NY Lawyer Disbarred, His $35 Million House OK (MORE, CLICK HERE)

NY Lawyer Disbarred, But Don't Feel Too Bad for Him - He Just Bought a $35 Million House
By Anthony Lin - The New York Law Journal - February 26, 2008

In 2002, real estate lawyer Keith G. Rubenstein, eager to bolster his shaky finances, signed on to an unusual arrangement to serve as a front for a Queens personal injury practice owned by a non-lawyer entrepreneur who made his fortune in taxicab medallions.

That deal, which netted Mr. Rubenstein a mere $21,000 over two years, resulted in his disbarment by a Brooklyn appeals court at the end of last month. But don't feel too sorry for him. Last year, he outbid Madonna on a $35 million Upper East Side townhouse that he is planning to occupy only after a two-year gut renovation. He told The New York Times that he will add a pool and a Russian steam bath.

Mr. Rubenstein's good fortune owes to his current job as principal of Somerset Partners, a real estate investment firm that last year bought the office tower at 450 Park Avenue for $509 million, a record price on a per-square-foot basis. Earlier in 2007, Somerset sold for $430 million 85 Tenth Avenue, a former Chelsea cookie factory, where they had fought a highly-publicized legal battle with tenant restauranteur Mario Batali.

But just six years ago, Mr. Rubenstein, a 1990 graduate of Widener University School of Law, was a struggling lawyer.

Responding to questions by e-mail yesterday, Mr. Rubenstein said that while he had practiced real estate and real estate litigation since 1991, he wanted to establish a personal injury practice to bring in more revenue.

"I was just beginning my career as a principal in real estate transactions, studying the markets and learning about financing, investing and operating properties," he said.

Around this time, Mr. Rubenstein met and became friendly with Simon Garber, the owner of several hundred taxicab medallions in Chicago and New York. In May 2002, Mr. Rubenstein agreed to practice personal injury law as an employee of a Long Island City-based company owned by Mr. Garber called Gem & R Management Corp.

Under this agreement, Mr. Rubenstein served as attorney of record on scores of personal injury cases that were in actuality handled almost entirely by paralegals employed by Gem & R. The agreement gave Gem & R the right to accept or reject clients for Mr. Rubenstein, as well as establish fees. The client files would also be owned by Gem & R. For his part, Mr. Rubenstein would receive 10 percent of the fees in the cases.

Mr. Rubenstein testified during disciplinary proceedings that court documents were often filed without his review and that Gem & R paralegals generally dealt with clients and insurance companies. Because of the arrangement, Mr. Rubenstein said it was possible he was the attorney of record on personal injury cases of which he was unaware.

A unanimous Appellate Division, Second Department, panel said Mr. Rubenstein's Gem & R deal violated several disciplinary rules, including those barring fee-splitting between lawyers and non-lawyers, aiding the unauthorized practice of law, paying for client referrals and filing false and misleading retainer agreements with the Office of Court Administration.

Mr. Rubenstein, represented by Michael A. Gentile of Manhattan, had acknowledged that he had entered into a "patently foolish arrangement" but had argued for leniency on the grounds that his misconduct was an aberration in an otherwise umblemished record that took place while he was going through a divorce and facing financial difficulties. He also argued that no clients had been harmed.

But the appellate panel of Presiding Justice A. Gail Prudenti (See Profile) and Justices Stephen G. Crane (See Profile), Reinaldo Rivera (See Profile), Peter B. Skelos (See Profile) and Howard Miller (See Profile) rejected Mr. Rubenstein's argument.

"Despite the respondent's characterization of his ethical breaches as isolated misjudgments, it is evident from the time frame of the charges and his total abdication of control over his practice to non-attorneys, that the misconduct involved was pervasive," the court said In the Matter of Keith G. Rubenstein, 01126/06.

Mr. Rubenstein said yesterday that he disagreed with the decision but that he respected the judicial system. He said he would apply to be reinstated to the bar at the first opportunity.

Of his more recent success, Mr. Rubenstein said he had been working on his real estate investment firm since 2001 and had been able to leverage knowledge and experience gained in his real estate practice. He further credited his "perseverance, dedication and hard work."

"I also am a firm believer in not dwelling on the past or mistakes," he said. "Mistakes are part of life and I believe when you make a mistake you learn from it, acknowledge it and move on. This is what I have done."

Attorney Colette M. Landers represented the Second Department Grievance Committee.