Ex-Lawyer Is Charged with Misleading FBI

, New York Law Journal

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A disbarred Long Island attorney accused of lying to federal investigators about his role in a foreclosure rescue scheme was held without bail after pleading not guilty Wednesday before Eastern District Magistrate Judge A. Kathleen Tomlinson (See Profile) in Central Islip.

A federal indictment unsealed Wednesday alleges that Barry Stephen Zornberg, 54, intentionally misled the FBI during an investigation into a scam in which 10 families were defrauded of approximately $1.3 million in home equity.

According to a press release issued by Eastern District U.S. Attorney Loretta Lynch, Zornberg was the architect of a scheme in which he and two other principals of Empire Property Solutions of Bethpage tricked distressed homeowners into transferring title to their homes to straw buyers while paying steep fees to Empire for what was supposed to be a refinancing. The straw buyers made no payments on the homes, resulting in the victims' homes going into default, according to the release.

The indictment alleges Zornberg, formerly of Zornberg & Hirsch in Happauge, used his law firm escrow account "to fraudulently take title to, and transfer equity out of, the homes of several Empire customers."

It also alleges that on April 2, 2012, Zornberg falsely told the FBI that he had urged two distressed property owners to abandon the Empire transaction, when in fact he actively encouraged them to complete the deal.

Assistant Eastern District U.S. Attorney Christopher Ott is prosecuting the case. Nancy Bartling of LaRusso & Conway in Mineola is defending Zornberg. Bartling was not immediately available for comment.

Zornberg was disbarred following a 2007 plea in Suffolk County to grand larceny and criminal possession of a forged instrument, felonies which resulted in a five-year probationary sentence and restitution of $534,462. Currently, Zornberg in his wife and former law partner, Judy Hirsch, are under indictment in Suffolk County on charges unrelated to the 2007 matter or the federal case, officials said.

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