A tax attorney who had lived in New City has been arrested on charges of embezzling more than $3.5 million from a client, channeling the funds through a shell company and phony charities with the help of a New Rochelle accountant, and ultimately using part of the stolen money to buy a $3 million house in Southampton.
Steven M. Etkind, 57, was arrested on Feb. 21 and charged with conspiracy to defraud the United States, obstructing IRS laws and tax evasion from 2009 to 2012. He pleaded not guilty in federal court in Manhattan.
His attorney, Marc S. Gottlieb, said he was not at liberty to say anything about the case at this time.
Etkind was a partner at Sadis & Goldberg in Manhattan, where, according to a news release from the U.S. Attorney’s Office, he headed the law firm’s tax, trusts and estates group. He was also a certified public accountant but his license was inactive.
The indictment does not name Etkind’s co-conspirator but identifies him as a CPA who lives in Fairfield, Connecticut, and operates an accounting, auditing, and bookkeeping business in New Rochelle. It further identifies him as CEO of Damida Inc., a shell corporation formed as part of the scheme.
A state Division of Corporations record lists David L. Glass of Fairfield as Damida’s CEO.
The government said Etkind had done legal work for a successful entrepreneur who died in 2008. The client, who is not identified in the indictment, had named Etkind as co-executor of the $35 million estate.
The client wanted the estate to use the funds for two charities, to help animals and to help Jewish organizations.
Etkind and the co-conspirator set up several companies, trusts and bank accounts: United Jewish Education Fund, Education Support Foundation, Damida, JE Capital Holding Corp. Then they allegedly diverted funds from the estate and passed them through the various entities in a series of transactions.
For instance, they are accused of enlisting the help of a Hebrew school in Connecticut that is unnamed in the indictment for a “conditional donation.”
Etkind claimed that the IRS had delayed United Jewish Education Fund’s application for charitable status. He allegedly asked the school to accept a donation and then later refund it to the new charity. The director of the school agreed to help.
Etkind allegedly distributed $3.7 million to the school, and the school then distributed $3.5 million to United Jewish Education Fund and $60,000 to Damida.
Some of the trust money was transferred to JE Capital. In 2010, Etkind bought a 6,300-square-foot home in Southampton for $3 million the government said, and titled the property under JE Capital.
The government said Etkind concealed his theft by filing false tax returns for the corporations, charities and his personal income. He allegedly made false and misleading statement to IRS investigators who were auditing the charities and gave them backdated documents.
Etkind lived in New City, Rockland County, when the alleged scheme began, and then moved to New York City.
He was released from custody on a $500,000 bond.