Judge poised to jail N.Y. real estate lawyer over bankruptcy docs

A plaque is displayed at the entrance of the U.S. District Bankruptcy Court for the Southern District of New York, REUTERS/Brendan McDermid
  • Mitchell Kossoff found in civil contempt by federal bankruptcy judge
  • Kossoff refused to hand over documents to trustee overseeing his defunct law firm

(Reuters) - A U.S. bankruptcy judge on Tuesday held New York real estate lawyer Mitchell Kossoff in civil contempt and said he will seek to have him incarcerated for defying court orders to cooperate with the Chapter 7 trustee overseeing the dissolution of his defunct law firm.

Chief U.S. Bankruptcy Judge David Jones in Manhattan said Kossoff can avoid prison and purge the contempt order if he turns over documents, including a list of creditors and personal financial information, to Al Togut, the Chapter 7 trustee overseeing the estate of Kossoff PLLC.

Kossoff "simply has not diligently attempted to comply nor has he taken steps to do so," Jones said during a hearing.

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Whether or not he complies, Kossoff remains free until Jones' findings can be affirmed by a U.S. district judge, allowing the bankruptcy court to issue a bench warrant. Kossoff will also have an opportunity to contest his findings at the district court, Jones said.

If the district court affirms his findings quickly, Jones said he would not issue a bench warrant for Kossoff's arrest during the next seven days.

"I believe no order short of incarceration is sufficiently likely to induce compliance by Mr. Kossoff," Jones said. He noted that Kossoff has been ordered to provide the materials to Togut for months.

Togut sought the civil contempt finding earlier this month. He declined to comment.

Kossoff PLLC was forced into bankruptcy in May after creditors claimed it misappropriated more than $8 million from its escrow accounts.

Kossoff, once a fixture of the New York real estate market, is reportedly under investigation by the Manhattan district attorney. That means providing information to Togut would waive his 5th Amendment rights, his defense lawyer Walter Mack has repeatedly argued, unsuccessfully.

During Tuesday's hearing, Mack said he and Kossoff would submit documents to Togut, but he signaled they would not be complete. "We are prepared to file something. You’re not going to happy about them," he said.

The case is In re Kossoff PLLC, U.S. Bankruptcy Court for the Southern District of New York, No. 21-10699.

For Togut: Neil Berger, Brian Shaughnessy and Minta Nester of Togut, Segal & Segal

For Kossoff: Walter Mack of Doar Rieck Kaley & Mack

Read more:

Trustee wants N.Y. lawyer jailed for not cooperating in firm bankruptcy

Embattled real estate lawyer Kossoff can't shield docs in bankruptcy

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David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.