The United States Law Week

N.Y. Attorney Suspended for Tax Fraud Earns Reinstatement

Jan. 17, 2019, 8:52 PM

A New York attorney suspended from the practice of law for three years for tax fraud will have her license reinstated.

While the felony that attorney Marla L. Stein committed was a serious crime, she has earned the right to reinstatement, a New York appeals court ruled.

The mitigating factors warranting reinstatement include a previously unblemished disciplinary history and the fact that she hasn’t practiced law for more than three years while under an interim suspension, the court said.

It also counts in her favor that the misconduct didn’t harm any of her clients, and that she fully cooperated with law enforcement and made full restitution, the court said.

Stein also accepted full responsibility for her misconduct, spent a year in prison, and paid more than $250,000 in interest and penalties to federal and state tax authorities, the court said.

In April 2015, Stein pleaded guilty to creating false tax documents, which she presented to the Internal Revenue Service in an effort to lower her tax liability.

Stein claimed false expenses on her tax return for commissions and fees purportedly incurred by her law practice and, falsely claimed personal expenses as legal expenses, including medical bills for a family member.

Although the IRS auditor ultimately disallowed over $37,000 in expenses related to Stein’s 2005 tax return, he allowed tens of thousands of dollars of fraudulently claimed expenses based on the false information she provided.

Stein also admitted to paying unreported cash wages to a domestic employee.

The case is Matter of Stein, N.Y. App. Div., No. M-5103, 1/17/19.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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