Per Curiam [*1]
Respondent David Spiegelman was admitted to practice law in the State of New York by the Second Judicial Department on February 9, 2000, and maintains a registered address in the First Department. In D. Penguin Bros. Ltd. v City Natl. Bank, index Nos. 158949/2014 and 153494/2015, Pete Jacov and Avraham Glattman, two of respondent's clients, alleged, in complaints containing over 50 and over 70 causes of action, respectively, that in 2005 and 2008 they and 12 business entities that they owned and controlled were induced by respondent and defendant James Williams to invest $4.5 million with the defendants by false representations that the defendants were going to develop residential buildings for including in federally subsidized housing programs, and that several of the defendants forged deeds and various approvals required from municipal agencies to falsely show the plaintiffs that closings on the sales of the buildings were effected in 2009, and that municipal approvals were acquired thereafter. The amended complaints alleged further that defendants misappropriated the invested and escrowed funds without ever entering into actual development agreement or obtaining necessary governmental approvals. The plaintiffs also allege that respondent, on behalf of the Williams defendants and himself, obtained unauthorized loans in the plaintiffs' names in the amount of $ 2.2 million and pocketed the loan proceeds, leaving plaintiffs responsible for repayment. Plaintiffs allege that defendants provided them with forged and fraudulent memoranda thus concealing their schemes from plaintiffs.
Specifically, Williams represented to Jacov and Glattman that through his association with a not-for-profit entity he was responsible for finding qualified investors to take over distressed Section 8 properties and could influence government officials to approve the sale of said properties to Jacov and Glattman. Williams also advised Jacov and Glattman that they would have to amass and segregate millions of dollars of investment funds to demonstrate to the government agencies involved that they had the necessary financial resources to purchase and operate the properties. [*2]
Based on Williams's representations, Jacov and Glattman remitted approximately $5.5 million to respondent which was to be held in his attorney escrow account(s) and applied toward the intended real estate transactions. In fact, the planned real estate transactions were fictitious and used by Williams and respondent to misappropriate these funds and an additional $17,215,636 with the aid of respondent; which funds respondent, at Williams's direction, and without the knowledge of consent of his clients Jacov and Glattman, disbursed to entities owned or controlled by Williams or to third parties for Williams's benefit. Respondent also fraudulently obtained funds by taking out loans in the names of entities owned and controlled by his clients without their authorization by forging and falsely notarizing Glattman's signature. This included taking out three mortgage loans that totaled approximately $637,000 and dozens of unsecured loans.
The plaintiffs commenced the actions on September 11, 2014 and April 9, 2015 by the filing of summonses with notice
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of:
"fraud; aiding and abetting fraud; conspiracy to defraud; fraudulent concealment; breach of fiduciary duty; conspiracy to breach fiduciary duties; aiding and abetting breach of fiduciary duties; conspiracy to commit conversion by a fiduciary of plaintiffs' property in the fiduciary's possession; aiding and abetting the conversion by a fiduciary of plaintiffs' property in the fiduciary's possession; and unjust enrichment."
The plaintiffs thereafter served multiple amended complaints in both actions, alleging causes of action for conversion, fraud, forgery, breach of fiduciary duty, accounting, specific performance, breach of contract, breach of warranty of authority, and legal malpractice. Respondent opposed plaintiffs' December 2015 motion for a default judgment in the 2014 action, simultaneously filing a notice of appearance and demand for complaint. He thereafter stipulated to adjourn the default judgment motion. In the 2015 action, plaintiffs moved for a default judgment against respondent in May 2016. In June 2016, respondent stipulated to adjourn the default judgment motion. On July 19, 2016, respondent stipulated to answer, move or otherwise respond to complaint within 45 days (i.e. by September 2, 2016). Respondent did not comply with the stipulation. Instead, on September 9, 2016, when he was in default of the pleadings and the stipulation, he moved pursuant to CPLR 3211(a)(5) to dismiss the complaint as time-barred and barred by collateral estoppel on the ground of the resolution of plaintiffs' 2013 federal complaints alleging identical conduct and causes of action.
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Respondent appeared for a preliminary conference in September 2016 and submitted his reply papers in the CPLR 3211(a)(5) motion in December 2016. He appeared for compliance conferences on April 20, 2017 and September 7, 2017. By order dated September 8, 2017, Supreme Court granted respondent's dismissal motion solely to the extent of dismissing 14 causes of action. The plaintiffs served the order with notice of its entry on October 3, 2017, extending respondent's time to answer the complaint to October 13, 2017 (see CPLR 3211[f]). Respondent did not answer, and plaintiffs moved for a default judgment against him on October 17, 2017. On November 6, 2017, respondent opposed the default judgment motion and attempted to file an untimely answer, which plaintiffs promptly rejected. Respondent attended compliance conferences on January 19, 2018, April 26, 2018, and June 7, 2018. In June 2018, he stipulated to the adjournment of plaintiffs' CPLR 3215 motion. In January 2019, he stipulated with plaintiffs to
"consent[] to the relief sought by [plaintiffs] . . . in the 2015 Action, to wit: modification of the Order to deny dismissal of the [first through fourteenth] causes of action against [respondent] . . . and waiv[ing] the right . . . to oppose the appeal in the 2015 Action" (D. Penguin Bros. Ltd. v City Natl. Bank, 171 AD3d 659, 659 [1st Dept 2019] [internal quotation marks omitted] [reversing the partial grant of respondent's CPLR 3211[a][5] motion]). Thereafter, respondent attended a compliance conference in February 2019 and did not attend a May 2019 compliance conference due to a conflict of which he advised the court in writing. By decisions dated May 18, 2020 and July 16, 2020, Supreme Court granted plaintiffs' motion for a default judgment against respondent; respondent filed a notice of appeal on August 13, 2020. (The actions were not consolidated until 2018, resulting in often duplicative motion practice and resulting orders.) One year later, by notice of motion dated July 14, 2021, respondent moved pursuant to CPLR 5015 to vacate his default, and in August 2021 executed two stipulations adjourning the motion. Supreme Court denied respondent's motion on October 4, 2021 and November 28, 2022; respondent filed a notice of appeal on December 27, 2022. Respondent failed to perfect this appeal, which was dismissed as abandoned.
Respondent appeared at and participated in an inquest against all defendants in November and December 2022, and submitted a post-inquest memorandum on January 11, 2023. The plaintiffs' evidence included two affidavits executed by respondent in February 2011 in which he extensively detailed his various failings in his representation of plaintiffs during the various transactions at issue, admitting to mishandling the funds entrusted to him and consummating various transactions on plaintiffs' purported behalf, without their knowledge, in an effort to conceal his other actions. [*4]
In his post-inquest memorandum, he argued that the plaintiffs' evidence was insufficient, self-serving, and also duplicative. As to the affidavits containing his admissions, respondent maintained that they should not be accorded any evidentiary weight because they were the product of duress and threats and not supported by independent financial records. Respondent also maintained that the funds at issue were disbursed at the direction of his co-defendant Williams and respondent derived no personal benefit therefrom; the plaintiff entities did not prove any actual loss attributable to the alleged fraudulent mortgages because they were satisfied upon the profit generating sale of the properties at issue; and respondent urged the court to assign any liability solely to Williams and the co-defendant entities related to him.
By March 10, 2023 order, Supreme Court awarded the plaintiffs approximately $20 million in compensatory and punitive damages jointly and severally against respondent and Williams; judgment for this amount was entered against them on July 31, 2023. Respondent's appeal of the judgment against him to this Court brought up for review the default order against him and the order denying his motion to vacate the default order, all of which this Court affirmed (236 AD3d 586 [1st Dept 2025]):
"Supreme Court providently exercised its discretion in finding that defendant did not provide a reasonable excuse for his default in appearing or answering the complaint (see Koppell Riv. Realty, Inc. v Rodriguez, 85 AD3d 520, 520 [1st Dept 2011]). Not only had defendant repeatedly defaulted before in this and related actions, but the record demonstrates that the excuses he offered for his default in his first motion that he was served the relevant papers on a Jewish holiday were erroneous, and the excuse proffered for his default in his second motion contradicts the first motion, and defendant failed to account for or address the discrepancies in his motions. His remaining arguments, including that the lawsuit was very emotional for him thus causing him to default, are unpersuasive.
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"Supreme Court properly denied defendant's motion to vacate the order granting a default judgment. Defendant appealed the order granting the motion for a default judgment, but then abandoned that appeal. The order was therefore deemed affirmed, and Supreme Court was bound by the doctrine of the law of the case (see People v Evans,
94 NY2d 499, 503 [2000]). Furthermore, issues that could have been raised on the abandoned appeal may not be reviewed on this appeal (see Bray v Cox, 38 NY2d 350, 353 [1976]; King v Compass Retail, 226 AD2d 263, 263 [1st Dept
1996]).
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"As to the order setting damages, we find no basis to disturb Supreme Court's findings (see Basmanov v Shiwcharan,
224 AD3d 435, 436 [1st Dept 2024]). This conclusion holds particularly true in light of defendant's default, after which he is deemed to have admitted all traversable allegations of the complaint (see Amusement Bus. Underwriters v American Intl. Group, Inc., 66 NY2d 878, 880 [1985]).
"The record provides an ample basis for imposition of punitive damages. The complaint alleges that defendant, plaintiffs' long-time attorney, engaged in a multi-year, multi-million-dollar scheme to defraud them, suggesting a high degree of moral culpability (see Home Ins. Co. v American Home Prods. Corp., 75 NY2d 196, 203 [1990])" (id. at 587). Now, by motion dated March 17, 2026, the Attorney Grievance Committee (AGC) seeks an order, pursuant to Judiciary Law § 90(2), 22 NYCRR 1240.8, and the application of the doctrine of collateral estoppel to the judgment against respondent and its ancillary findings, finding respondent guilty of professional misconduct in violation of New York Rules of Professional Conduct (22 NYCRR 1200.0) rules 1.15(a) (misappropriation), 8.4(b) (illegal conduct that adversely reflects on the lawyer's honesty, trustworthiness or fitness as a lawyer), 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation), and 8.4(h) (other conduct that adversely reflects on fitness as a lawyer). The AGC also seeks an order, pursuant to 22 NYCRR 1240.9(a)(5), immediately suspending respondent from the practice of law until further order of this Court based on the aforementioned liability finding and judgment. Collateral estoppel applies where a defaulting party "has, by deliberate action, refused to defend or litigate the charge or allegation that is the subject of the preclusion request," thus invoking the "limited exception" to the general rule that a default judgment is not entitled to issue-preclusive effect (Matter of Abady, 22 AD3d 71, 83-84 [1st Dept 2005]; see also Metro Found. Contractors, Inc. v Marco Martelli Assocs., Inc., 145 AD3d 526 [1st Dept 2016]). It is under these circumstances, where a party who participates in the litigation thereafter abandons the opportunity to do so and provides no explanation therefor or attempts to be relieved of his or her omission, that the party will be collaterally estopped notwithstanding his or her failure to respond (see Windley v City of New York, 104 AD3d 597 [1st Dept 2013]). [*6]
The application of the preclusive effect of collateral estoppel requires a showing of (1) identity of issue, which has necessarily been decided in a prior proceeding and is decisive in the present proceeding; and (2) a full and fair opportunity to litigate before a court of competent jurisdiction the decision(s) now said to be controlling (see Schwartz v Public Adm'r of County of Bronx, 24 NY2d 65 [1969]; Matter of Yao, 231 AD2d 346 [1st Dept 1997]; Matter of Morrissey, 217 AD2d 74 [1st Dept 1995]). "[The] determination of whether a party had a full and fair opportunity to litigate in the prior proceeding requires a practical inquiry into the realities of [the] litigation" (Matter of Dunn, 24 NY3d 699, 704 [2015] [internal quotation marks omitted]). The proponent of the doctrine must establish the identity of the issues; the opponent must establish the lack of a full and fair opportunity to litigate (see id.). The AGC has established the identity of issues between this proceeding and the prior litigation because the disciplinary violations alleged by the AGC are based on the same fraudulent conduct by respondent extensively detailed in the civil complaints against him, the traversable allegations of which he has admitted (see Amusement Bus. Underwriters v American Intl. Group, 66 NY2d 878, 880 [1985]). Respondent does not materially contest this point. Further, the AGC has shown, and respondent has failed to disprove, that respondent had a full and fair opportunity to contest the adverse findings and judgment entered against him even though ultimately emanating from a putative default order. While respondent maintains that collateral estoppel should not attach to the default order determining his liability because he did not deliberately fail to answer the civil complaints, the record of these consolidated actions evinces that he made a calculated choice not to answer the complaints, because it is abundantly clear from the foregoing that he was fully aware of the actions brought against him and actively participated in the litigation, a fact he freely admits. It bears noting that while the "default judgment" against respondent was entered pursuant to CPLR 3215, it cannot truly be said that it was entered "on default" -- respondent having challenged plaintiffs' application for the default judgment after years of active litigation -- and the issue of respondent's "default" was, in fact, litigated on its merits. Here, an appearing, litigating party failed to take advantage of procedural opportunities available to him at some point after his initial appearance in the action. Respondent's numerous filings in the actions against him themselves are evidence that he was given, and took advantage of, a full and fair opportunity to litigate the issues now before us.
Respondent's failure to pursue the appeal of the denial of his CPLR 5015 motion, leading to its dismissal, also bears on the issue of estoppel:
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"Where a party appeals from an intermediate order, thereafter abandons the appeal by failing to perfect, and the appeal is then dismissed by an appellate court, the party is estopped for reasons of judicial economy from seeking review of issues which could have been raised on the appeal from the intermediate order (Bray v Cox, 38 NY2d 350; Matter of Smith v McManus & Sons, 101 AD2d 890)" (Montalvo v Nel Taxi Corp., 114 AD2d 494, 494 [2d Dept 1985], lv denied and dismissed 68 NY2d 643 [1986]).
Respondent fully litigated the issue of the preclusive effect of the disposition of that abandoned appeal in his appeal
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from the judgment against him (see D. Penguin Bros. Ltd. v. City Natl. Bank, 236 AD3d at 587). He has provided no reason for us to depart from our prior finding.
Based on the foregoing, respondent's deliberate diversion and misuse of his clients' escrow funds at his co-defendant Williams's direction constitutes intentional conversion and misappropriation of client funds in violation of rules 8.4(c) and 1.15(a) and that respondent's additional fraudulent conduct (e.g., forging and falsely notarizing one of his client's signature to take out mortgage loans against his client's property without consent or authorization to do so) also violates rule 8.4(c).
With respect to the AGC's request that respondent be found guilty of having violated, inter alia, rule 8.4(b) (illegal conduct adversely reflecting on the lawyer's honesty, trustworthiness or fitness as a lawyer), the fraudulent conduct by which respondent intentionally converted/misappropriated millions of dollars from his clients supports this violation, even in the absence of a criminal conviction (see Matter of Rosenberg, July 8, 2026 unpub order [M-2530] [applying collateral effect to a judicial finding of elder abuse despite no criminal conviction]; see also Matter of Tarter, 156 AD3d 157 [1st Dept 2017] [finding that an attorney violated rule 8.4[h] when he defrauded distressed homeowner clients and improperly shared unearned legal fees with nonattorney mortgage brokers, despite the lack of criminal conviction]). Furthermore, based on the complete recitation of respondent's conduct, respondent should also be found guilty of having violated rule 8.4(h).
Based on this conduct and rule violations, the AGC seeks respondent's interim suspension. Respondent urges that suspension is unwarranted because he does not pose an immediate threat to the public interest, given that the events at issue occurred nearly 20 years ago and that he has since practiced without ethical issue. It is significant, however, that he asserts not that he has acquired the skills, experience and knowledge to confront and successfully navigate similar issues, but that he simply avoids dealing with escrowed funds whenever possible. Under the circumstances, this is not an affirmative demonstration, to the satisfaction of this Court, of a lack of threat. [*8]
The serious nature or respondent's conduct warrants his interim suspension under 124o.9(a)(5) because the record demonstrates that he engaged in a protracted pattern of fraudulent conduct, which included the intentional conversion and misapplication of millions of dollars of escrow funds, resulting in a judgment against him for approximately $20 million (including punitive damages) in favor of the clients whom he victimized. Suspension is warranted by the judgment entered against respondent as well as the detailed admissions in his February 4 and 16, 2011 affidavits of having intentionally misappropriated millions of dollars from his clients that the inquest court accepted as evidence of damages notwithstanding respondent's claims of duress (see Matter of Taylor, 113 AD3d 56 [1st Dept 2013]; Matter of Harley, 293 AD2d 131 [1st Dept 2001]; see also Matter of King, __AD3d__, 2026 NY Slip Op 02604 [1st Dept 2026]; Matter of Boyd, 216 AD3d 78 [1st Dept 2023]).
Accordingly, the AGC's motion should be granted to the extent of finding respondent guilty of professional misconduct in violation of rules 1.15(a), 8.4(b), 8.4(c), and 8.4(h), and referring this matter to a referee for a hearing solely to consider evidence in mitigation or aggravation, if any, and to recommend an appropriate sanction, and respondent suspended, effective immediately, and until further order of the Court.
All concur.
Wherefore, it is Ordered that the motion by the Attorney Grievance Committee for the First Judicial Department, pursuant to 22 NYCRR 1240 (8) and pursuant to the doctrine of collateral estoppel, is granted to the extent of finding respondent, David Spiegelman, guilty of professional misconduct in violation of rules 1.15(a), 8.4(b), 8.4(c), and 8.4(h) of the Rules of Professional Conduct and referring this matter to Bruce N. Lederman, lederman.bruce@gmail.com, as Referee, to conduct a hearing to consider evidence in mitigation and aggravation, if any, and to recommend an appropriate sanction to be imposed on respondent (see NYCRR 1240.8 and 22 NYCRR 603.8-a); and It is further Ordered that the motion by the Attorney Grievance Committee for the First Judicial Department for Interim Suspension, pursuant to 22 NYCRR 1240.9(a)(5), is granted, and respondent, David Spiegelman, is suspended from the practice of law in the State of New York effective immediately, and until further order of this Court; and It is further Ordered that, pursuant to Judiciary Law § 90, during the period of suspension, respondent, David Spiegelman, is commanded to desist and refrain from (1) the practice of law in any form, either as principal or agent, clerk or employee of another, (2) appearing as an attorney or counselor-at-law before any court, Judge, Justice, board, commission or other public authority, (3) giving to another an opinion as to the law or its application or any advice in relation thereto, and (4) holding himself out in any way as an attorney and counselor-at-law; and [*9]
It is further Ordered that, during the period of suspension, respondent, David Spiegelman, shall comply with the rules governing the conduct of disbarred or suspended attorneys (see 22 NYCRR 1240.15), which are made part hereof; and It is further Ordered that if respondent, David Spiegelman, has been issued a secure pass by the Office of Court Administration, it shall be returned forthwith.
Entered: October 27, 2026
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