The Real Deal New York

Judge orders NY Department of State to pay Mitchell Maxwell & Jackson’s legal fees

Court rules appraisal firm owed $115K over botched probe

November 01, 2016 05:04PM
By Rich Bockmann

From left: Jeffrey Jackson and Steven Knobel

From left: Jeffrey Jackson and Steven Knobel

The New York Department of State has been ordered to pay more than $115,000 in attorneys fees to the real estate appraisal firm Mitchell Maxwell & Jackson over a botched investigation by the former Secretary of State into allegedly phony appraisal documents that maimed the once-dominant company.

Meanwhile, Mitchell Maxwell & Jackson co-founders Steven Knobel and Jeffrey Jackson are pushing forward in a separate legal matter seeking $10 million in damages.

Knobel, who said he’s still waiting on the state to provide the investigator’s report that he believes will help make his case for damages, said the ruling on attorneys fees is encouraging.

“It’s always good to be proven right. It’s always nice when justice is served, so to speak,” he told The Real Deal. “But it’s the documents that are really the problem with them.”

Knobel said the state is late in providing documents the court ordered to be delivered by early October.

A spokesperson for the Department of State said the office doesn’t comment on ongoing litigation.

In September, Manhattan Supreme Court Justice Alice Schlesinger ordered former Secretary of State Cesar Perales – who at the time oversaw the state’s licensing division – to cough up $115,479.89 in attorneys fees after the judge ruled in 2014 that the appraisers’ licenses had been unfairly revoked. (Perales retired in February, and was succeeded by Rossana Rosado.)

“I did find a clear and serious violation of petitioners’ fundamental right to a fair hearing, preceded by adequate notice,” Schlesinger wrote in her September decision. “So I find pursuant to law that attorney’s fees are proper.”

The ordeal dates back to 2010, when the Department of State opened an investigation into claims that MMJ had allegedly attached phony signatures to appraisal documents.

The state based its probe on information provided by former star employee Marianne Mueller, who claimed MMJ had directed her electronic signature to be placed on appraisals she never reviewed.

While the case was ongoing, Knobel and Jackson had to fight to keep their appraisal licenses. As the firm lost major clients like Citibank, it shrunk from a company worth $9 million with 30 employees to a single employee, MMJ claimed.

But in 2014 Schlesinger annulled the decision to revoke the licenses, saying the state had failed to make a clear case about the charges against the appraisers, making it nearly impossible – and costly – to defend themselves.

“[T]he issues were complicated and the stakes very high. Counsel was fighting to preserve the reputation and livelihood of Steven Knobel and Jeffrey Jackson,” Schlesinger wrote in September.

MMJ is still in the midst of a claim they filed early last year, which seeks $10 million in damages from the state for the whole affair. The judge in that case has set a Dec. 5 deadline for the state Attorney General’s office to provide discovery documents MMJ requested.

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