Summary: Blank Rome is settling a lawsuit filed by investors alleging the law firm was involved in a real estate investment scheme.
In a filing late Tuesday in the U.S. District Court for the Eastern District of Pennsylvania, a group of investors moved to dismiss their lawsuit against Blank Rome. The investor plaintiffs had sued the law firm, alleging they were involved in real estate investment scheme that caused the investors to lose millions of dollars.
The investors – Kilbride Investments Ltd., Busystore Ltd., and Bergfeld Co. Ltd. – agreed to a settlement after engaging in mediation for two days with the firm. A federal judge must sign off on the agreement. “Blank Rome agreed that any judgment in the lawsuit would be reduced by the percentage share of liability attributed to Blank Rome,” according to Law.com. The amount must not be less than what they have agreed to pay in the settlement.
Of the three other defendants in the lawsuit, two are agreeing to sign a stipulation for Blank Rome’s dismissal. Cushman & Wakefield and JFK BLVD Acquisition GP acknowledged that the final judgment will deduct the amount of Blank Rome’s liability. The other defendant, Cozen O’Connor, will not sign a stipulation.
The lawsuit alleged that former Cozen O’Connor and Blank Rome attorney Charles Naselsky conspired with developers to get money from investors for projects they knew were bad. The now disbarred attorney is accused of working with Philadelphia real estate developers on a project that would end up being barred because of zoning restrictions. The investors had put up over $27 million for the project.
The investors claim that Eliyahu Weinstein used the law firms to operate the Ponzi scheme. He was convicted of fraud for operating the scheme that targeted the Orthodox Jewish community. Weinstein was sentenced to 22 years behind bars for running a scheme under the facade of being an investment in Philadelphia real estate projects.
Blank Rome and Cozen O’Connor fought back against the claims. Last year they filed motions for summary judgment, alleging that the only reason they were included in lawsuit was because the investors were unable to recover money from Weinstein. U.S. District Senior Judge Jan DuBois of the Eastern District of Pennsylvania gave Cozen O’Connor part of the motion, agreeing that the law firm was not responsible for Naselsky’s actions during the time he was not employed with their firm.
Blank Rome is being represented by John Harkins Jr. of Harkins Cunningham. William Harvey of Klehr Harrison Harvey Branzburg represents Cozen O’Connor. The plaintiffs are represented by Mary Kay Brown of Brown McGarry Nimeroff and Cushman & Wakefield is represented by Jayne Risk of DLA Piper.
Do you think law firms should be responsible for their current attorneys and how they practice law? Share your thoughts with us in the comments below.
To learn more about other real estate schemes, read these articles:
- Dustin Hoffman Loses Millions in Real Estate Investment with Paul Manafort’s Son-in-Law
- Mitchel Tarter Disbarred Following Real Estate Scam
- Real Estate Agent Sentenced for Mortgage Fraud Scheme
Photo: businesswire.com