By Forum Staff
Hyun W. Lee, also known as Michael Lee, pleaded guilty at the federal courthouse in Brooklyn to wire fraud in connection with a scheme to defraud his real estate clients and their counterparties of funds held in his attorney escrow account.
Friday’s proceeding took place before United States District Judge Pamela K. Chen.
Breon Peace, United States Attorney for the Eastern District of New York, announced the guilty plea.
“With today’s guilty plea, Lee has admitted that he preyed upon members of the Korean-American community by holding himself out as a licensed attorney after his suspension and disbarment, only to steal millions of dollars entrusted to him for safekeeping,” Peace said. “Protecting the community while holding accountable those who use their positions of trust to defraud others is, and will remain, a priority of this Office.”
Peace expressed his appreciation to the Queens County District Attorney’s Office for their assistance in this investigation.
According to court filings and facts presented during the plea proceeding, Lee induced clients and counterparties to entrust funds to him for the purchase of real estate based on misrepresentations that Lee would release the funds deposited into his escrow account. Instead, Lee misappropriated these funds and used them for his own benefit, which included gambling at casinos and to pay expenses at a restaurant that he partially owned. Lee also misrepresented that he was an attorney authorized to represent clients, including in connection with the purchase and sale of real estate, and to receive and hold funds in his escrow account in connection with real estate transactions. In reality, Lee had been suspended and was subsequently disbarred from engaging in the practice of law in the State of New York. As a result, Lee was not permitted to accept funds from clients and third parties.
In furtherance of the scheme, Lee misled clients about the status of funds held in his escrow account by fabricating documents leading them to believe their funds were secure. While documentation Lee showed to clients reflected a balance in Lee’s escrow account of nearly $3 million, in reality Lee had depleted the escrow account down to only approximately $25,000. Lee then failed to honor requests by clients and their counterparties to release funds from his escrow account, falsely claiming that he was in the process of working out an equitable way to distribute funds that remained when Lee had already spent virtually all of the funds in the account.
Victims who suffered losses as a result of the conduct of Lee, or other New York lawyers who engage in misconduct, may be eligible to receive compensation by filing a claim with the Lawyer’s Fund for Client Protection, which may be reached at (800) 442-3863 or e-mailing info@nylawfund.org.
When sentenced, Lee faces up to 20 years in prison. Lee has also agreed to pay $3.27 million dollars in forfeiture.
The government’s case is being prosecuted by Assistant United States Attorneys Hiral D. Mehta and Brian D. Morris of the Office’s Business and Securities Fraud Section with assistance from Special Agent Martin Sullivan and Paralegal Specialist Peyton Jefferson.
