New York Attorney General Letitia James reached a settlement with Paul Marchese and Robin Maynard on August 30 after the two Long Island lawyers allegedly paid themselves more than $1.3 million illegally from a deceased client’s trust and charitable foundation.
Following the death of their client, Helen Gottlieb, Marchese and Maynard were in control of funds that Gottlieb had left for charity. Marchese unilaterally paid his law firm nearly $600,000 in fees without reporting the financial transactions to the Office of the Attorney General (OAG), as required by law. Additionally, he and Maynard improperly paid themselves salaries from the foundation in excess of $750,000. As part of the settlement, Marchese and Maynard will have to pay $510,000 in restitution and may not serve as officers or directors of a not-for-profit corporation or any other charitable organization for three years unless authorized by OAG to do so.
Marchese established a charitable foundation and a trust for Gottlieb. The trust held $2 million in assets to fund her foundation upon her death. After Gottlieb died in 2008, Marchese directed the trust to pay his law firm, Marchese & Maynard LLP, fees totaling $598,931.42. Marchese and Maynard were unable to provide attorney time sheets, invoices, or receipts to prove that they provided legal services worth nearly $600,000 or that Gottlieb knew of or agreed to pay Marchese & Maynard LLP that amount.
Over the next decade, Marchese and Maynard also paid themselves salaries totaling $758,334 as directors of Gottlieb’s charitable foundation, in violation of New York law. These salaries were substantially greater than the amount the foundation disbursed in charitable grants.
In the settlement, Marchese and Maynard admitted to failing to register the trust after Gottlieb’s death, failing to retain timely records of the trust’s expenditures, and operating Gottlieb’s foundation without a legally constituted board of directors. As a result, they set their own compensation without review by nonconflicted directors. They also failed to adopt and adhere to a conflict-of-interest policy.
As part of the settlement reached with OAG, the foundation will be dissolved and all of its remaining assets, which — together with the restitution funds — exceed $1 million, will be disbursed to other charitable organizations under the supervision of OAG.
“New Yorkers who generously donate to charity upon their death deserve to have their wishes honored,” James said. “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.”