An estate lawyer who diverted $1.3 million from trust accounts – set up by an Orchard Park brother and sister to benefit charities – pleaded guilty Thursday to second-degree grand larceny, a felony, according to the state Attorney General’s Office.
As part of his plea in New York County Supreme Court, Stephen M. Newman, 71, will forfeit $800,000 and surrender his licenses to practice law in New York and Florida.
Newman, who once catered to wealthy clients from law offices in Amherst and Palm Beach County, Fla., is scheduled to be sentenced to four years’ probation on May 12.
The trust funds were set up by June and Worth Farrington, lifelong Orchard Park residents, to benefit charities. June Farrington was 84 when she died in 2008 and Worth Farrington was 87 when he died in 2014. Neither ever married or had children.
In 2007, Newman was retained by June and Worth Farrington as an estate planning attorney. Between 2007 and 2009, Newman revised the trusts and changed the outright gifts to charities into annuities and made himself the sole trustee.
As sole trustee, between November 2008 and November 2011, Newman diverted more than $900,000 from the Farringtons’ trust accounts to himself. Additionally, Newman diverted more than $400,000 to Joan M. Morgante, a home aide he introduced to the Farringtons, according to the state Attorney General’s Office.
Morgante, 76, of Cheektowaga, pleaded guilty Thursday in State Supreme Court in Buffalo to second-degree attempted grand larceny, a felony, for her part in the scheme. Morgante is scheduled to be sentenced to five years’ probation when she appears before Justice John L. Michalski on June 15.
“When individuals abuse the trust of elderly New Yorkers, they will face prosecution and they will be held accountable,” Attorney General Eric T. Schneiderman said.
Newman arranged for Morgante to work for the elderly siblings beginning in 2006. The Farringtons were worth an estimated $20 million at that time.
Morgante, who met Newman while caring for another of his clients, had little training as a caregiver, according to an affidavit signed by Morgante and filed in Surrogate’s Court. The high school dropout worked as a geriatric “companion” and held no health care certifications.
A legal battle between the charities and Newman erupted in Erie County Surrogate’s Court following June Farrington’s death. She established a trust in 1999 from money she inherited from her father’s hand-tool fortune, intending to leave all of her assets to three charities upon her death – the Community Foundation for Greater Buffalo, the Nature Conservancy and the Women & Children’s Hospital of Buffalo Foundation.
So when she died in 2008, her favored charities counted on sharing about $8 million.
Instead, they found themselves in a pitched battle with Newman. At the time, the charities’ attorneys accused Newman of masterminding a “wrongful scheme” to steer the money to himself and the home aide by changing Farrington’s will.
In 2012, Newman agreed to pay back $410,000 as part of a settlement in Surrogate’s Court. Newman also resigned as executor and trustee of all of the estates and trusts he set up for the elderly Orchard Park siblings. The settlement did not require Newman to admit to wrongdoing.
In 2011, a state attorney general investigator concluded Newman and Morgante engaged in “a pattern of improper conduct” as they financially exploited three elderly people for whom they worked, court records reveal.
Investigator Kenneth Peters, in a 2011 affidavit, said the will of June Farrington was changed 10 days before she died.
And a will for Worth Farrington named Morgante sole beneficiary of his estate – worth more than $6 million – and provided $325,000 to buy an Amherst townhouse in which Morgante lived.
“Mr. Farrington does not possess the necessary capacity to understand and protect himself and his assets,” Peters said.
Morgante, then 72, had been Farrington’s caregiver in his Orchard Park home for four years. In the fall of 2011, headed to Amherst Town Hall to get a marriage license. Morgante, in a November 2011 affidavit, said she did not know she was the sole beneficiary of Mr. Farrington’s estate until she read Peters’ affidavit.
“Within the past year … Mr. Farrington became more adamant about the two of us marrying,” she said in her affidavit.
The clerk refused to issue the marriage license because Farrington could not answer questions about his birth date, address, Social Security number and the name of the person he wished to marry, according to Surrogate’s Court records.
“Why are you here?” the clerk asked. To get a driver’s license, Farrington replied.