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Ex-lawyer charged with stealing $1.3M from account

BY ANTHONY M. DESTEFANO | anthony.destefano@newsday.com

8:45 PM EDT, May 27, 2008

A former corporate lawyer at a major international law firm in Manhattan was arrested Tuesday on charges he stole $1.3 million from a client escrow account, law enforcement officials said.

Martin Weisberg, 57, who is already facing indictment for stock fraud, was freed on $500,000 bond by a Brooklyn federal magistrate judge after pleading not guilty to wire fraud and money laundering charges.

The latest indictment against Weisberg, who lives in upstate Waccabuc, alleges he took the money after he had placed $30 million of the client's funds into an account but concealed that the account generated interest.

Weisberg had the $1.3 million wired out of the account without the client's permission and then sent the client letters with false account balances, prosecutors alleged in the indictment.

At Weisberg's arraignment, however, defense attorney Barry Slotnick said his client returned the money to the client. "At this point, your honor, no one is out of pocket," Slotnick told magistrate judge Robert Levy.

Assistant U.S. attorney John Nathanson said Weisberg returned the money only after the federal probe began.

Brooklyn federal prosecutors said in a statement that the FBI uncovered the alleged theft during an investigation that led to Weisberg's August 2007 securities fraud indictment.

Weisberg resigned from the Manhattan office of the giant firm Baker & McKenzie after he was indicted with five other men on charges they were part of an illegal $55-million short-selling scheme involving stock in two public companies. The alleged stock fraud occurred before Weisberg joined the law firm in 2005, legal sources said.