Forged Documents by Big NY Attorney Center of Merrill Lynch Fraud Suit (MORE, CLICK HERE)

Forged Letters From Prominent Local Lawyer at Heart of Merrill Lynch Fraud Suit
New York Lawyer - February 13, 2008
By Mary Pat Gallagher - New Jersey Law Journal

Forged opinion letters, purported to be from a prominent New Jersey lawyer, are at the center of $7 million loan fraud case in federal court in Newark, N.J.

The lawyer, Ben Becker, is the alleged signer of two letters provided to Merrill Lynch Business Financial Services in 2004, along with allegedly fake financial statements, based upon which Merrill Lynch loaned money to an import-export company.

The company, PITTRA G.B. International of Morristown, N.J., thereafter filed for bankruptcy, and the alleged fraud came to light in the Chapter 7 case.

Becker has said he had nothing to do with the opinion letters, which summarize and report the status of certain suits then pending against the Morristown-based company

In a certification dated Sept. 29, 2006, Becker said the signatures were not his, the secretary's initials were not those of his secretary, the font was wrong and, "most importantly, the substance of the letters is unknown to me."

He also said the stationery used for the letters was outdated and did not reflect the composition of the firm at the time the letters were written.

He says he was shocked by the forgery but relieved that it was easy to show that the letters were phony. His disavowal was bolstered by the fact that Amper, Politziner & Mattia, the accounting firm whose name appeared on the financial documents, also disclaimed any connection.

Becker's firm, Becker Meisel in Livingston, N.J., had done work for a company owned by one of PITTRA's principals, Arthur Kupperman, and PITTRA's Chapter 7 case was being handled by Becker Meisel of counsel Douglas Kent.

James Scarpone, the lawyer for the Chapter 7 trustee, says the opinion letters and allegedly fake financial statements were among records he subpoenaed from Merrill Lynch. He also came across documents indicating Wachovia Bank was holding $10 million in escrow for PITTRA's impending sale.

He says he called the accountants, Becker and the bank and discovered that none of the documents purportedly originating with them was legitimate.

The accountants had done work for PITTRA years earlier and Wachovia knew nothing about the $10 million.

Becker says that when Scarpone called him, he didn't think he had written the letters and asked Scarpone to fax them over. Once he saw them, he was certain. Within a day or two, the firm was in court, asking to be let out of the Chapter 7 case. U.S. Bankruptcy Judge Morris Stern granted the request on Oct. 6, 2006.

During a hearing around the same time, Stern asked the U.S. trustee to refer the matter of the allegedly forged documents to the U.S. Attorney's Office.

Jane Limprecht, a spokeswoman for the Office of the U.S. Trustee in Washington, D.C., says she cannot confirm or deny a criminal referral or investigation. Michael Drewniak, a spokesman for the U.S. Attorney's Office, did not return a call seeking comment.

Scarpone says use of fictitious documents to defraud lenders only works if no one checks on the authenticity.

"Old-fashioned bankers used to make phone calls. They used to talk to live people," says Scarpone, of Newark's Robertson Freilich Bruno & Cohen. "Now everything is paper."

Meanwhile, on Oct. 5, 2006, Merrill Lynch sued to recover $4,139,146 loaned to PITTRA. The company was protected by the automatic bankruptcy stay so Merrill Lynch went after the loan guarantors, Kupperman, E. Ross Browne and Paulette Krelman, and PGB International, to which PITTRA allegedly transferred assets to evade creditors. Merrill Lynch claims that PITTRA ceased operations in 2003 but misled it so that it could continue to borrow money.

In their answers, the individual defendants asserted the Fifth Amendment privilege against self-incrimination. Krelman later waived the privilege and has denied knowledge of any fraud.

Merrill Lynch later added JP Morgan Chase Bank as a defendant after learning it loaned $3 million to PGB. The amended complaint alleges that its loan has priority.

Chase has cross-claimed against the other defendants, alleging it loaned the money based on inflated statements showing $8 million in accounts receivable when PGB actually had less than $1.7 million.

George Hirsch, who represents Merrill Lynch, says, "if Ben Becker says he didn't write the letter, you can take that to the bank." Modern technology makes it easy to forge a document, says Hirsch, of Bressler, Amery & Ross in Florham Park.

Hirsch says he has not been contacted by the U.S. attorney about any investigation into the provenance of the opinion letters, "though I probably have information and documents that would be helpful."

Frederick Polak, who represents Krelman, says his client knew nothing about any forgery and had nothing to do with it. "It was appropriate to advise her to take the Fifth until we had an opportunity to review the allegations and facts," says Polak, of Post Polak Goodsell MacNeill & Strauchler in Roseland, N.J. "Based on our analysis, we determined she had done nothing wrong."

A. Michael Covino, of Budd Larner in Short Hills, N.J., who represents Kupperman and PGB, did not return a call for comment. Nor did Browne's lawyer, Vincent Papalia, of Saiber in Newark.

The suit, Merrill Lynch Business Financial Services v. Kupperman, 06-Civ.-4802, is pending before U.S. District Judge Dennis Cavanaugh in Newark, based on diversity jurisdiction. Merrill Lynch is incorporated in Delaware.