Paul P. Marchese and Robin S. Maynard Diverted Funds from a Client’s Trust That Was Intended for Charity
New York Attorney General Letitia James today filed a civil complaint against two Long Island lawyers, Paul P. Marchese and Robin S. Maynard, of Manhasset, New York, who allegedly paid themselves more than $1 million in funds that were supposed to go to a charitable foundation created by their deceased client. The client established a trust for her assets, and when she died, those assets were supposed to be transferred to a foundation she created to support education, cultural activities, and provide food and shelter for people in need. The lawsuit alleges that after she died, Mr. Marchese — as the sole administrator of her trust — directed the trust to pay their law firm nearly $600,000 in fees, and both Mr. Marchese and Ms. Maynard — acting as the sole directors of the foundation — directed the charity to pay them more than $750,000 in salaries. Attorney General James’ suit seeks a court order to force Mr. Marchese and Ms. Maynard to repay the funds, along with interests and penalties.
“Acting in their own interests, these lawyers allegedly failed to grant their client’s dying wish and hurt a charitable cause in the process,” said Attorney General James. “New Yorkers must have trust in the individuals tasked with overseeing their affairs when they are no longer able to do so themselves. My office will continue to uphold the laws designed to protect the interests of our charitable organizations and hold accountable those who attempt to shirk their duties in order to line their pockets.”
An inquiry by the Office of the Attorney General (OAG) found that Mr. Marchese and Ms. Maynard abused their positions to enrich themselves and their law firm, Marchese & Maynard LLP. Mr. Marchese helped the client set up her foundation and a trust holding all of her assets — worth $2 million — the remainder of which would go to her foundation upon her death. She appointed Mr. Marchese to act as trustee upon her death and tasked him with transferring the funds to the foundation. Following the client’s death in 2008, Mr. Marchese directed the trust to pay the law firm $598,931.42. The lawyers could provide no records showing that the client owed them any legal fees.
Attorney General James also alleges that Mr. Marchese and Ms. Maynard, acting as sole directors of their client’s foundation, paid themselves salaries totaling $758,334. The governance of not-for-profit corporations must be overseen by a board with no fewer than three directors under New York law, and any compensation of directors must be approved by directors who have no conflicts of interest.
The complaint filed today also alleges that Mr. Marchese concealed the transfers from OAG by hiding the existence of the trust. Under New York law, fiduciaries of a trust holding charitable interests must register the trust with OAG’s Charities Bureau, and provide the office with a report of funds transferred out of the trust. Mr. Marchese never registered the trust with OAG and did not provide a report until 2019, after OAG had begun its inquiry, had learned there was a trust, and asked for an accounting.
Attorney General James’ action today seeks a court order directing Mr. Marchese and Ms. Maynard to repay the funds they received from their client’s estate and foundation, plus interest and financial penalties. Attorney General James also seeks to bar Mr. Marchese from serving as a fiduciary of an estate or a trust holding a charitable interest for a period of five years, and bar both individuals from serving as an officer, director, or trustee of a charitable organization for five years.
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