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December 12, 2011 11:28 AM

Crowell Settles Suit Over Ex-Lawyer Arnsten's Alleged Theft

Posted by Ed Shanahan

Crowell & Moring has settled litigation initiated by a client who claimed that ex-firm counsel Douglas Arnsten stole millions of dollars in real estate escrow funds, according to sibling publication the New York Law Journal.

The NYLJ's Mark Hamblett reports that Crowell said the settlement, which was announced Friday, makes good on its earlier promise to resolve the matter to everyone's satisfaction, "particularly the client's, Regal Real Estate."

As Hamblett notes, Arnsten faces extradition from Hong Kong, where he fled in September as the police in New York prepared to arrest him. Regal, which had gone to the Manhattan district attorney's office when Arnsten failed to return escrow money he allegedly stored in his own account, sued Crowell & Moring claiming the firm was responsible for the $5.5 million.

In a statement announcing the settlement, Hamblett reports, Crowell & Moring said it had "fully reimbursed Regal for the escrow funds that were lost as a result of Arnsten's misconduct." The firm went on to say it was "appalled to learn that a former employee seems to have been involved in an elaborate plot to defraud our client and his colleagues at Crowell & Moring. The alleged conduct of this former employee is in stark contrast to everything we stand for as a firm and is entirely inconsistent with the strong reputation of trust we have built among our clients over the years. We are grateful to our client Regal for their patience in this matter and are pleased finally to be in a position to honor our obligations to them through this settlement."

Regal is represented by Bruce Lederman of D'Agostino, Levine, Landesman & Lederman, according to Hamblett.

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