Judge Freezes Account Of Real Estate Lawyer Who Disappeared With Clients' Millions

Weeks after a prominent Manhattan real estate attorney disappeared, his clients are still trying to locate millions of dollars he held in escrow for them.

This week, a New York judge froze several accounts linked to Kossoff PLLC Managing Partner Mitch Kossoff, Crain’s New York Business reported. Kossoff disappeared sometime in late March, after which time his clients started to file lawsuits against him to try to recover their funds, The Real Deal reported last week.

Four of his clients, who claim he misused a total of $8M, asked New York’s bankruptcy court to push Kossoff’s firm into involuntary bankruptcy, The Real Deal reported Tuesday.

Only around $112K was left across three of the firm’s bank accounts that New York State Supreme Court Justice Jennifer Schecter put on hold in a hearing this week, just a fraction of the estimated $5M that he owed clients, Crain’s reports. 

SMS Realty, which claims the lawyer owes it $1.3M, and 537 Associates, which says Kossoff owes it $440K and $2.59M in damages, were among the lawyer’s clients to take him to court. Six lawsuits have been filed so far, according to Crain’s. 

An attorney representing Prince Street Holdings, another landlord suing Kossoff, said, “I don’t think anyone on this call would be surprised to hear that” when told that the accounts were almost empty, and one had been overdrawn, per Crain’s.

The case has garnered the attention of the city’s top prosecutor. Manhattan District Attorney Cyrus Vance opened an investigation into whether the lawyer mishandled his clients' money, Commercial Observer reported.