“He wasn’t even an elegant thief”: Kossoff trustee seeks to claw back $18M

Mitch Kossoff used his law firm as a personal piggy bank to pay for things like a failed housing subdivision in upstate New York, loans to a real estate executive who helped him avoid personal bankruptcy and his $19,000-a-month East Side apartment.

Now, the lawyer in charge of compensating Kossoff’s victims is trying to claw back more than $18 million the convicted real estate attorney embezzled through his law firm.

Albert Togut, the trustee overseeing Kosoff PLLC’s bankruptcy, has filed 45 lawsuits over the past year seeking to recoup fraudulent payments Kossoff made over a period that stretches for roughly a decade. 

“I think our prospects are very good for recovering this money,” Togut told The Real Deal. “Kossoff left me a law firm with no assets and a lot of lawsuits, so I’m filing those lawsuits.”

The 69-year-old Kossoff is serving a prison sentence of up to 13.5 years after pleading guilty in late 2021 to stealing from more than a dozen clients through his firm’s escrow and operating accounts.

Soiled plan

Kossoff’s financial troubles date back to the early 2000s when he got involved in a doomed real estate project in Dutchess County about 100 miles north of Manhattan.

In 2005, Kossoff and a group of investors paid $2.2 million to buy a 112-acre lot in the town of Clinton Corners, which they planned to transform into a housing subdivision. 

But the project was “a complete failure,” according to Togut’s lawsuit, and the investors sold the property in 2012 for $1.7 million.

Kossoff laid the ground for a personal bankruptcy in 2011, but never filed. Instead, he created his law firm Kossoff PLLC in 2013 as part of a scheme to pay back his lenders and investors.

“Kossoff did not have enough of his own money, so he attempted to extinguish his personal debt to Farmview’s investors and lenders … by repaying them not with his own personal funds, but with funds that were the property of the [law firm and its] clients,” Togut’s filings said.

Costly lifeline 

In 2011, facing personal bankruptcy, Kossoff reached out to Michael Besen for help.

The founder and CEO of Besen Partners made a number of loans to Kossoff and his family’s failing packaging business to bail him out, and in 2016 the attorney began paying him back. 

Drawing from his law firm’s escrow and operating accounts, Kossoff made more than $2 million in payments to Besen between 2016 and 2021.

Besen knew Kossoff’s company was strapped for cash. And, Togut claims, as a sophisticated real estate executive he either knew or should have known that it was wrong for Kossoff to pay back these personal loans through the law firm’s accounts.

Togut accused Besen of aiding and abetting Kossoff’s fraud.

“Besen substantially aided and assisted Kossoff because it advanced Besen’s personal interests. Indeed, Besen had an extraordinary financial incentive to aid and abet Kossoff’s breaches of his duties to [the law firm] and to advance Kossoff’s improper activities.”

Besen filed a response in court denying the allegations. His attorney told The Real Deal that Besen is “disappointed and frustrated” by the situation, explaining he is a creditor with a claim of more than $1 million owed to him by Kossoff’s law firm.

“Mr. Besen, like many of the other defendants ensnared in these claw-back claims, feels that he and his companies have been victimized by Mr. Kossoff and the law firm that Mr. Kossoff exclusively owned and controlled during this 10-year period,” attorney Sean Southard wrote in an email.

Easy street

Kossoff also used his business accounts to fund his lavish lifestyle, and now Togut’s trying to get that money back for his victims.

Those include years’ worth of rent payments for his apartment at the Le Triomphe apartment tower at 245 East 58th Street, where Kossoff’s rent at one point topped $19,000 a month. Togut has sued the building’s owner, The Olnick Organization, to recoup more than $1.6 million.

A representative for Olnick declined to comment.

He’s going after Bank of America and American Express for credit card bills, and is trying to get back $100,000 that Kossoff’s wife spent at Bloomingdales. He even sued Colgate University, where Kossoff’s son went to college, for $170,000 in tuition the attorney paid for from company funds. 

Togut, known as “Big Al,” has a long track record of working on high-profile cases including the 2012 collapse of Dewey & LeBoeuf — the largest law firm bankruptcy in the U.S.

He said some trustees will go around and sue everyone in sight, but he’s been more selective in the cases he’s filed and is confident he can recover the money for Kossoff’s victims.

Togut said he’s worked on lots of complex bankruptcy cases, and thinks the Kossoff case is pretty humdrum.

“This guy was a thief and wasn’t even an elegant thief,” he said.

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