New York lawyer disbarred after admitting litigation funding scam

REUTERS/Kim Hong-Ji
  • Jaeson Birnbaum pleaded guilty last year to duping investors
  • Sentencing in Manhattan federal court set for July

(Reuters) - A New York state court has disbarred the founder of a litigation finance firm who will be sentenced next month in federal court for his role in a multimillion-dollar securities fraud scheme.

Jaeson Birnbaum, a member of the New York state attorney bar since 2003, did not contest disciplinary proceedings that were brought against him by the state Attorney Grievance Committee for the First Judicial Department.

In September, he pleaded guilty to securities fraud tied to his litigation funding company Cash4Cases Inc. The New York appeals court's June 21 disciplinary order said Birnbaum's felony conviction required automatic disbarment.

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Birnbaum, 48, could not be immediately reached for comment on Thursday. His lawyer in the criminal case, Sam Braverman of Fasulo Braverman & Di Maggio, told Reuters that Birnbaum "accepted responsibility at the first opportunity."

Representatives from the Attorney Grievance Committee also did not immediately respond to messages seeking comment.

Litigation financing involves a third party that funds a case or portfolio of cases in exchange for a piece of any judgment.

Many litigation funders operate out of New York and Chicago, and the practice has grown in the U.S. in recent years.

Manhattan prosecutors said last year that Birnbaum "conned investors through a series of lies about Cash4Cases." The government alleged he used the company to take cash for himself, despite telling investors he was using funds to back litigants.

Birnbaum, according to charging documents, "solicited and obtained more than $3 million in investments for Cash4Cases based on fraudulent misrepresentations" from 2017 to 2019.

The U.S. Securities and Exchange Commission last year filed a related civil action against Birnbaum. He agreed to a consent judgment to resolve the case.

The disbarment order noted, as prosecutors claimed, that Birnbaum attempted to cover up his fraudulent activity.

Birnbaum, the appeals court said, "directed an employee to falsify books and records to make it appear that certain cases were available to be pledged as collateral to new investors, when in fact the matters had already concluded."

Birnbaum's sentencing is scheduled for July 7 before U.S. District Judge Paul Crotty in Manhattan. He faces a sentencing guideline range of between 41 and 51 months in prison, court records show.

The case is In the Matter of Jaeson L. Birnbaum, New York Supreme Court, Appellate Division First Department, No. 2022-01393.

For petitioner: Jorge Dopico of Attorney Grievance Committee

For respondent: Pro se

Read more:

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Litigation funders howl as N.J. adopts disclosure requirement

(UPDATE: This article was updated with comment from defense counsel.)

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