John J. Reddy Jr., who was hired by Bronx Surrogate Lee L. Holzman to clean up a scandal in his court, wore a wire as a part of a 2009 investigation conducted by the New York City Department of Investigation, according to sources.
In an interview, Mr. Reddy confirmed that he had worn the wire to help the New York City Department of Investigation (DOI) determine who knew what within the Bronx courthouse and its satellite, the Bronx Public Administrator’s Office.
As part of the effort, Mr. Reddy, a widely respected lawyer who sought the Democratic nomination for Surrogate in 2008, said he asked a pointed question as to whether Surrogate Holzman had been informed of potential wrongdoing.
While wearing the wire shortly after Surrogate Holzman hired him in April 2009, Mr. Reddy said he asked an accountant, whose contract with the Public Administrator’s office he was about to end, what information he had provided to the judge.
“I was terrified of the answer,” Mr. Reddy said. But, he added, the accountant, Paul Rubin, told him that he did not raise any red flags for the Surrogate. A source close to Mr. Rubin said that prior to the scandal breaking into the open in early 2006, the accountant was not aware of any problem in the office and only might have been with the benefit of hindsight.
“My job was to clean up the office, not to protect anyone,” Mr. Reddy added, “I wasn’t there to protect the Surrogate.”
In April, 2009, when the conversation was recorded, three government agencies—the FBI, the Bronx District Attorney’s Office and DOI—were examining suspicions that the office’s counsel, Michael Lippman, had been overcharging for work he had performed and taking fees in advance of earning them.
Fifteen months later in July 2010, Mr. Lippman was indicted for receiving $300,000 in unwarranted fees from estates he had handled at the Public Administrator’s Office. The case is currently scheduled to begin trial on May 22. The Public Administrator’s Office handles estates of persons who die without a will.
Mr. Lippman’s lawyer, Murray Richman, said his client “has done nothing wrong and everything he did had been cleared by the court prior to his doing it.”
Conduct Commission Hearing
In January 2011, the New York State Commission on Judicial Conduct filed disciplinary charges against Surrogate Holzman accusing him of breaching the ethical code for judges by not properly supervising Mr. Lippman and by failing to report his alleged improper billings to law enforcement authorities.
The complaint also alleges that Surrogate Holzman approved fee applications from Mr. Lippman that were based upon “boilerplate” affidavits that did not detail the actual work he had done.
Those charges did not become public until nine months later when Surrogate Holzman waived his right to keep the proceeding confidential.
The commission acknowledges that Surrogate Holzman never approved either advance or excess fees for Mr. Lippman. No criminal charges have been brought against the judge.
Mr. Reddy also said in an interview that he testified about his recording of the conversation with Mr. Rubin during the disciplinary hearing.
The commission appointed former Manhattan Supreme Court Justice Felice K. Shea to preside as referee over the hearing which spanned 15 days through last fall and early winter.
According to published reports, Surrogate Holzman testified at the hearing that he fired Mr. Lippman as the office’s counsel after learning of his allegedly improper fee practices in early 2006, but allowed him the remain on staff to work on cases.
In allowing Mr. Lippman to stay on, the conduct commission charges, Surrogate Holzman improperly set up a system that permitted the lawyer to use his future earning to reimburse estates from which Mr. Lippman had allegedly improperly taken fees.
According to an article in the New York Law Journal (Jan. 18, 2012), Surrogate Holzman testified that he fired Mr. Lippman after he confessed in 2006 to taking excess fees from some estates, but added that he did not believe Mr. Lippman had broken any laws and trusted that he would pay back any overpayments.
It was not until 2009, he testified, that he first suspected Mr. Lippman might have engaged in serious misconduct upon learning state and federal authorities were investigating his fee practices.
Surrogate Holzman’s lawyer, David Godosky, of Godosky & Gentile, said in an email that Mr. Reddy had testified that the reimbursement system devised by Surrogate Holzman “greatly reduced the harm” caused by Mr. Lippmann’s receipt of advanced fees.
In connection with its description of the repayment system, the commission complaint alleges that Surrogate Holzman allowed “a social, political or other relationship” to influence his judgment. Separately, the complaint states that Surrogate Holzman should have recused himself from hearing Mr. Lippman’s cases because he raised $125,000 for Surrogate Holzman’s 2001 campaign.
Following his termination of Mr. Lippman in early 2006, Surrogate Holzman named his court attorney, Mark Levy, as counsel to the public administrator. Mr. Levy served in that capacity until Mr. Reddy was appointed in April 2009.
Shortly after becoming the PA counsel, Mr. Reddy terminated Mr. Lippman’s relationship with the office, according to the commission complaint.
Eight months before Mr. Reddy was hired as counsel to the public administrator, the New York Daily News ran an article reporting that Mr. Lippman had taken fees before filing affidavits required to support the fee applications (July 20, 2008). The article also reported that then-New York City Comptroller William Thompson had criticized a number of practices within the Bronx Public Administrator’s Office and had referred the matter to the Department of Investigations.
The evidentiary phase of the hearing was completed on Jan. 17, and it is anticipated that the 2,700-page transcript of the hearing will be available to the public on the commission’s Web site next week. Referee Shea will render a report to the commission after the two sides submit briefs.
Surrogate Holzman, who turns 70 in May, will be required by law to step down at the end of the year.
Reddy Again Sought Surrogate Nomination This Year
As in 2008, Mr. Reddy again this year sought the Democratic nomination to fill a vacancy on the Manhattan court which will open up at the end of the year when the current surrogate, Kristin Booth Glen, must also step down because of the mandatory retirement law. The Surrogate’s Court presides over the distribution of the assets of persons who die either with, or without, a will.
Unlike four years ago, when the Democratic party’s screening panel found Mr. Reddy to be one of the best three qualified candidates to compete in the primary, this year the panel did not include him on the list of candidates qualified to run. Also unlike in 2008, the screening panel this year only found two candidates qualified to compete for the nomination, Barbara Jaffe and Rita Mella, both Civil Court judges.
Under the Manhattan party’s rules, the county committee may only endorse one of the three candidates named by its screening panel. While the county party’s backing is largely symbolic, most of the local political clubs in the borough, which do much of the legwork in campaigns, will only endorse candidates reported out by the panel, though they are not bound to.
Mr. Reddy, a trusts and estates expert at Reddy Levy & Zifner in Manhattan, said he has abandoned his quest for the Democratic nomination because it is not possible to compete without the support of the borough’s Democratic clubs.
The party screening panel’s deliberations are confidential, and the reason Mr. Reddy was not listed among the three best candidates is not known.
Four years ago, after being one of the three candidates approved by the screening panel, Mr. Reddy went on to compete in a three-way race for the Democratic nomination. Manhattan Surrogate Nora S. Anderson won that contest and two months later was elected to the then-open seat on the Manhattan court.