Nassau County District Attorney Denis Dillon announced the arrest of an attorney and a disbarred attorney for allegedly stealing hundreds of thousands of dollars from clients. In unrelated cases, Jeffrey Schwartz, 59, of Dix Hills and Kathleen Trum, 57, of Garden City, are both charged with second-degree grand larceny, a Class A felony punishable by up to 15 years in prison.

According to Dillon, "Kathleen Trum was retained to represent a client in his role as executor and trustee of a personal estate. In November 2001, after distributions were paid to beneficiaries under the trust and the will of the deceased, $405,596.18 of the estate remained. Trum advised her client that she would put that money in a separate escrow account for 'safekeeping.'

"Between November 2001 and April 2002 certain authorized disbursements were made, reducing the balance to $374,522.10. After April 17, 2002, the client authorized disbursements totaling $20,631.06 in fees for another attorney and an accountant. No other disbursements were authorized between April 17, 2002 and January 2003, nor did the client receive any bills, invoices or other documentation regarding disbursement of additional funds," Dillon continued.

"Yet, by January 31, 2003, a total of $4,230.14 was all that remained in the account. Bank records show that during this time period the account was depleted by the defendant, who withdrew or transferred to her own account a total of $331,890.95 from the escrow account."

Jeffrey Schwartz had been disbarred in 1989 but continued to practice law until he was arrested in December 2002 for perjury and offering a false instrument for filing, Dillon said. "During the time he continued to practice illegally, Schwartz collected funds from clients to be held in escrow for anticipated closing costs on real estate transactions. Although the law requires escrow funds to be kept in non-interest-bearing accounts or IOLAS (Interest on Lawyer's Accounts), where any interest goes to the State's Lawyer's Fund for Client Protection, Schwartz did not do so. Instead he kept the funds in a high yield personal account."

Dillon continued, "When a civil action for legal malpractice resulted in a judgment of $198,000 against Schwartz in 1998, the judge in the case ordered that the money be paid from Schwartz's personal account. This resulted in a shortfall of escrow funds to cover his clients' closing costs. Rather than replace the clients' money with his own, Schwartz proceeded to take on new clients. 'Robbing Peter to pay Paul,' he then used the escrow money collected from newer clients to pay the closing costs that were coming due for other clients. However, once Schwartz's practice was terminated upon his arrest in 2002, there were no longer any incoming funds to cover the shortfall. The escrow funds available are $460,000 short of what is needed to reimburse clients."

Trum and Schwartz were arraigned in First District Court in Hempstead. The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.