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Manhattan lawyer sentenced to 37 months in charity scam case

Steven Etkind, of New City, N.Y., wanted no jail time for a complex scheme to divert money from a Long Island client's $35 million estate that was supposed to go to Jewish charities and animal care.

Attorney Steven Etkind in lower Manhattan after rushing

Attorney Steven Etkind in lower Manhattan after rushing from federal court where he was sentenced Friday for ripping off money intended for charity from a Long Island industrialist's estate to buy himself a $3 million East End beach mansion. Photo Credit: John Roca

A Manhattan lawyer who ripped off money intended for charity from a wealthy Long Island client’s estate to buy himself a $3 million Southampton beach mansion and then didn’t pay taxes on it was sentenced to 37 months in prison in federal court Friday.

Steven Etkind, 56, of New City, New York, wanted no jail time for a complex scheme to divert money from the $35 million estate of Edwin Berger, the founder of Lambro Industries, an Amityville manufacturer, that was supposed to go to Jewish charities and animal care.

But Manhattan U.S. District Judge John Koeltl said the crime — which Etkind admitted trying to hide from an IRS audit by backdating documents transferring the Water Mill home to a Jewish group in New York City — was too serious to overlook.

“The defendant was making a substantial income and there is no explanation why he was in such need of a house in the Hamptons that he would risk all he had built up over the years,” the judge said. “But he did.”

Etkind, formerly a partner heading the tax, trusts and estate group at the Manhattan firm Sadis & Goldberg, didn’t comment after the sentencing, pulling a stocking cap over his head and racing through Chinatown in an unsuccessful effort to avoid a photo.

His lawyer, Duncan Levin, argued that Etkind’s effort to siphon money into the East End house and fool the IRS from 2009 to 2012 had been “aberrant.” He praised Koeltl for imposing a “just and fair” sentence at the low end of advisory federal guidelines of 37 to 46 months.

Etkind specialized in employee stock ownership plans and designed one for Lambro, a small company that makes dryer vents. He was named co-executor of Berger’s estate and co-trustee of trusts that were to be established under the will.

Prosecutors alleged that after Berger died in 2008, Etkind and a co-conspirator used phony charities and shell companies to make it appear that they were funding Jewish charities while siphoning off more than $3 million to buy the two-story 6,300-square-foot house with a swimming pool near the beach.

Then, almost two years later, after the IRS initiated an audit, Etkind arranged with a friend who was a rabbi at a midtown Manhattan chabad — an orthodox Jewish center — to donate the Southampton property, using backdated documents to try to fool the IRS into thinking it was theirs from the start.

Etkind, who pleaded guilty in September to conspiracy and tax evasion for failing to pay taxes on the money he used to buy the estate, said he had already lost his livelihood and apologized for his behavior. “This is not how I’ve lived my life,” he told Koeltl.

Levin argued that he did no harm, because he was paying back the $1.2 million in taxes he owed, the mansion he bought ended up with a Jewish group and appreciated in value, and he had never tried to claim a charitable deduction for donating the property he bought with Berger’s money.

But prosecutors urged a sentence near the 46-month high end of the sentencing guidelines, calling it a “blatant fraud” that had harmed both Berger and other taxpayers, and deprived his co-trustees of the right to choose appropriate charities by substituting his “hand-picked” choice.

“It is very tough to steal a house,” said prosecutor Jack Morgan. “And Mr. Etkind used his special abilities as a trust and estates lawyer to do just that.”

Although Etkind submitted 70 pages of testimonials from family and friends, there was one discordant note. Denise Botterio, a longtime Lambro employee, told Koeltl in a letter that Etkind had thwarted Berger’s intent to increase employees’ share of the business and turned over control to a Jewish foundation that has left its future on Long Island uncertain.

She urged the maximum sentence. “He took it upon himself to steal someone’s hard working $$,” she wrote. “That is a disgrace in my book.”

Koeltl said the scheme “was not an isolated aberrant act.” In addition to the 37-month prison term, the judge ordered restitution of the $1.2 million in taxes and recommended substance abuse treatment for a “long-standing problem.” He gave Etkind until May 31 to surrender.

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