 985, 1082). Mr. Levy

had not been able to analyze the case files and independently compute the extent of what

Michael Lippman owed due to the backlog inherited from Mr:. Lippman and due to the

time consuming nature of calculating overpayments (Ir. 961, 987, 989, 1082-83, 1232,

2553-54). Mr. Levy was operating on a crisis basis, looking at cases one by one (Ir. 961,

983,987,2553-54) and giving priority to "people who were screaming on a regular basis,

to have their cases ... addressed" (If. 987). Cases were moved forward on a "matching"

basis. Mr. Levy testified "it would be a good idea ...to file a case where ...there's more

fee available with a case where there's too much fee [that] was taken. So, they both can

go in as zero" (If. 973). As cases of fee overcharge not on Mr. Lippman's original lists

came to their attention (Ir. 985), respondent and Mr. Levy became aware that "Mr.

Lippman probably was more over extended than we thought" (Ir. 986, see also If. 1082-

 83, 1232).

               12.   Respondent concluded that the office of counsel to the PA needed

 more help (If. 986, 1082). In the fall of2008, respondent and Mr. Levy called John

 Reddy, who had been counsel to the PA in New York County for 23 years, and expressed



                                             75
interest in having Mr. Reddy and his firm move to the Bronx (Tr. 1102, 1426-27). Mr.

Reddy needed time to wind up his work for the Manhattan Surrogate (Tr. 1427). Mr.

Levy advised Mr. Reddy of the disarray in the Bronx PA's office and that there had been

visits by the DOl and the FBI (Tr. 1102-03). Mr. Levy told Mr. Reddy that the goal "was

to make sure that by the time the judge's term was completed, that absolutely no person or

estate had been in any way prejudiced by ... [Mr. Lippman's] conduct" (Tr. 1102). Mr.

Reddy asked for more information so that he could assess how big the project would be

and whether there would be money remaining in Mr. Lippman's cases to pay legal fees

and make distributions to family members (Tr. 1457-58). Mr. Levy gave Mr. Reddy the

three lists Mr. Lippman had prepared in 2006 and 250 trial balance reports ofMr.

Lippman's open cases (Tr. 1103, 1432-33).

               13.    Over a period of several weeks, with help from people in his office,

Mr. Reddy analyzed the 250 ledgers and prepared an Excel spreadsheet (Ex. 92[aJ). Mr.

Reddy found that Michael Lippman "was taking money at will, haphazardly             the Public

Administrator's office was writing checks to Michael Lippman randomly,             on demand

 .. .It was a random taking of money back and forth, in and out of different estates ...the

norm was to bill the estate early ...to ·take..all ofthe fees within the first few months ...

 and then return money when it was clear that m?ney had to be returned, but sometimes

 those returns were years after the checks for the accounting had been issued" (Tr. 1497).

 In 15 to 20% of the 250 cases Mr. Reddy analyzed, Mr. Lippman was paid the entire legal

 fee before an accounting was filed (Tr. 1500). "[He] was moving fees around in order to



                                                76
cover the fees that he had taken from an estate, so that he could close them" (Tr. 1521).

"[T]here were estates where Michael Lippman had taken more than he was entitled to"

(Tr. 1521). Mr. Lippman waited for the mail to be delivered, and as assets came in, he

would request checks to be cut (Tr. 72-73, 250-51). Mr. Lippman often took legal fees

before doing any legal work causing estates to incur negative balances (Tr. 409, 634-35;

Ex. 34, 35, 36). It would be normal for about 10% of open cases to have negative

balances from such items as the payment of taxes or the purchase of a death certificate,

but as Mr. Lippman regularly took advance legal fees, the number of estates with negative

balances rose to 40% (Tr. 859-60, 880). In addition, Mr. Lippman "almost regularly"

misstated the attorney's fees he had received in the accountings he submitted to the court

(Tr. 1501)

               14.    Mr. Reddy's analysis, an estimate of the status ofthe 250 ledgers

given to him, showed 60 cases where Mr. Lippman had overcharged estates (Tr. 1451).

The spreadsheet (Ex. 92[a]) showed negative balances which when added up revealed

that Mr. Lippman had received over $450,000 in legal fees that were in excess of the

Guidelines (Tr. 1438-39, 1486-87) and net fees which still could be earned by those

estates of$149,000 using the figure 6% of the value of each estate's gross assets (Tr.

 1487-89). None of the calculations included interest (Tr. 1615).

               15.    When Mr. Reddy began work as counsel to the PA in April 2009,

 respondent gave Mr. Reddy permission to fire or retain personnel. Mr. Reddy fired

 Michael Lippman and had the office locks changed (Tr. 1516). Lonnie Elson, a civil



                                              77
servant, was transferred from his bookkeeping job to less sensitive duties (Tr. 1511-12).

              16.    In April 2009, Mr. Reddy also determined to fire Paul Rubin, the

PA's accountant (Tr. 1517-18). Mr. Rubin acknowledged that he knew Michael Lippman

was taking larger legal fees than he was entitled to (Tr. 1522). Paul Rubin told Mr.

Reddy that he regretted not doing so, but "he didn't go to the Surrogate to tell him what

was going on" (Tr. 1522).

              17.    In those cases where Mr. Lippman had overcharged the estates, Mr.

Reddy planned to finish the cases and look to Michael Lippman for repayment (Tr. 1490-

91). As he and his staff went through open estates case by case, they found many

inaccuracies and omissions in Mr. Lippman's files (Tr. 1526). They found more open

cases than they had anticipated (Tr. 1525) and they needed to amend a number of Mr.

Lippman's accountings to restate Mr. Lippman attorney's fees (Tr. 1501). Mr. Reddy's

office prepared affidavits amending the accountings to reflect the dates fees were paid to

Mr. Lippman and the true amounts (Tr. 1502-03). In every case, the parties to the

proceedings were notified of the misrepresentations (Tr. 1503).

               18.    As of January 6, 2012, when Mr. Reddy testified at the hearing, all

but 19 of Mr. Lippman's cases had been close.d out (Tr. 1530). Mr. Reddy estimated that

his office performed legal services with a value of between half a million and a million

dollars on cases for which Michael Lippman had been paid (Tr. 1569-70). In addition,

 Mr. Lippman still owed between $125,000 and $150,000 to overcharged estates (Tr.

 2560-62). Again, none of these figures included interest (Tr. 1615).



                                              78
      19.        Respondent was aware of the following in early 2006:

         a)      From his conversation with Deputy PA Steven Alfasi, respondent

knew that Mr. Lippman was a problem in the PA's office (Tr. 643).

         b)· He knew from Mr. Alfasi that Michael Lippman was being paid legal

fees in advance of accountings in violation of respondent's protocol, a court

directive (Tr. 2040-42).

            c)   Respondent knew from a report from the PA's accountant that there

were negative balances in estates of $300,000-$400,000 caused by advance legal

fees paid to Mr. Lippman (Tr. 644).

            d)   Respondent knew from Chief Court Attorney Mark Levy that

Michael Lippman was commingling his retained matters with the PA's estates and

Michael Lippman admitted doing so (Tr. 941-42, 944).

            e)    Mr. Levy's investigations, reported to respondent in early 2006,

showed an estimated $100,000 in unauthorized advance fees (Tr. 2045).

            t)    When respondent confronted Mr. Lippman with accusations of

unauthorized legal fees, Mr. Lippman gave respondent an explanation which

respondent did not believe (Tr. 2047, 2049). He felt his trust had been betrayed

(Tr. 2049).

            g)    Mr. Lippman provided respondent with three lists purportedly

showing those estates where he had not yet been paid the full Guideline fee, those

 estates where the Guideline fee had been paid, and those estates where the fee paid



                                         79
      Mr. Lippman was in excess ofthe Guideline fee. The lists had monetary figures

      next to the names <if the estates (Tr. 2051, 956-57, 2517-18).

                h)   Respondent knew that law enforcement authorities were

      investigating payments ofMr. Lippman's legal fees (Tr. 2378, 2526).

                i)   Respondent knew in 2006 "that paperwork was not Mr. Lippman's

      strong point" (Tr. 2046).

                j)   Respondent knew "for a long period of time that Mr. Lippman liked

      to gamble" and frequented gambling establishments (Tr. 2550-51).

              20.    In 2006 at the time respondent put the remedial systemlrepayment

plan into effect, he knew that Mr. Lippman had been paid excess fees as well as

unauthorized advance fees, that the advance fees and excess fees came to a large sum, and

that the number of overcharged estates was significant.

              21.    The taking of excess fees was gross misconduct on the part of

Michael Lippman.

              22.    The taking of advance fees by Michael Lippman at a time when he

was not entitled to do so in a large number of cases in violation of respondent's directive

was also gross misconduct even when the fees in theory and ultimately might be within

the Guidelines. The advance fees were unearned fees, paid to Mr. Lippman at a time

before he had done the legal work to support the fees paid, and they put the affected

estates at risk. They also violated a court directive.

              23.     The Code of Professional Responsibility in effect in 2006 prohibited



                                              80
an attorney from charging excessive fees (DR 2-106[A]) and from violating a court

directive (DR 7-106[A]). In 2006, respondent had information that would have made him

skeptical of the accuracy ofMr. Lippman's three lists. But even taking the lists at face

value, when combined with all the other information in respondent's possession,

respondent had evidence that there was a substantial likelihood that Mr. Lippman had

com·mitted substantial violations of the Code of Professional Responsibility.

               24.     Section 100.3(D)(2) of the Rules of Judicial Conduct provides: " A

judge who receives information indicating a substantial likelihood that a lawyer has

committed a substantial violation of the Code of Professional Responsibility shall take

appropriate action."

               25.     According to the Advisory Committee on Judicial Ethics, "a judge

must report a lawyer's alleged misconduct to a disciplinary authority" when "the alleged

substantial misconduct rose to such an egregious level that it seriously called into

question the attorney's honesty, trustworthiness or fitness as a lawyer" (Adv Ops 10-85,

07-29). The purpose of the reporting requirement is to "protect the public from attorneys

who are unfit to practice law" (Adv Op 10-85, as amended 12/9/11).

               26.     The probability and egregiousness of substantial misconduct by Mr.

Lippman was so high that it seriously called into question Mr. Lippman's honesty,

 trustworthiness and fitness to practice law. In order to protect the estates in his court

 from an attorney unfit to practice law, respondent had a duty to report Mr. Lippman to the

 DDC.



                                               81
              27.    Under Rule 100.3(D)(2), with the knowledge respondent had in

2006, the appropriate action was to fire Michael Lippman and report him to the DDC, and

respondent had a duty to do so.

              28.    The information in respondent's possession in 2006 strongly pointed

to larcenous conduct on the part ofMr. Lippman. Respondent knew that investigations

by law enforcement were underway. The prestige of his office would not be misused by

assisting law enforcement agencies. Respondent had a duty to share the information he

had with law enforcement.

              29.    The remedial system/repayment plan implemented byrespondent in

2006 was not an appropriate response to Michael Lippman's large scale taking of advance

and ex,cess fees.

               30.    By allowing a lawyer who cheated the PA's office, overcharged

estates, lied to him and breached his trust to continue to represent the PAin the

administration of estates, respondent put at further risk the estates under his care.

               31.    Respondent's mistake was compounded by the details of the system

he set up whereby he directed that Michael Lippman be the person to decide which

overcharged estates to repay. Furthermore, decisions were made as to the order in which

cases were to be closed out on a "matching basis" - Mr. Lippman's new fee would be

matched to the amount of overcharge on a case on the list. Moreover, the beneficiaries of

the .estates were never told that their funds had been "borrowed" by Mr. Lippman or what

the reasons were for delay in closing their estates. Although some of the overcharged



                                              82
estates were repaid, new cases of overcharged estates were discovered, the amount Mr.

Lippman owed was far more than respondent had been aware (Tr. .1 087) and progress in

clearing the backlog was slow.

              32.    It was misconduct not to terminate Michael Lippman in 2006.

              33.    That part of Charge II alleging that during the repayment period,

2006-2009, respondent failed to give individualized consideration to Mr. Lippman's fee

applications is dealt with under Charge I. The calculations of overcharge and repayment

during the repayment period were made using the Guideline fee of 6% and fees were

generally fixed at 6%.

              34.    Respondent and Michael Lippman had a close relationship.

              35.    Michael Lippman started work as counsel to the Bronx County PA in

 1970 (Tr. 2238). In 1974, respondent came to work in the Bronx County courthouse as

Law Secretary to the then Bronx County Surrogate and later was appointed head of the

Surrogate Court's Law Department where he served until he became Surrogate in 1988

(Tr. 1938). During the years that the two men worked in the same courthouse, they saw

each other frequently on court business (Tr. 1972-73). When respondent was elected

 Surrogate, he retained Mr. Lippman as counsel to the PA (Tr. 1973).

               36.    During the ensuing years, respondent and Michael Lippman worked

 closely together. In addition to appointing Mr. Lippman as Chief Counsel to the PA,

 respondent conferred with him about the staffing needs of the office and, in consultation

 with Mr. Lippman, selected the attorneys who served as associate counsels (Tr. 1976,



                                             83
2638-39). Staffing changes in the PA's counsel's office were done in consultation with

Mr. Lippman (Tr. 1976-77). Respondent decided which of the attorneys, if any, would

serve as co-counsel with Mr. Lippman on each case (Tr. 2623-25). Mark Levy,

respondent's Chief Court Attorney, testified that in January 2006, while Mr. Levy was

working in respondent's chambers, "Mr. Lippman came in and said to the Surrogate, 'Do

I still have a job?''' (Tr. 958). This incident bespeaks Mr. Lippman's familiarity with the

Surrogate and his chambers.

              37.    On occasion, respondent and Michael Lippman saw each other

outside the courthouse as well. Respondent knew that Mr. Lippman had season's tickets

to Yankee Stadium, and testified that "over the years there were at least three or four

years that I went to Opening Day games with Mr. Lippman" (Tr. 1977). Respondent

could recall at least t-.vice when the two men had lunch together with other parties present

(Tr. 1978). Mr. Lippman attended the wedding of respondent's eldest daughter (Tr.

 1979). Mr. Lippman gave a party at his upstate home for more than 100 people to

 celebrate respondent's re-election (Tr. 263-64). Mr. Lippman also made telephone calls

 "for a couple of months" in an effort to raise money for respondent's 2001 re-election (Tr.

 264-65).

               38.    When respondent learned that Esther Rodriguez had disobeyed his

 direction to stop using John Rivera as a vendor, he summarily fired her. See supra, p. 71.

 When respondent learned that Michael Lippman had taken excess and advance fees and

 had disobeyed a direction of the court, respondent retained his services as associate



                                              84
counsel and pennitted him to represent estates for three more years, albeit Mr. Lippman's

fees were used to make refunds. The damage to the estates from the pilfering ofMr.

Rivera was miniscule compared to the damage to the estates by Mr. Lippman as it was

known to respondent in 2006.

              39.    There was proof by a preponderance of the evidence that the long

and close relationship between respondent and Michael Lippman influenced respondent's

decision in 2006 not to fire Michael Lippman and his decision not to report Michael

Lippman to the DDC and to law enforcement, and instead to set up a repayment plan.

              Proposed Conclusions of Law as to Charge II

              I.     The record establishes proof by a preponderance of the evidence of

respondent's misconduct as alleged in Charge II, Part (1), of the Formal Written

Complaint in that in 2006, despite his knowledge that in numerous cases Michael

Lippman had taken unearned advance legal fees and fees that exceeded the amount

prescribed by the Administrative Board Guidelines, respondent failed to report Mr.

Lippman to the Departmental Disciplinary Committee of the Appellate Division, First

Department and to Law Enforcement authorities.

              2.     Respondent should be disciplined for cause, pursuant to Article 6,

Section 22, subdivision (a), of the Constitution of the State of New York and Section 44,

subdivision I, of the Judiciary Law.

               3.    Respondent failed to uphold the integrity and independence of the

judiciary by failing to maintain high standards of conduct so that the integrity and



                                             85
independence of the judiciary would be preserved, in violation.of Section 100.1 of the

Rules Governing Judicial Conduct.

              4.     Respondent failed to avoid impropriety and the appearance of

impropriety, in that he failed to respect and comply with the law and failed to act in a

manner that promotes public confidence in the integrity and impartiality of the judiciary,

in violation of Section 100.2(A) of the Rules Governing Judicial Conduct.

              5.     Respondent allowed his relationship with Michael Lippman to

influence his judicial conduct or judgment, in violation of Section 100.2(B) of the Rules

Governing Judicial Conduct.

               6.     Respondent failed to perform the duties ofjudicial office impartially

and diligently, in that he failed to be faithful to the law and maintain professional

competence in it, in violation of Section 100.3(B)(1) of the Rules Governing Judicial

Conduct.

               7.     Respondent failed to take appropriate action upon receiving

information indicating a substantial likelihood that Michael Lippman had committed a

substantial violation of the Code of Professional Responsibility, in violation of Section

 100.3(D)(2) of the Rules Governing Judicial Conduct.

               8.     Charge 11, Part (2), is not sustained.

               Proposed Findings of Fact as to Charge III

                1.    Respondent had a duty to supervise his appointees, the PA and her

 counsel.



                                               86
             2.      The procedures in place in the PA's office during the times charged

in the Formal Written Complaint made it difficult to detect that Michael Lippman was

taking advance and/or excess legal fees. Many times the checks payable to Michael

Lippman represented fees from several estates with no estate identifYing information on

the check (Ex. 1,4,5,8, II, 12; Tr. 86, 168, 196,22.9,232). Mr. Lippman was paid

attorney's fees in odd denominations and in a combination of checks (Tr. 1442). The

computer system did not have the capacity to track fee payments by running the check

number (Tr. 1447).

              3.     The trial balance report or ledger for an individual estate, run from

the PA's computer, showed the moneys that had come in and moneys that had been paid

out of an estate (Tr. 90, 156). The trial balance reports were the basis for the accountings

prepared for the surrogate by the PA's office. They would show any legal fees that were

taken in advance. The accountings were prepared by Michael Lippman and signed by

Esther Rodriguez (Tr. 54,207). The trial balance reports were not submitted to the

surrogate (Tr. 389-90, 2025). Even though the trial balance report was an internal

document of the PA's office, respondent had a right to examine it if there was a need. He

had no duty to examine trial balance reports on a routine basis.

              4.      The accountings filed with the court did not list the dates and

amounts of legal fees paid. While it might have been better practice to require it, there is

 no reason to believe that Michael Lippmanwould have accurately listed the details of his

 fees had the details been required. Mr. Lippman regularly misstated his fees (Tr. 1501-



                                              87
03).

             5.     The Commission's argument that respondent failed to train Esther

Rodriguez, the PA, so that she would scrutinize the accountings more thoroughly and

otherwise perfonn her duties more competently is unpersuasive. The collaboration of

Esther Rodriguez with Michael Lippman was not inadvertent. The record shows that Ms.

Rodriguez knew when she signed the checks that she was paying Michael Lippman

unauthorized advance and excess legal fees (Tr. 73, 250-51). It cannot be said that better

training would have made a difference.

              6.     I find that the Commission has not proved by a preponderance ofthe

evidence that before 2006 respondent should have known of, or that supervisory failings

on his part resulted in, the taking of advance and excess legal fees by Michael Lippman.

              7.     There were backlogs in the processing and closing out ofPA cases in

the wake of Esther Rodriguez' termination in 2006 (Tr. 648, 1082).

              8.     Estates administered by the PA's office take longer than others to

resolve because many proceedings can be brought in the course of such a case (Tr. 2014-

 IS).

              9.     With regard to some of the 26 cases in Schedule E, an explanation

for delay emerged when it became apparent that court files subpoenaed by the

Commission were incomplete. When separate files for the same estates were produced by

respondent, the explanations became apparent.

              10.    In a number of Schedule E cases there were long delays without



                                             88
satisfactory explanations. In the following cases, there appeared to be excessive,

unexplained delays: Estate of Babineau (Ex. 3); Estate ofDanziger (Ex. 43); Estate of

Fleming (Ex. 45); Estate ofFrankelino (Ex. 46); Estate ofEchevarria (Ex. 47); Estate of

Vandermark (Ex. 48); Estate ofAlcantara (Ex. 96); Estate ofBlanch (Ex. 100); Estate of

Chesterfield (Ex. 107); Estate ofLederman (Ex. 124); Estate ofScott (Ex. 139); Estate of

West (Ex. 145); Estate of White (Ex. 146).

               11.   Using the testimony of John Reddy that 250 would be his estimate of

three years of large estates in the PA's office (see Fn. 22, supra), a reasonable estimate of

the number of large estates handled by the PA's office between 1997 and 2005 (the dates

charged in the Complaint) would be 670.

               12.    The lines of administrative responsibility are not clear. Respondent

has overall responsibility for the running of his court. He has the power to hire and fire

the PA and her counsel. But the nature of his supervisory role is general and

circumscribed by respondent's role as a neutral arbiter of cases in which the PA is a party.

 Supervision is shared with the City who pays the PA and her staff. The City

 Comptroller's audit reports are very detailed (see Ex. MM) but there is no indication in

 them that delay was found or noted. There was no evidence of what entity or person in

 OCA is respondent's administrative judge. To whom does respondent report on the

 number of pending cases and the length of time they have remained open? Does OCA

 have statistics on cases open for extended periods of time in respondent's court? The

 record does not tell us. The Attorney General is a party to PA cases because the State has



                                              89
an interest in unclaimed assets and charitable bequests, but there is no evidence that the

Attorney General complained of delay in PA matters.

              13.    Respondent received no complaints from any governmental agency

raising the issue of backlog in the PA's office (Tr. 2316-17).

               14.   The PA made semi-annual status reports to the surrogate listing all

estates not distributed within two years (SCPA § II 09). Esther Rodriguez, who is not a

lawyer, relied on Michael Lippman in the making of her reports (Tr. 342-43). Before

2006, Michael Lippman had reasons to keep estates open. All excess legal fees had to be

refunded before he could present a decree for judicial signature because respondent did

not sign a decree unless the legal fee was within the Guidelines. In addition, Michael

Lippman was receiving a benefit from the use of the advance/excess fee money as estates

remained open for extended periods of time (Tr. 2577-78). Thus, there was an incentive

for Mr. Lippman to delay and find explanations for delay. On the semi-annual reports

prepared by Mr. Lippman (Ex. 30[b])-[c]) there were explanations, albeit not always

detailed, in every case. The explanations respondent received satisfied him at the time

(Tr. 2029-30, 2577).

               15.     The proof is not compelling that the delays were pervasive and

 excessive enough to demonstrate a lack of supervision amounting to misconduct. The

 link between the delays and respondent is attenuated because the semi-annual reports to

 respondent, based on information from Michael Lippman, showed acceptable reasons for

 the cases that were slow in being closed. Until 2006, respondent, believing in the ability



                                              90
and probity of his appointees, relied on the PA's reports.

                 16.    Numerous estates had negative balances during the applicable time

period as a result of payment to Michael Lippman of advance and excess fees. See supra,

pp. 27-28, 34.

                 17.    There was no proof offered by the Commission that the reports

accepted by respondent did not meet the statutory requirements ofSCPA §1109. The

reports in evidence (Ex. 30[b]-[c]) are adequate.

                 18.    SCPA §1109 does not require that reports by the accountant itemize

each estate separately.

                 19.    Respondent examined the reports and audits submitted to him and

followed up when he noted cause to do so (Tr. 2404). He investigated and responded to

complaints he received (Tr. 2404-05). The Commission has not pointed to any required

reports that were not made. The Commission has not proved, or even suggested, that

respondent ignored a report that hinted at wrongdoing. None of the reports received by

respondent revealed the advance and excess fees paid to Michael Lippman. The FBI and

DOl, whom he knew to be investigating the PA's office, had drawn no problem to his

attention.

                 20.    The negative balances caused by Mr. Lippman's fee overcharges and

 respondent's failure to recognize them were not shown to be the result of respondent's

 failure to properly supervise by requiring adequate reports.

                  21.    Esther Rodriguez, the PA, was not an expert in financial matters and



                                                91
the brokerage account in the PA's office was supervised by Paul Rubin, the PA's

accountant (Tr. 288-92). Paul Rubin gave her advice regarding investjng estate funds (Tr.

92).

              22.    . At a time before January 2006, Paul Rubin introduced Esther·

Rodriguez to Jason Reback, a friend of his who was a licensed broker (Tr. 294-96, 665-

68). Mr. Reback suggested moving the PA's brokerage account, containing about

$10,000,000 (Tr. 293) to a new company (Tr. 295-98). Mr. Rubin assured Ms. Rodriguez

that the new accounts would be "safe" and "liquid" (Tr. 295-96). Paul Rubin and Jason

Reback advised Esther Rodriguez that auction-rate securities were an appropriate

investment and could be liquidated within 24 hours (Tr. 669-70). Esther Rodriquez

signed an agreement with Jason Reback that authorized investment in auction-rate

securities (Tr. 301-02, 669-70). Paul Rubin was the person who dealt with the broker (Tr.

292).

               23.     In February 2008, after John Raniolo had been appointed PA, the

 court ordered a distribution of $1.2 million from an estate invested in auction-rate

securities (Tr. 671,677). The PA's office asked Jason Reback to liquidate the estate's

 assets but the broker could not comply because that "there was an illiquidity issue" (Tr.

 525,671). When the markets "froze," John Raniolo and Steven Alfasi discussed the

 matter with respondent (Tr. 526,673-74) and contacted the City Comptroller's Office (Tr.

 527,674). After an exchange of correspondence between the New York City Law

 Department, the PAand the Comptroller's office (Ex. 20-27), the City agreed to pay the



                                              92
distributees (Ex. 27). In January, 2009, the PA's office reimbursed the City (Ex. 25; Tr.

688, 690-92).

                24.   The PA's accountant believed that the auction-rate securities were in

tax free money market accounts or tax free bonds protected by the State or City (Tr. 1332-

33,1374-75). The auction-rate securities were on the books of the PA for a substantial

period of time and the Comptroller of the City of New York noted no concern in its audit

until after the market "freeze" (Tr. 675). The accountings and other documents submitted

to respondent for review did not identify auction-rate securities as estate investments (Tr.

2074-75).

                25.   The record does not make clear that the auction-rate securities were

"an investment that was risky and imprudent, not authorized by the SCPA § 11 07 and/or

contrary to the Administrative Board Guidelines" as charged in the Formal Written

Complaint. The Commission has not proved a violation of established standards or

limitations for investment by a PA in New York City.

                26.   Respondent had no involvement in the making of the investment.

The accountings he received referred to the investment as a type of "money market

account" (Tr. 2075). When respondent discovered the problem of the "frozen" securities,

 he took action to make the affected estate whole.

                27.   I find a lack of proof by a preponderance of the evidence t~at

 respondent's failure to supervise resulted in an imprudent and/or unauthorized

 investment.



                                              93
              28.    In 2004, in reviewing accounts, respondent noted higher than usual

charges for the clean out of a decedent's estate. He ascertained from Esther Rodriguez

that she was using John Rivera, a friend with whom she had had a romantic relationship,

to do the clean out work. Respondent suggested to Ms. Rivera that she use a bidding

system to find a vendor and that she hire the person who submitted the lowest bid. When

the price for the service did not go down, and respondent found out that DOl was

investigating and about to indict Mr. Rivera, he directed Ms. Rodriguez to stop employing

John Rivera to clean O\1t the homes of decedents (Tr. 2032-33,137-38,312,314-15,355,

357,929). Ms. Rodriguez promised respondent to cease employing Mr. Rivera (Tr. 357-

58).

              29.     In late October or early November 2005, respondent asked Mark

Levy, his Chief Court Attorney, to investigate the operations of the PA's office and how

it selected and paid its vendors (Tr. 929-30). Mr. Levy reported back to respondent that

clean out work was now being performed by a corporation, that John Rivera was the

incorporator, and that Ms. Rodriguez was paying Mr. Rivera in cash from the office's

operating account at a higher rate than other vendors (Tr. 931, 2032-35).

               30.    On January 4, 2006, respondent told Esther Rodriguez that he would

 fire her if she did not resign (Tr. 362-63, 2035). Within 20 minutes she submitted a letter

 of resignation (Tr. 932, 2035).

               31.    I find that misconduct on the part of the vendor, John Rivera, and on

 the part of Esther Rodriguez for employing him, was not proven by a preponderance of



                                              94
the evidence to be the result of respondent's failure to properly supervise.

              Proposed Conclusions of Law as to Charge III

              I.     Charge III is not sustained.

              Proposed Findings of Fact as to Charge IV

               I.     Michael Lippman made telephone calls from his desk in the PA's

office for "a couple of months" (Tr. 264) before respondent's 2001 election for Surrogate

asking for campaign contributions from lawyers (Tr. 264-65).

               2.     The election was effectively over in June 2001 (Tr. 2401).

               3.     Michael Lippman held a victory party on July 14,2001 for more than

100 people at his upstate home that respondent attended (Tr. 263-64,1979,2401).

               4.     Respondent had general knowledge that Mr. Lippman was trying to

raise funds (Tr. 2400-0 I).

               5.     There was no proof that Michael LipP111an played an active,

 leadership role in respondent's 2001 election campaign.

               6.     There was no proof that Michael Lippman raised more than

 $125,000 in campaign funds for respondent's 2001 campaign.

               7.     Respondent did not commit judicial misconduct by failing to

 disqualify himself from cases in which Michael Lippman appeared from 2001 to 2003 or

until Primary Day, September 25,2001.

               8.      Charge IV has not been proved by a preponderance of the evidence.




                                               95
            Proposed Conclusions of Law as to Charge IV

             1.    Charge IV is not sustained.



Dated: July 18, 2012




                                                 Hon. Felice K. Shea
                                                 Referee




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