In re Fagan

Edward Fagan (defendant), an attorney, filed an action on behalf of the Association of Holocaust Victims for Restitution of Artwork & Masterpieces (AHVRAM) against Bank Austria Creditanstalt AG (Bank Austria), other financial institutions, and governmental entities, alleging theft, retention, and sale of artwork looted during the Holocaust. The district court dismissed the complaint for lack of federal jurisdiction and granted Bank Austria’s motion for sanctions under Federal Rule of Civil Procedure 11, finding that the action was frivolous and brought in bad faith to circumvent the settlement in another case against Bank Austria in which Fagan had participated. The court stated that Fagan was prosecuting actions against at least six governments or entities through AHVRAM, which did not exist; had filed pleadings containing flagrant misrepresentations; had engaged in champerty by purchasing interests in stolen artwork for the purpose of bringing lawsuits involving the artwork; and was unprepared and unprofessional. Fagan failed to pay the sanctions imposed by the court. The disciplinary committee (plaintiff) filed a petition requesting that the appellate division give collateral-estoppel effect to the district court’s findings and sanction Fagan. The appellate division granted the petition and concluded that Fagan had violated various disciplinary rules by acquiring a proprietary interest in the subject of the litigation; engaging in conduct involving dishonesty, fraud, misrepresentation, or deceit; and engaging in conduct that was prejudicial to the administration of justice, adversely reflected on Fagan’s fitness to practice, disregarded the court’s rulings, and violated established procedural rules. At the hearing to determine the sanction for Fagan’s conduct, Fagan was dilatory and disruptive and expressed no contrition. Fagan testified that his clients would suffer if he were sanctioned because no one would take over his victims’-rights cases; in fact, Fagan had been disqualified from one of the four cases he was working on, and the AHVRAM lawsuit had been dismissed. The hearing panel concluded that Fagan’s false submissions and knowing misrepresentations and other aggravating factors were sufficiently serious to warrant disbarment.