A settlement has been reached involving two Manhasset lawyers, Paul Marchese and Robin Maynard, who were accused of unlawfully diverting more than $1.3 million from a deceased client’s trust and charitable foundation.
U.S. Attorney General Letitia James, representing the public interest, confirmed the settlement on Wednesday.
The settlement, formalized with the Office of the Attorney General, entails the Harold & Helen Gottlieb Foundation be dissolved, and its remaining assets, which surpasses $1 million when combined with restitution funds, will be allocated to other charitable organizations under OAG’s supervision.
Helen Gottlieb died on March 31, 2008, following her passing, Marchese and Maynard, who had offices in Manhasset, were in control of assets that Gottlieb designated for charitable purposes, James’ office said.
Specifically, she left assets valued at $2,050,378 in a Living Trust. Marchese took unilateral action by channeling nearly $600,000 in fees to his law firm without proper financial reporting to the OAG as mandated by law.
“New Yorkers who generously donate to charity upon their death deserve to have their wishes honored,” said James. “Mr. Marchese and Ms. Maynard abused their positions and misused funds entrusted to them, depriving others of significant charitable donations intended to help the most vulnerable. My office will ensure that these funds will be used as intended and continue to enforce the laws that protect charitable organizations.”
“They also failed to adopt and adhere to a conflict-of-interest policy,” James’ office wrote in a press release.
In addition, Marchese and Maynard reportedly drew salaries from the foundation, of which they were the only two directors, that exceeded $750,000, for over a decade after her death.
As the only two directors on the board, they were in violation of the foundation by-laws and requirements of the New York Not-for-Profit Corporation Law, that requires there be a minimum of three, the settlement stated.
They stopped taking funds immediately once civil action was filed in Nassau County Supreme Court, the settlement states.
“These salaries were substantially greater than the amount the foundation disbursed in charitable grants,” a press release from James’ office read.
As a part of the settlement, the lawyers have agreed to pay $510,000 in restitution. Moreover, they are prohibited from assuming roles as officers or directors in not-for-profit corporations or charitable organizations for the next three years, unless authorized by the OAG.
Timothy Gilles of Gilles Consulting Group LLC, speaking on behalf of the law firm, said from the beginning of the investigation the firm has cooperated fully and have been eager to settle the matter.
“We are pleased that the Attorney General’s office has now consented to terms that we believe are reasonable,” Gilles wrote in a statement, “All demands for penalties have been dropped; the settlement amount is less than 15% of the amount originally demanded by the AG; and all of the settlement funds will be donated to worthy charities.”
As part of the agreement, both lawyers agreed that within six months of the settlement, they will complete two hours of accredited CLE training on the duties of fiduciaries of trusts and/or estates holding a charitable interest.
Originally, they faced barring of these responsibilities for five years.
They admitted in the settlement to not registering the trust following Gottlieb’s passing, failing to maintain accurate records of the trust’s expenditures, and operating Gottlieb’s foundation without a duly constituted board of directors.
For their work during Gottlieb’s lifetime, both lawyers were not compensated, they stated.
“For 24 years, we did legal work for Helen D. Gottlieb, for her living trust, for her estate and trust after her death, and for the Foundation she created—all without being paid,” a statement said, “We had a clear understanding with her that she would not pay us during her lifetime because her assets were largely illiquid, and that we would collect our fees from her trust after her death.”
Issues in documentation showing their past legal work were lost in a fire at their Manhasset offices in August of 2020. “Unfortunately, we were unable to document our extensive past legal work to the Attorney General’s satisfaction due to the loss of records while converting an antiquated computer system, a fire in our offices, and our not realizing that the Attorney General would expect to see time sheets and other records more than seven years old,” they stated.
“We are pleased to put the expense and distraction of this matter into the past and look forward to continuing to provide excellent legal services to our many clients in Sea Cliff and elsewhere,” they concluded.