HH Frank Enterprises
legal fees examined

NEW YORK CITY - In a precedent-setting case which some lawyers claim strikes at the heart of attorney-client privilege, the U.S. Court of Appeals for the Second Circuit, in New York, ordered lawyers -- including two in Sullivan County -- to reveal the details of fees paid by a client in a highly publicized fraud case.

In November 1992, North Branch poultry farm, Hiram H. Frank Enterprises -- and related family businesses -- were convicted of a confidence scheme bilking lenders of millions. Money was borrowed to buy expensive machinery to gather eggs from chickens in HH Frank's vast coops, but the machines were never purchased. Old machines, sandblasted and repainted, were showed to investors instead. It was years before the scheme was uncovered.

After a federal jury in White Plains ordered HH Frank to pay $25 million, the company declared bankruptcy. The investors that sued included HBE Leasing Corp., Reyna Financial Corp., and the John Hancock Corp.

Monticello lawyers named in the May 26 issue of The New York Times included Cliff Gordon, reportedly paid $40,211; and Richard A. Stoloff of Goldstein & Stoloff, whose fee totaled $48,288, according to the Times.

New York City lawyers received larger sums. Gerald B. Lefcourt was paid $291,004; Jay Goldberg received $165,223; and Judd Burstein, $69,744, the Times said. Two Manhattan solo practitioners, Michael Berger, who received $114,019, and Richard W. Levitt, who got $48,233, may reportedy also be questioned.

Representing five companies victimized by HH Frank, attorney S. Pitkin Marshall claimed it was unfair for lawyers to keep huge salaries paid by bankrupt clients while they receive pennies on the dollar. Frank's lawyers argued the court's decision will make it impossible for people to hire lawyers to defend against claims greater than their assets, since legal fees would potentially be creditors' money.

Goldstein & Stoloff reportedly did corporate work for the Frank companies and set up the fee arrangements, according to Marshall. "These attorneys are very exposed," Marshall is quoted as saying.

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