The dissolution of Mark Nussbaum’s former regulation agency Nussbaum Lowinger in some way retains getting uglier.
Sheldon Eisenberger, the legal professional overseeing Nussbaum Lowinger’s wind down since final June is firing photographs at Nussbaum, his private lawyer, and a restructuring officer, about two weeks after the agency filed for Chapter 11 bankruptcy in New York’s Southern District.
The chapter was seen by Nussbaum’s aspect as a method to expedite distributions to Nussbaum Lowinger’s collectors, after the choice to the chapter course of overseen by Eisenberger was deemed to be shifting too gradual. The transfer irked Eisenberger, who had an more and more strained relationship with Nussbaum and lately launched a lawsuit in opposition to Nussbaum’s private legal professional.
Eisenberger claims the chapter is nothing greater than a final ditch effort by Nussbaum to evade state courtroom proceedings.
“I imagine it’s clear that continuing additional with this chapter case could effectively enable the debtors’ principal the disgraced former legal professional and admitted Ponzi schemer Mark Nussbaum to proceed to defraud his collectors and to cover property that rightfully belong to these collectors,” stated Eisenberger in a brand new courtroom submitting.
Eisenberger’s response to Nussbaum’s chapter petitions transcend procedural motions. His filings reveal beforehand undisclosed particulars about Nussbaum’s alleged legal proceedings.
Nussbaum allegedly had intensive pre-indictment plea talks with the U.S. Division of Justice and is dealing with imminent federal legal fees, based on Eisenberger. Eisenberger additional claims Nussbaum carried out mortgage fraud in opposition to varied lenders on a large scale along with escrow fraud.
Nussbaum’s legal legal professional Zach Intrater didn’t return a request to remark.
Nussbaum Lowinger’s chapter lays naked the strain between Nussbaum, the as soon as scorching shot actual property lawyer, and Eisenberger, a industrial litigator at Anderson Killer with many years of expertise. Eisenberger, although finally appointed by Nussbaum, doesn’t work for or receives a commission by Nussbaum. His job is to behave as a fiduciary to begin litigation to repay collectors of Nussbaum’s property.
Collectors made up of former Nussbaum Lowinger purchasers, largely within the Orthodox Jewish group in New Jersey and New York, are owed over $400 million from Nussbaum’s former regulation companies.
Thus far, Eisenberger’s efforts have produced minimal outcomes. The lawyer and his group are nonetheless tracing precisely the place all the cash went. Nussbaum admitted in a courtroom submitting to diverting $336 million from his regulation companies to his deal associate Mendel Steiner and his household. However Steiner died in early 2025, and gathering on his property’s property has proved difficult. Nussbaum’s chapter now halts the ABC course of.
Nussbaum was generally known as the final word fixer. He used his regulation agency’s escrow accounts to supply bridge loans to actual property dealmakers. By early 2025, Nussbaum Lowinger purchasers alleged he refused to return escrow cash. Nussbaum closed his agency. After analyzing his choices, Nussbaum finally agreed to an ABC, a course of that’s way more opaque than chapter.
Eisenberger claims he’s made progress on settlements to return funds to collectors. He has commenced litigation in opposition to individuals who allegedly owed Nussbaum cash reminiscent of nursing house entrepreneur Tzali Chopp.
However Eisenberger alleges the gathering course of took a detour earlier this yr when he found that Nussbaum had turned over property to most popular collectors by way of the escrow account of his civil legal professional Ethan Kobre.
On March 19, Eisenberger initiated a lawsuit in opposition to Kobre. Eisenberger claims Kobre responded angrily, threatening authorized motion in opposition to Eisenberger and his regulation agency. Two founding companions of Kobre’s regulation agency Schwartz Sladkus Reich Greenberg and Atlas, pleaded with Eisenberger’s attorneys to discontinue the lawsuit, so they may tackle the problems raised, based on Eisenberger.
Two weeks in a while April 16, Mark J Nussbaum & Associates and Nussbaum Lowinger, have been put into chapter 11. Ephraim Diamond was employed because the chapter’s chief restructuring officer.
“This sequence of occasions – together with the absence of any reliable chapter function to those petitions makes it evident that the impact of this chapter continuing is to frustrate and halt my efforts to carry Nussbaum and Kobre to account for diverting property property and thereby persevering with to defraud the debtors’ collectors,” stated Eisenberger in a declaration.
A spokesperson for the debtor stated, “Any allegation or insinuation that Mr. Kobre acted improperly is patently false. The reality will likely be laid naked within the debtors’ response.”
Kobre will not be Eisenberger’s solely goal. He then turned his ire to Diamond, the restructuring officer of Nussbaum Lowinger’s chapter, claiming that he’s biased as a result of he’s the primary cousin of Samuel Lowinger, Nussbaum’s ex-law associate.
Eisenberger alleges Diamond minimized Nussbaum’s crimes in his declaration offered as a part of the chapter. In his declaration, Diamond described Nussbaum Lowinger as branching out from the apply of regulation into arduous cash lending, liquidity enhancement loans, and short-terms bridge loans.
“In a really restricted and overly literal sense, this assertion by Mr. Diamond is partially true. However the assertion is ‘true’ solely in the identical sense as, for instance, saying that Bernard Madoff ran an asset administration agency,” stated Eisenberger.
In actuality, Eisenberger stated, Nussbaum ran a multi-hundred million greenback Ponzi scheme by redirecting cash out of Nussbaum Lowinger’s escrow accounts to Steiner and others.
“Mr. Nussbaum has freely acknowledged that he dedicated fraud, and that consequently he expects that he’ll quickly be going to jail for a few years,” stated Eisenberger.
The central query for Eisenberger is whether or not he has the authorized authority to problem Nussbaum’s bankruptcies.
Eisenberger claims Nussbaum doesn’t have the authority to throw his defunct regulation companies into chapter 11, citing New York regulation. But, Diamond claims the ABC task will be terminated.
Collectors face one other urgent query. Which choice is healthier? The ABC has been a gradual course of, partially due to delays within the state courtroom. However progress has been ongoing for about ten months and Eisenberger has a default judgment for $336 million in opposition to two firms previously managed by Steiner. (Though Eisenberger has not collected on that judgment).
On the flip aspect, chapter might consolidate all of the circumstances into one case and one decide. In chapter, a debtor is meant to open their books. Thus the general public and collectors could have extra perception into Nussbaum Lowinger’s opaque monetary dealings, one thing Nussbaum doubtless initially sought to keep away from.
The bankruptcies is not going to cease the legal proceedings in opposition to Nussbaum. The disgraced lawyer is dealing with fees from the Manhattan District Lawyer’s workplace for grand larceny for allegedly diverting over $15 million in shopper escrow cash. Nussbaum has pleaded not responsible.
Learn extra
Nussbaum Lowinger files for Chapter 11 bankruptcy
Mark Nussbaum turns on former “bro” Tzali Chopp over unpaid debt
Mark Nussbaum begins bankruptcy alternative to pay off escrow clients
