The lawyer, who manages funds for some of New York’s largest landlords, has apparently disappeared, so his clients are concerned that millions of dollars in custody accounts also have them, sources said of The Real Deal scandal.
Mitchell Kossoff, managing partner of Kossoff PLLC, has been unreachable for several days with his partners in a Manhattan law firm and a landlord for whom he holds millions of dollars in escrow accounts, according to clients attempting to contact the company.
Kossoff could not be contacted for comment, and his company’s partners did not respond to several requests for comments.
One client has already sued the company and charged it with “potentially criminal offenses” that constitute a “serious breach” of its obligations.
Westchester-based investor Rob Yaffa filed a lawsuit on Wednesday through a limited liability company that signed a $ 4.5 million deal with a 10-unit apartment building at 537 Edgecombe Avenue in Upper Manhattan last May. The buyer added $ 590,000 to a tied account controlled by a law firm, which was to be released after the closure on March 26, when Yaffa built another building in exchange for 1,031, according to the lawsuit.
But Yaffa said Kossoff never hooked up the money for the 1031 deal and left the radar.
The investor “does not know the disposition of the proceeds from the sale and, despite the questioning, was not able to get a direct answer,” said his lawyers in the complaint.
Yaffa declined to comment.
The scandal has shaken some real estate clients who have worked with Kossoff and are now asking about the status of their money, according to landlords who spoke to TRD on condition of anonymity.
Kossoff is a prominent landlord and tenant lawyer, and some of the tied funds he oversees include money that landlords would set aside to buy out tenants. Cash held in custody facilitates the negotiation of buyouts in rent-stabilized apartments.
Lawyers also keep funds in custody for buyers and sellers of real estate, as well as advances and maintenance fees that clients pay their lawyers. Conditional fraud by lawyers, especially in residential transactions, is such a problem that a special fund was established to compensate the victims.
“Every few years, there is one of these cases where a lawyer runs away for his client’s money,” said one landlord familiar with the Kossoff case, speaking on condition of anonymity.
Back on Tuesday, he was on the list of clients that Kossoff represents on its website, Icon Realty Management, Stellar Management and Stonehenge Partners. This page was deleted shortly after TRD inquired.
It is not possible to determine whether any of these companies are missing funds. None responded to the request for comment.