A disbarred Queens attorney — who defrauded real estate clients of millions of dollars to gamble and pay for personal expenses — pleaded guilty to wire fraud last week in federal court in Brooklyn.
The charges against Hyun W. Lee, aka Michael Lee, stem from his involvement in a scheme that bilked clients out of the funds he held in his attorney escrow account, according to a press release from the U.S. Attorney’s Office.
Lee, who made the plea before U.S. District Judge Pamela K. Chen, faces a prison term of up to 20 years. As part of the plea agreement, he has committed to forfeiting a staggering $3.27 million.
Lee, according to U.S. Attorney Breon Peace, exploited members of the Korean-American community by posing as a licensed attorney, despite having been suspended and disbarred.
Lee’s actions involved misappropriating millions of dollars entrusted to him for safekeeping.
According to court documents and statements made during the plea proceedings, Lee deceived clients and counterparts into entrusting funds for real estate transactions, falsely assuring them that the funds would be released from his escrow account.
In reality, he diverted these funds for personal use, including gambling at casinos and covering expenses at a restaurant in which he had partial ownership.
Furthermore, Lee falsely represented himself as an authorized attorney for real estate transactions, despite having lost the right to practice law in the State of New York due to suspension and subsequent disbarment.
To perpetuate the scheme, Lee fabricated documents to mislead clients about the security of funds in his escrow account. Although the presented documentation indicated a balance of nearly $3 million, the actual amount had dwindled to around $25,000. Lee consistently failed to fulfill requests to release funds, falsely claiming ongoing efforts to equitably distribute remaining funds while having already depleted the account.
Sometimes New York real estate attorneys will break bad.
In September, 44-year-old New York-based attorney Robert Wisnicki pleaded guilty to charges to used his law firms — Wisnicki & Associates LLP and Wisnicki Neuhauser LLP — to lure investors into purchasing real estate and to conceal the proceeds of health care fraud, according to a press release from the U.S. Attorney’s Office.
The charges carry a maximum sentence of five years in prison each. As part of his plea agreement, Wisnicki agreed to pay restitution of $18.8 million.
In the Ponzi scheme, Wisnicki’s law firms specialized in real estate transactions. He began his real estate investment business in 2007, wherein existing clients, referred to as “Investor Clients,” entrusted their funds to him.
Wisnicki identified real estate investment opportunities for the clients and represented them in the resulting transactions.
However, as the clients began losing money, instead of informing them, Wisnicki used funds from other clients held in trust accounts to conceal the losses. He falsely assured his clients that their funds were still secure, even though he had transferred those funds to the other clients.
Additionally, Wisnicki used funds from new clients to repay previous ones, misleading them about the purpose of their investments. The fraudulent activity continued until at least 2022, resulting in approximately $18.8 million owed to clients.