New York Bankruptcy Lawyer Linda Tirelli Is Facing Hefty Sanctions From The US Bankruptcy Court And Possible 12+ Month License Suspension
Narcissistic New York Bankruptcy Lawyer Linda Tirelli aka the self-proclaimed “bank slayer” is in serious hot water.
The US Bankruptcy Court in New York. The Court has unsealed an order to show cause against Tirelli. The court order calls for Tirelli to be be sanctioned for misrepresentation and recommends a one-year suspension from practicing law. The court referred Tirelli to the Committee on Grievances for the United States District Court, S.D.N.Y. for disciplinary action.
Linda Tirelli Failed To Escrow Funds Or Make Payments On Behalf Of Her Clients
The order states that Tirelli admitted she was serving as “escrow agent” for 13 of her Chapter 13 clients. However, Tirelli did not pay the Debtors’ post-petition monthly mortgage payments in these Chapter 13 cases.
The judge in the case allowed the arrangement even though she expressed reservations regarding Tirelli actions.
The judge noted that a debtor is obligated to making their payments regardless of other issues.
Yet, the Court understood that these procedures had been put in place by the prior judge on the case. As a result, the court allowed them to continue.
However, the Court made clear that Tirelli’s procedures would be limited to certain circumstances. Those circumstances were limited to where there was a bona fide challenge to the mortgage. The Court noted that:
“We shouldn’t do that unless there’s actually been something filed that calls into question the validity of the actual noteholder. And so if there’s an adversary, there’s a claim objection, but as a general practice, no we—that should—that money should come out of escrow.”
In June 2021, it came to the Court’s attention that Tirelli was not escrowing funds in a handful of cases. This stipulation was required under the terms of these Chapter 13 plans. The court also found that payments were not being remitted to the Chapter 13 Trustee for the benefit of creditors. The payments were also not being paid directly to the secured creditors as required by the Bankruptcy Code.
Tirelli claimed her clients had raised issues regarding the validity of the lenders claim to collect payments. However, it turns out Tirelli wasn’t being being honest with the court and question remain about what Tirelli did with the money.
The Bankruptcy Court Busts Linda Tirelli
The court then ordered Tirelli to show cause as to:
- If misrepresentations were made by Ms. Tirelli regarding the escrowing of post-petition mortgage payments. If so, why Ms. Tirelli should not be sanctioned for such misrepresentations.
- Whether all post-petition mortgage payments purportedly held in escrow should not be turned over to the creditors or the Chapter 13 Trustee.
- Why the Chapter 13 Plans where Ms. Tirelli is counsel should not be immediately amended to require that all post-petition mortgage payments be paid either directly to the secured creditors or paid to the Chapter 13 Trustee as conduit payments to the secured creditors.
The Court Orders Tirelli For A Declaration Providing The Following Information:
- A calculation of the amount of funds that are being held in escrow for post-petition mortgage payments in each of the above-captioned cases and any other cases where Ms. Tirelli has represented to the Court that she (or her law firm) is holding such funds;
- An accounting of how the funds actually held in escrow by Ms. Tirelli (or her law firm) compares with the amount that should be in escrow given the length of time that these bankruptcy cases have been pending[;] and
- Why the funds actually held in escrow do not match the amount that should have been in escrow. The later being based on representations Tirelli made to the Court, an explanation as to why such a circumstance does not constitute sanctionable conduct.
Tirelli Tries To Play The Dumb Blonde. It Doesn’t Go Over Well
She responded by saying:
“No representations were ever made to the Court except for true and accurate representations as to sums held, or that no funds were held. Without knowing which ‘representations made to the Court’ are being referenced, the undersigned is unable to intelligently respond other than to make clear that at no time has the undersigned ever represented to the Court that funds were held by her office, if such representations were not entirely accurate in all respects.”
She also argued that she does not fund the Debtors’ plans and that the obligation is on the Debtors to fund their own plans and adhere to the terms of those plans.
Tirelli Releases The Escrowed Funds And Fears Incident Will Damage To Her Reputation
Linda Tirelli realized she was busted by the court. So she released the escrow funds to the Bankruptcy Trustee. She also asked the court to seal the proceedings.
Tirelli claimed that anytime an attorney is accused of misrepresentation, that is considered defamatory. However, the court disagreed.
The court ruled that the vast majority of information in the pleadings that Ms. Tirelli wanted sealed was derived from prior pleadings and hearing transcripts that are already on the public record.
As a result, the court stated it lacked the authority to seal information derived from public documents. The information was already part of the public record and can’t be made confidential. The court also found that Tirelli’s claim of defamatory statements was unfounded.
Tirelli also stated that her reputation would be damaged if the Order To Show Cause and records of the proceedings were not sealed.
The narcissistic lawyer also argued that the proceedings before the Court are akin to an attorney grievance proceeding. Therefore, the Court should follow the sealing rules applied by the District Court Committee on Grievances.
However, the court disagreed and unsealed the case. Now, the pompous lawyer is attempting to do damage control by hiding the proceeding on the internet.
The Court Found New York Bankruptcy Lawyer Linda Tirelli Comingled Funds and Failed To Reconcile Accounts
Court concluded that Tirelli failed to comply with her obligations for the IOLTA account where the escrowed funds were held. The applicable rules require that an attorney with client funds in escrow must hold the funds in a separate account. The court found she comingled the funds with other monies.
It stated that it was due to, among other things, the shortfall in escrow account and comingling of funds. The court ignored Tirelli’s claims that the invasion of trust funds was inadvertent.
The judge also noted that Tirelli only replaced the funds when she was called out by the court. As a seasoned bankruptcy lawyer, the court found Tirelli’s actions were inexcusable.
New York Bankruptcy Lawyer Linda Tirelli’s Future Is An Jeopardy
As as result, the court referred Tirelli to the Committee on Grievances for the United States District Court, S.D.N.Y. for further investigation. However, the court did recommended a one year suspension for Tirelli.
The Court also requires Tirelli provide a copy of this Memorandum of Decision to any judge presiding over any case where Ms. Tirelli is acting as counsel to a bankruptcy debtor.
The court ruled that such a step will ensure that the judge in any existing or future case is put on notice of the issues that arose in these cases so that the judge may take whatever protective action they deem appropriate. Such a step is appropriate to protect the integrity of the judicial process and any parties that appear before the Bankruptcy Court in current or future proceedings.
Linda Tirelli’s legal career is now in serious jeopardy. Grab the popcorn. This is going to be one fight for survival that will be fun to watch.
If you feel you have a grievance against Linda Tirelli for mishandling your case, contact the NYS Bar Association at:
Grievance Committee for the Ninth Judicial District
399 Knollwood Road, Suite 200
White Plains, NY 10603
(914) 824-5070
Or go to there website here and fill out the form.
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