Officials: Korn acted alone in $27M fraud

Jay Korn, the attorney who police said jumped to his death from a Hempstead office building almost a year ago, acted alone in a suspected Ponzi scheme that bilked close to 100 investors of nearly $28 million, officials said.

On March 24, 2010, Korn, who lived in Rockville Centre, jumped from the roof of an office building at 50 Clinton St. in Hempstead where he had a law practice. After his death, investigators with the Nassau County District Attorneys Office started a probe into allegations he ran a Ponzi scheme that cheated investors and law clients out of $27.8 million.

After examining Korn's affairs for close to a year, prosecutors concluded the 70-year-old attorney was solely responsible for the losses.

"The credible evidence did not establish that anyone other than Jay Korn was involved in the alleged criminal wrongdoing," a spokesman for Nassau County District Attorney Kathleen Rice told Newsday in a statement. "Accordingly, in light of Mr. Korn's death, the case was closed."

An investigation by a federal bankruptcy court trustee is now underway in an attempt to locate any assets that can be used to reimburse investors. Trustee Andrew M. Thaler of East Meadow, said he plans to review the prosecutor's file to trace payments Korn may have made in the months before he died from the account of his law firm, Korn & Spirn. As trustee, Thaler has the ability to try and recover monies through clawback lawsuits similar to what is being done in the massive Bernard Madoff case.

Korn's law firm was placed in involuntary bankruptcy late last year after three creditors - owed a combined $4.1 million - filed a petition in the Eastern District federal bankruptcy court. Additional court filings showed that a total of $13.1 million in claims have been filed against the law firm, mostly from investors in New York City and on Long Island. The firm had assets of only about $2,500, the bulk being in a checking account.

One of the biggest claims was lodged by Dr. Lewis Rubin, of Manhattan. Rubin wired Korn about $2.5 million on March 11, 2010 as payment for a condominium, said Rubin's attorney Herbert Kramer. Rubin never saw the money again and it was not used toward the condominium, Kramer said.

In other cases, Korn took money from friends and law clients for a real estate investment program that promised and sometimes paid out returns of 12 percent to 15 percent a year, according to investors and records examined by Newsday.

Kramer and Thaler said the bankruptcy probe will be looking into reports that there was a large life insurance policy on Korn's life.

David Baram, an attorney representing Arthur Spirn, Korn's law partner, said his client was a victim in the case and had been cleared by Rice's investigation.

Korn's widow Ellen didn't return a telephone call seeking comment.