Jaeson Birnbaum has been a member of the New York Bar since the year 2003. Birnbaum founded a litigation finance firm named Cash4Cases Inc. Birnbaum’s investors made allegations against him for his involvement in a multi-million dollar securities fraud scheme.
Jaeson Birnbaum pleaded guilty to his involvement in the fraud and accepted the allegations against him, after which the New York court disbarred him from practice, and the federal court will pronounce the sentence in July 2022.
Lawyers associated with bar associations are obligated to act in compliance with the ethical code of conduct and follow the rules and regulations of their respective bar associations.
In this case, Birnbaum violated the ethical code of conduct, and his actions were repugnant to these rules. Given the allegations of involvement in a fraud scheme, the state Attorney Grievance Committee brought disciplinary proceedings against him. However, he refused to contest the disciplinary proceeding.
The litigation funding scheme case
In September 2021, Birnbaum pleaded guilty and submitted his confession for his involvement in the securities fraud scheme and the allegation brought against his litigation funding company Cash4Case Inc.
After pleading guilty to the charges made against him and his company, the New York Appeals Court provided that the conviction required automatic disbarment. Hence, his membership in the New York State Bar has been removed, and he has been disbarred from practicing law.
Attempts were made to reach Birnbaum for comments, but he was not available. His lawyer, representing him in the criminal case, Sam Braverman of Fasulo Braverman and Di Maggio, told news media that his client accepted responsibility at the first opportunity. The representatives from the Attorney Grievance Committee also refused to give any statement to the media regarding the matter.
A good industry used by some bad players
Litigation financing companies not only operate in New York, but they offer their services to almost every state in the United States. These funding companies provide pre-settlement funding to the claimants with meritorious claims to assist them in paying their medical bills and other financial liabilities. The funding provided by them helps claimants to pursue their cases and stand against businesses and corporations for the wrongs done to them.
In litigation finance arrangements, the claimants promise to pay a particular percentage of the settlement after successfully defending a case in a court of law. Alternatively, these funders have been gaining traction in the judicial system of the United States. However, like all industries, some individuals have been using their legal funding companies to make profits unlawfully, as the founder of Cash4Cases Inc.
According to the Manhattan prosecutors, Birnbaum has used his company to take cash for himself, despite telling investors that he was using funds to back the litigants. He allegedly obtained 3 million dollars in investments from 2017 to 2019. Due to these factors, the U.S. Securities and Exchange Commission filed a civil action against him. He agreed to a consent judgment to settle the issue.
The appeal court held that Birnbaum instructed his employee to falsify books and other records, so it looks like pending lawsuit settlements would be collateral to a new potential investing team. Whereas, in reality, these claims had already been settled and paid. Essentially, he provided false information with the intention to acquire money through deceiving means.
After his confession to the financial crime, his membership in the bar was revoked by the appeal court, and on July 7th, 2022, the federal court will pronounce the sentence for his involvement in the fraud scheme.
Burbaum’s case is before U.S. District Judge Paul Crotty in Manhattan. The court record shows that he may face imprisonment between 41 to 51 months in prison.