B’lyn state senator charged with embezzling foreclosure funds

A Brooklyn state senator who was overseeing foreclosure cases has been indicted for embezzling funds from the sales of those properties, the New York Daily News reported.

Senator John Sampson, a Democrat, was charged with embezzling $440,000 in escrow funds. Prosecutors told the Daily News that Sampson, an attorney, was appointed by Brooklyn judges to serve as a referee in several foreclosures. The case has sparked a Office of Court Administration review into how foreclosure sales are handled. “Clearly there is a statutory weakness that needs to be strengthened for greater accountability,” OCA spokesman David Bookstaver told the Daily News. “In the interim, we’re examining ways to add accountability.” 

Sampson was meant to receive the proceeds from sales of foreclosed properties and then pay off the mortgage, lawyers and other creditors. If any money remained, it was to be turned over to the homeowner. Beginning in 1998, however, prosecutors said that Sampson kept excess funds from the sales. Some of it was used in his 2005 unsuccessful run for Brooklyn district attorney, they added.

Courthouse insiders told the Daily News that no oversight existed in the process. “We rely on the referee to be truthful about the amount of surplus funds,” said Brooklyn County Clerk Nancy Sunshine. “The clerk has no authority to question that. It’s on the homeowner and creditor to check on what’s left over.” [NYDN] –Hiten Samtani