Preview
FILED: NASSAU COUNTY CLERK 09/10/2015 06:49 PM INDEX NO. 600821/2012
NYSCEF DOC. NO. 189 RECEIVED NYSCEF: 09/10/2015
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
Index No.: 600821/2012
VION HOLDINGS LLC
Plaintiff,
- against -
NAQIY MEDICAL SERVICES, P.C.,
SAMUEL WALTERS, M.D., JOHN
MAURELLO, D.C., JOHN DOES 1 – 20, JANE
DOES 1 – 20, ABC PARTNERSHIPS 1 – 20,
and XYZ CORPORATIONS 1 - 20
Defendants.
______________________________________________________________________________
MEMORANDUM IN SUPPORT OF MOTION TO BAR AND DISQUALIFY
MATTHEW CONROY, ESQ. AND HIS FIRM FROM REPRESENTING OR ADVISING
JOHN MAURELLO IN THIS CASE
______________________________________________________________________________
PRELIMINARY STATEMENT
This Memorandum of Law is respectfully submitted in support of the motion to bar
Matthew Conroy from advising or representing John Maurello (“Defendant” or “Maurello”) in
this case.
To date, Maurello has been represented by Harold Levy, Esq., counsel to the firm of
Quadrino Schwartz. Recently, the named partners in Quadrino Schwartz separated into two
separate, unconnected firms: Quadrino Law Group and Schwartz Law, P.C. Notwithstanding
that separation, Harold Levy, Esq. has continued to represent Maurello; at first through the firm
of Quadrino Schwartz and now through Schwartz Law, P.C., the successor firm that has
continued Maurello’s representation. Recently, on August 13, 2015, Maurello’s counsel filed
consent to change attorneys from Quadrino Schwartz to Schwartz Law, P.C.
Although a notice of representation has not been entered and there was no prior notice to
the Court or Vion’s counsel, it appears Matthew Conroy is attempting to step in as counsel for
Maurello. It further appears that Matthew Conroy may now be a part of the Schwartz Law, P.C.
legal team. Due to serious conflicts of interest, Matthew Conroy cannot represent Maurello in
this case, and in fact such attempted representation violates the Rules of Professional Conduct.
Further, to the extent Mr. Conroy is now part of Schwartz Law, P.C. the firm too must be
removed as Maurello’s counsel, and Maurello should either continue his representation with
Quadrino Law Group or retain other counsel.
Mr. Conroy has not entered an appearance in this case for or on behalf of Maurello. It
appears however that he is now a part of the legal team at Schwartz Law, P.C. This has become
clear because a notice of deposition for plaintiff’s expert from Schwartz Law, P.C. was signed by
Mr. Conroy, and the Schwartz Law, P.C. website identifies Mr. Conroy as part of its legal team.
1
DISCUSSION
Matthew Conroy, Esq. and Schwartz Law, P.C., if and to the extent Mr. Conroy is now a
part of the legal team at that firm, should be disqualified from representing defendant
John Maurello in this case.
The issue before the court on this motion is whether or not Mr. Conroy who has
previously represented co-defendants Naqiy Medical Services, P.C. (“Naqiy”), and Samuel
Walters, M.D. (“Walters”) with respect to the same exact issues that are the subject of this civil
litigation may now represent the third defendant, John Maurello, whose interest conflicts with
Naqiy and Walters.
Factual allegations in this Case
Through case management and summary judgment motion, the Court has an extensive
history on this case.1 Therefore, rather than provide a detailed history, by way of brief
background, Vion alleges that Maurello (who is a chiropractic doctor and not a medical doctor)
was the owner and operator of an illegal medical practice that operated under the name of Naqiy
Medical Services, P.C. (“Naqiy”). Maurello had represented himself to be the owner of Naqiy in
all meetings, communications, and negotiations with Vion that had spanned over several months.
Maurello had also represented that his companies, one of which was Naqiy, provided mobile
diagnostic services to motor vehicle accident victims, and billed for those services through New
York’s no-fault insurance plans.
During those same meetings and communications, Maurello had also represented to Vion
that because his operations provided medical diagnostic testing, he needed to partner with, and
1
To the extent additional factual history may be helpful, copies of two affidavits submitted by
Vion in opposition to Maurello’s prior summary judgment motion and Vion’s Statement of Facts
from the summary judgment motion, without their exhibits, are attached as Exhibits 1 through 3
to Affirmation of Vafa Sarmasti, (“Sarmasti Aff.”), the combination of which sets forth in
greater detail the factual allegations and issues in this case.
2
have a medical doctor involved with his operations as a medical director that supervised the
employed medical doctors and the medical testing that was being performed. Maurello’s
statements in that regard however were false. Unknown to Vion and contrary to Maurello’s
representations, Walters did not supervise any medical doctors or diagnostic testing, and in fact
did not play any substantive role in Naqiy. Rather, Maurello was secretly operating all aspects of
Naqiy’s operations, and contrary to Maurello’s representations to Vion, Walters’ involvement in
Naqiy was solely to conceal Maurello’s unlawful ownership and control in Naqiy from law
enforcement and from the insurance companies to which claims were being submitted under
Naqiy.
Based on Maurello’s misrepresentations, for the months that followed, Vion gave over
$2.5 Million to Naqiy for substantially all of its medical receivables after meetings,
communications, and negotiations with Maurello, during all of which Maurello had at all times
represented himself as the owner of Naqiy, and misrepresented the reasons for and Walters’
actual role and involvement in Naqiy.
As part of its case against Maurello, Vion further alleges that in order to establish and
operate Naqiy as a medical practice, Maurello had paid Walters, a medical doctor, for the use of
his name and medical license. Maurello operated Naqiy from the basement of his house.
Maurello used Walters’ signature stamp to submit fraudulent receivables to insurance companies,
the same receivables it transferred to Vion. Maurello also used Walter’s signature stamp to sign
Walters’ name on Naqiy checks to pay for Maurello’s personal expenses and the personal
expenses of his family members such as automobile insurance payments, home telephone, home
cable and electric bills, life insurance, his children’s COBRA insurance payments, etc.
3
Important for purposes of this motion is that Maurello has defended against Vion’s
allegations by claiming that it was Naqiy and Walters (Mr. Conroy’s former clients) that
defrauded Vion, not Maurello.
Mr. Conroy’s prior representation and involvement with Naqiy and Walters
Mr. Conroy had been Naqiy and Walters’ (not Maurello’s) attorney as to the same
insurance receivables for which Vion had paid more than $2.5 Million during the time that Naqiy
was in operations. Mr. Conroy’s involvement and representations of Naqiy and Walters was not
minor and inconsequential, but rather significant and meaningful. For instance, Mr. Conroy had
represented Naqiy and Walters in communications with insurance companies relating to the same
receivables that are at issue in this case.
But even more importantly, Mr. Conroy had also represented Dr. Walters and Naqiy in at
least two examinations under oath (“EUO”) of Dr. Walters that were conducted by Allstate
Insurance Company and by MetLife/Statewide Insurance Company on March 9, 2011, and
March 16, 2011, respectively. Copies of the first few pages of the EUO transcripts for the two
EUOs are attached to the accompanying Sarmasti Aff. as Exhibits 4 and 5, respectively.
Equally important as the EUOs, Mr. Conroy had also represented Naqiy and Walters (not
Maurello) in several lawsuits by insurance companies regarding the same issues involved in this
case. At least two of the lawsuits by the insurance companies in which Mr. Conroy represented
Naqiy and Walters were: (1) Nationwide Insurance Comp. of America et al. v. Bradford Medical
Diagnostic, P.C. et al., Index No. 019491-2010 (N.Y. Sup. Ct., Nassau) (“Nationwide Case”);
and (2) GEICO et al. v. Maurello et al., Index No., 116518-2010 (N.Y. Sup. Ct., New York)
(“GEICO Case”). A copy of a Notice of Motion to Dismiss that Mr. Conroy filed on behalf of
Walters and Naqiy in the Nationwide Case evidencing Mr. Conroy’s representation of Walters
4
and Naqiy is attached as Exhibit 6 to Sarmasti Aff. A copy of a Notice of Motion to Dismiss
that Mr. Conroy filed on behalf of Walters, Naqiy and several other defendants he represented in
the GEICO Case (but not Maurello), evidencing Mr. Conroy’s representation of Walters and
Naqiy is attached as Exhibit 7 to Sarmasti Aff.
Mr. Conroy now wants to join the Maurello defense team in his case against his former
clients, Walters and Naqiy, relating to the same facts as to which Mr. Conroy represented and
advised his former clients.
What makes Mr. Conroy’s disqualification here even more compelling (and distances it
further from the norm) is that Mr. Conroy was previously one of approximately 40 co-defendants
in the criminal case titled U.S. v. Zemlyansky et al., 12-cr-0171 (S.D.N.Y.) (“Criminal Action”).
The Government’s indictment against Mr. Conroy in the criminal action is attached as Exhibit 8
to the accompanying Sarmasti Aff. Maurello is also a defendant in the same Criminal Action.
The Government’s indictment against Maurello in the Criminal Action is attached as Exhibit 9 to
the accompanying Sarmasti Aff.
Mr. Conroy was a defendant in the criminal case in large part because of the same issues
that are involved in this case – namely, the allegations against Mr. Conroy were that he
represented and advised/assisted the alleged owners (such as Maurello) and alleged front-men
(such as Walters) of these alleged fraudulent no-fault clinics (such as Naqiy) in their unlawful
activities. In the Criminal Action, Walters testified for the government against Mr. Conroy. A
copy of the transcript of Walters’ testimony in the Criminal Action against Mr. Conroy is
attached to Sarmasti Aff., as Exhibit 10.
Mr. Conroy now looks to represent Maurello in this case and attempt to inculpate his
former clients, Naqiy and Walters, for Vion’s losses in favor of and to the benefit of Maurello.
5
Indeed, Mr. Conroy may be blinded to the extraordinary nature of his conduct by thoughts of
revenge against his former client, Walters, for testifying against Mr. Conroy in the criminal
action.
Mr. Conroy’s representation of Maurello in this case violates the Rules of Professional Conduct
and therefore should not be permitted
Rule 1.9 of the Rules of Professional Conduct provides:
(a) A lawyer who has formerly represented a client in a matter shall not thereafter
represent another person in the same or a substantially related matter in which that
person’s interests are materially adverse to the interests of the former client unless
the former client gives informed consent, confirmed in writing.
(b) Unless the former client gives informed consent, confirmed in writing, a lawyer
shall not knowingly represent a person in the same or a substantially related
matter in which a firm with which the lawyer formerly was associated had
previously represented a client:
1. Whose interests are materially adverse to that person; and
2. About whom the lawyer had acquired information protected by
Rules 1.6 of paragraph (c) of this Rule that is material to the
matter.
(c) A lawyer who has formerly represented a client in a matter or whose present or
former firm has formerly represented a client in a matter shall not thereafter:
1. Use confidential information of the former client protected by Rule
1.6 to the disadvantage of the former client, except as these Rules
would permit or require with respect to a current client or when the
information has become generally known; or
6
2. Reveal confidential information of the former client protected by
Rule 1.6 except as these Rules would permit or require with
respect to a current client.
Rule 1.10 of the Rules of Professional Conduct provides in relevant part:
(a) While lawyers are associated in a firm, none of them shall knowingly represent a
client when any one of them practicing alone would be prohibited from doing so by
Rule 1.7, 1.8 or 1.9, except as otherwise provided herein.
(b) When a lawyer has terminated as association with a firm, the firm is prohibited from
thereafter representing a person with interests that the firm knows or reasonably
should know are materially adverse to those of a client represented by the formerly
associated lawyer and not currently represented by the firm if the firm or any lawyer
remaining in the firm has information protected by Rule 1.6 or Rule 1.9(c) that is
material to the matter.
(c) When a lawyer becomes associated with a firm, the firm may not knowingly represent
a client in a matter that is the same as or substantially related to a matter in which the
newly associated lawyer, or a firm with which that lawyer was associated, formerly
represented a client whose interests are materially adverse to the prospective or
current client unless the newly associated lawyer did not acquire any information
protected by Rule 1.6 or Rule 1.9(c) that is material to the current matter.
(d) A disqualification prescribed by this Rule may be waived by the affected client or
former client under the conditions stated in Rule 1.7.
It is well-settled that the disqualification of an attorney is a matter that rests within the
sound discretion of the court. Matter of Town of Oyster Bay v. 55 Motor Ave. Co., LLC, 109
AD3d 549, 550 (2nd Dept. 2013). Furthermore, the burden is on the party moving for
disqualification to prove the existence of a prior attorney-client relationship with the movant, that
the matters involved in both representations are substantially related, and that the interests of the
7
present client and former client are materially adverse. Id.; Gussack v. Goldberg, 248 AD2d
671, 672 (2nd Dept. 1998). We note a majority of cases in New York have held that a party
seeking the disqualification of an attorney has to have had a prior attorney-client relationship
with the attorney it seeks to disqualify. If it does not, it lacks standing to seek the attorney’s
disqualification.
Several courts however have noted that in instances where Rules of Professional Conduct
are at issue, there is an overriding and far more important principal in play, and lack of standing
should not be a bar to an application to disqualify an attorney. In the Matter of Abrams, 62
N.Y.2d 183 (1984), in considering an application to disqualify an attorney by a movant that had
no prior attorney-client relationship with the attorney, the Court factored into its decision and in
fact ruled that a “court’s duty to protect the integrity of the judicial system and preserve the
ethical standards of the legal profession [emphasis added]” should be considered as part of the
analysis. In re Abrams at 197. In Rosen v. Rosen, 5 Misc. 3d 1031(A), 799 N.Y.S.2d 163 (N.Y.
Sup. Ct., Suffolk, January 6, 2003), the court held that a “[l]ack of standing, where a conflict of
interest is demonstrated, must … be subsumed by a broader protection that adequately ensures
both clients and the general public that lawyers will act within the bounds of ethical conduct.” In
Lane Apartments Inc. v. Green, 21 Misc. 3d 480 (N.Y. Sup. Ct., Bronx, August 18, 2008), citing
to DR 1-103(A), the court noted that the Rules of Professional Conduct “confers standing on any
attorney to challenge a lawyer’s representation of a client.” Lane Apartments Inc. at 491 quoting
SMI Indus. Canada Ltd. v. Caelter Indus., 586 F. Supp. 808, 815 (N.D.N.Y. 1984).
It is respectfully submitted that those courts have correctly noted that a lack of standing
must not interfere with the broader protection to adequately reassure clients and the general
8
public, that where conduct of an attorney will violate a Rule of Professional Conduct, formalities
such as standing will not prevent the court from considering the motion to disqualify.
Mr. Conroy’s intention to represent Maurello in this action, given Mr. Conroy’s
significant prior involvement as attorney for Walters and Naqiy, coupled with the fact Walters
testified against Mr. Conroy in the Criminal Action (which is an added extraordinary
circumstance), concerns the Rules of Professional Conduct. There is no shortage of clients and
cases, and the fact that Mr. Conroy intends to become involved in this case in order to represent
Maurello to the detriment of his former clients should shock one’s conscience. Such act, if
permitted, will certainly erode the public’s confidence in the profession and the judicial process,
and in addition, violate the Rules of Professional Conduct.
As noted above, Mr. Conroy’s representation of Naqiy and Walters was significant and
entailed disclosure of confidences relating to the same matters that are at issue in this case. Mr.
Conroy cannot now attempt to represent Maurello in this case to the detriment of Walters and
Naqiy.
For the foregoing reasons, Vion and its counsel respectfully request that their motion
seeking to disqualify Mr. Conroy from representing Maurello in this case be granted, and to the
extent Maurello is now a part of the legal team at Schwartz Law, P.C., that the firm too be
disqualified from representing Maurello.
9
CONCLUSION
It is respectfully requested that the Court enter an Order barring and disqualifying
Matthew Conroy, and to the extent necessary, the firm of Schwartz Law, P.C., from representing
or advising Maurello in this case.
Dated: Fairfield, New Jersey
September 10, 2015
Respectfully submitted,
_____________________________
Vafa Sarmasti, Esq.
vafa@sarmastipllc.com
SARMASTI PLLC
Attorneys for Plaintiff Vion Holdings LLC
729 Seventh Avenue, 17th Floor
New York, NY 10019
Telephone (212) 736-9119
Facsimile (212) 736-3820
To: Harold J. Levy, Esq.
Schwartz Law, P.C.
Attorneys for defendant John Maurello, D.C.
666 Old Country Road, Ninth Floor
Garden City, New York 11530
Telephone (516) 745-1122
Facsimile (516) 745-0844
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Preview
FILED: NASSAU COUNTY CLERK 09/10/2015 06:49 PM INDEX NO. 600821/2012 NYSCEF DOC. NO. 189 RECEIVED NYSCEF: 09/10/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU Index No.: 600821/2012 VION HOLDINGS LLC Plaintiff, - against - NAQIY MEDICAL SERVICES, P.C., SAMUEL WALTERS, M.D., JOHN MAURELLO, D.C., JOHN DOES 1 – 20, JANE DOES 1 – 20, ABC PARTNERSHIPS 1 – 20, and XYZ CORPORATIONS 1 - 20 Defendants. ______________________________________________________________________________ MEMORANDUM IN SUPPORT OF MOTION TO BAR AND DISQUALIFY MATTHEW CONROY, ESQ. AND HIS FIRM FROM REPRESENTING OR ADVISING JOHN MAURELLO IN THIS CASE ______________________________________________________________________________ PRELIMINARY STATEMENT This Memorandum of Law is respectfully submitted in support of the motion to bar Matthew Conroy from advising or representing John Maurello (“Defendant” or “Maurello”) in this case. To date, Maurello has been represented by Harold Levy, Esq., counsel to the firm of Quadrino Schwartz. Recently, the named partners in Quadrino Schwartz separated into two separate, unconnected firms: Quadrino Law Group and Schwartz Law, P.C. Notwithstanding that separation, Harold Levy, Esq. has continued to represent Maurello; at first through the firm of Quadrino Schwartz and now through Schwartz Law, P.C., the successor firm that has continued Maurello’s representation. Recently, on August 13, 2015, Maurello’s counsel filed consent to change attorneys from Quadrino Schwartz to Schwartz Law, P.C. Although a notice of representation has not been entered and there was no prior notice to the Court or Vion’s counsel, it appears Matthew Conroy is attempting to step in as counsel for Maurello. It further appears that Matthew Conroy may now be a part of the Schwartz Law, P.C. legal team. Due to serious conflicts of interest, Matthew Conroy cannot represent Maurello in this case, and in fact such attempted representation violates the Rules of Professional Conduct. Further, to the extent Mr. Conroy is now part of Schwartz Law, P.C. the firm too must be removed as Maurello’s counsel, and Maurello should either continue his representation with Quadrino Law Group or retain other counsel. Mr. Conroy has not entered an appearance in this case for or on behalf of Maurello. It appears however that he is now a part of the legal team at Schwartz Law, P.C. This has become clear because a notice of deposition for plaintiff’s expert from Schwartz Law, P.C. was signed by Mr. Conroy, and the Schwartz Law, P.C. website identifies Mr. Conroy as part of its legal team. 1 DISCUSSION Matthew Conroy, Esq. and Schwartz Law, P.C., if and to the extent Mr. Conroy is now a part of the legal team at that firm, should be disqualified from representing defendant John Maurello in this case. The issue before the court on this motion is whether or not Mr. Conroy who has previously represented co-defendants Naqiy Medical Services, P.C. (“Naqiy”), and Samuel Walters, M.D. (“Walters”) with respect to the same exact issues that are the subject of this civil litigation may now represent the third defendant, John Maurello, whose interest conflicts with Naqiy and Walters. Factual allegations in this Case Through case management and summary judgment motion, the Court has an extensive history on this case.1 Therefore, rather than provide a detailed history, by way of brief background, Vion alleges that Maurello (who is a chiropractic doctor and not a medical doctor) was the owner and operator of an illegal medical practice that operated under the name of Naqiy Medical Services, P.C. (“Naqiy”). Maurello had represented himself to be the owner of Naqiy in all meetings, communications, and negotiations with Vion that had spanned over several months. Maurello had also represented that his companies, one of which was Naqiy, provided mobile diagnostic services to motor vehicle accident victims, and billed for those services through New York’s no-fault insurance plans. During those same meetings and communications, Maurello had also represented to Vion that because his operations provided medical diagnostic testing, he needed to partner with, and 1 To the extent additional factual history may be helpful, copies of two affidavits submitted by Vion in opposition to Maurello’s prior summary judgment motion and Vion’s Statement of Facts from the summary judgment motion, without their exhibits, are attached as Exhibits 1 through 3 to Affirmation of Vafa Sarmasti, (“Sarmasti Aff.”), the combination of which sets forth in greater detail the factual allegations and issues in this case. 2 have a medical doctor involved with his operations as a medical director that supervised the employed medical doctors and the medical testing that was being performed. Maurello’s statements in that regard however were false. Unknown to Vion and contrary to Maurello’s representations, Walters did not supervise any medical doctors or diagnostic testing, and in fact did not play any substantive role in Naqiy. Rather, Maurello was secretly operating all aspects of Naqiy’s operations, and contrary to Maurello’s representations to Vion, Walters’ involvement in Naqiy was solely to conceal Maurello’s unlawful ownership and control in Naqiy from law enforcement and from the insurance companies to which claims were being submitted under Naqiy. Based on Maurello’s misrepresentations, for the months that followed, Vion gave over $2.5 Million to Naqiy for substantially all of its medical receivables after meetings, communications, and negotiations with Maurello, during all of which Maurello had at all times represented himself as the owner of Naqiy, and misrepresented the reasons for and Walters’ actual role and involvement in Naqiy. As part of its case against Maurello, Vion further alleges that in order to establish and operate Naqiy as a medical practice, Maurello had paid Walters, a medical doctor, for the use of his name and medical license. Maurello operated Naqiy from the basement of his house. Maurello used Walters’ signature stamp to submit fraudulent receivables to insurance companies, the same receivables it transferred to Vion. Maurello also used Walter’s signature stamp to sign Walters’ name on Naqiy checks to pay for Maurello’s personal expenses and the personal expenses of his family members such as automobile insurance payments, home telephone, home cable and electric bills, life insurance, his children’s COBRA insurance payments, etc. 3 Important for purposes of this motion is that Maurello has defended against Vion’s allegations by claiming that it was Naqiy and Walters (Mr. Conroy’s former clients) that defrauded Vion, not Maurello. Mr. Conroy’s prior representation and involvement with Naqiy and Walters Mr. Conroy had been Naqiy and Walters’ (not Maurello’s) attorney as to the same insurance receivables for which Vion had paid more than $2.5 Million during the time that Naqiy was in operations. Mr. Conroy’s involvement and representations of Naqiy and Walters was not minor and inconsequential, but rather significant and meaningful. For instance, Mr. Conroy had represented Naqiy and Walters in communications with insurance companies relating to the same receivables that are at issue in this case. But even more importantly, Mr. Conroy had also represented Dr. Walters and Naqiy in at least two examinations under oath (“EUO”) of Dr. Walters that were conducted by Allstate Insurance Company and by MetLife/Statewide Insurance Company on March 9, 2011, and March 16, 2011, respectively. Copies of the first few pages of the EUO transcripts for the two EUOs are attached to the accompanying Sarmasti Aff. as Exhibits 4 and 5, respectively. Equally important as the EUOs, Mr. Conroy had also represented Naqiy and Walters (not Maurello) in several lawsuits by insurance companies regarding the same issues involved in this case. At least two of the lawsuits by the insurance companies in which Mr. Conroy represented Naqiy and Walters were: (1) Nationwide Insurance Comp. of America et al. v. Bradford Medical Diagnostic, P.C. et al., Index No. 019491-2010 (N.Y. Sup. Ct., Nassau) (“Nationwide Case”); and (2) GEICO et al. v. Maurello et al., Index No., 116518-2010 (N.Y. Sup. Ct., New York) (“GEICO Case”). A copy of a Notice of Motion to Dismiss that Mr. Conroy filed on behalf of Walters and Naqiy in the Nationwide Case evidencing Mr. Conroy’s representation of Walters 4 and Naqiy is attached as Exhibit 6 to Sarmasti Aff. A copy of a Notice of Motion to Dismiss that Mr. Conroy filed on behalf of Walters, Naqiy and several other defendants he represented in the GEICO Case (but not Maurello), evidencing Mr. Conroy’s representation of Walters and Naqiy is attached as Exhibit 7 to Sarmasti Aff. Mr. Conroy now wants to join the Maurello defense team in his case against his former clients, Walters and Naqiy, relating to the same facts as to which Mr. Conroy represented and advised his former clients. What makes Mr. Conroy’s disqualification here even more compelling (and distances it further from the norm) is that Mr. Conroy was previously one of approximately 40 co-defendants in the criminal case titled U.S. v. Zemlyansky et al., 12-cr-0171 (S.D.N.Y.) (“Criminal Action”). The Government’s indictment against Mr. Conroy in the criminal action is attached as Exhibit 8 to the accompanying Sarmasti Aff. Maurello is also a defendant in the same Criminal Action. The Government’s indictment against Maurello in the Criminal Action is attached as Exhibit 9 to the accompanying Sarmasti Aff. Mr. Conroy was a defendant in the criminal case in large part because of the same issues that are involved in this case – namely, the allegations against Mr. Conroy were that he represented and advised/assisted the alleged owners (such as Maurello) and alleged front-men (such as Walters) of these alleged fraudulent no-fault clinics (such as Naqiy) in their unlawful activities. In the Criminal Action, Walters testified for the government against Mr. Conroy. A copy of the transcript of Walters’ testimony in the Criminal Action against Mr. Conroy is attached to Sarmasti Aff., as Exhibit 10. Mr. Conroy now looks to represent Maurello in this case and attempt to inculpate his former clients, Naqiy and Walters, for Vion’s losses in favor of and to the benefit of Maurello. 5 Indeed, Mr. Conroy may be blinded to the extraordinary nature of his conduct by thoughts of revenge against his former client, Walters, for testifying against Mr. Conroy in the criminal action. Mr. Conroy’s representation of Maurello in this case violates the Rules of Professional Conduct and therefore should not be permitted Rule 1.9 of the Rules of Professional Conduct provides: (a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing. (b) Unless the former client gives informed consent, confirmed in writing, a lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client: 1. Whose interests are materially adverse to that person; and 2. About whom the lawyer had acquired information protected by Rules 1.6 of paragraph (c) of this Rule that is material to the matter. (c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter: 1. Use confidential information of the former client protected by Rule 1.6 to the disadvantage of the former client, except as these Rules would permit or require with respect to a current client or when the information has become generally known; or 6 2. Reveal confidential information of the former client protected by Rule 1.6 except as these Rules would permit or require with respect to a current client. Rule 1.10 of the Rules of Professional Conduct provides in relevant part: (a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rule 1.7, 1.8 or 1.9, except as otherwise provided herein. (b) When a lawyer has terminated as association with a firm, the firm is prohibited from thereafter representing a person with interests that the firm knows or reasonably should know are materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm if the firm or any lawyer remaining in the firm has information protected by Rule 1.6 or Rule 1.9(c) that is material to the matter. (c) When a lawyer becomes associated with a firm, the firm may not knowingly represent a client in a matter that is the same as or substantially related to a matter in which the newly associated lawyer, or a firm with which that lawyer was associated, formerly represented a client whose interests are materially adverse to the prospective or current client unless the newly associated lawyer did not acquire any information protected by Rule 1.6 or Rule 1.9(c) that is material to the current matter. (d) A disqualification prescribed by this Rule may be waived by the affected client or former client under the conditions stated in Rule 1.7. It is well-settled that the disqualification of an attorney is a matter that rests within the sound discretion of the court. Matter of Town of Oyster Bay v. 55 Motor Ave. Co., LLC, 109 AD3d 549, 550 (2nd Dept. 2013). Furthermore, the burden is on the party moving for disqualification to prove the existence of a prior attorney-client relationship with the movant, that the matters involved in both representations are substantially related, and that the interests of the 7 present client and former client are materially adverse. Id.; Gussack v. Goldberg, 248 AD2d 671, 672 (2nd Dept. 1998). We note a majority of cases in New York have held that a party seeking the disqualification of an attorney has to have had a prior attorney-client relationship with the attorney it seeks to disqualify. If it does not, it lacks standing to seek the attorney’s disqualification. Several courts however have noted that in instances where Rules of Professional Conduct are at issue, there is an overriding and far more important principal in play, and lack of standing should not be a bar to an application to disqualify an attorney. In the Matter of Abrams, 62 N.Y.2d 183 (1984), in considering an application to disqualify an attorney by a movant that had no prior attorney-client relationship with the attorney, the Court factored into its decision and in fact ruled that a “court’s duty to protect the integrity of the judicial system and preserve the ethical standards of the legal profession [emphasis added]” should be considered as part of the analysis. In re Abrams at 197. In Rosen v. Rosen, 5 Misc. 3d 1031(A), 799 N.Y.S.2d 163 (N.Y. Sup. Ct., Suffolk, January 6, 2003), the court held that a “[l]ack of standing, where a conflict of interest is demonstrated, must … be subsumed by a broader protection that adequately ensures both clients and the general public that lawyers will act within the bounds of ethical conduct.” In Lane Apartments Inc. v. Green, 21 Misc. 3d 480 (N.Y. Sup. Ct., Bronx, August 18, 2008), citing to DR 1-103(A), the court noted that the Rules of Professional Conduct “confers standing on any attorney to challenge a lawyer’s representation of a client.” Lane Apartments Inc. at 491 quoting SMI Indus. Canada Ltd. v. Caelter Indus., 586 F. Supp. 808, 815 (N.D.N.Y. 1984). It is respectfully submitted that those courts have correctly noted that a lack of standing must not interfere with the broader protection to adequately reassure clients and the general 8 public, that where conduct of an attorney will violate a Rule of Professional Conduct, formalities such as standing will not prevent the court from considering the motion to disqualify. Mr. Conroy’s intention to represent Maurello in this action, given Mr. Conroy’s significant prior involvement as attorney for Walters and Naqiy, coupled with the fact Walters testified against Mr. Conroy in the Criminal Action (which is an added extraordinary circumstance), concerns the Rules of Professional Conduct. There is no shortage of clients and cases, and the fact that Mr. Conroy intends to become involved in this case in order to represent Maurello to the detriment of his former clients should shock one’s conscience. Such act, if permitted, will certainly erode the public’s confidence in the profession and the judicial process, and in addition, violate the Rules of Professional Conduct. As noted above, Mr. Conroy’s representation of Naqiy and Walters was significant and entailed disclosure of confidences relating to the same matters that are at issue in this case. Mr. Conroy cannot now attempt to represent Maurello in this case to the detriment of Walters and Naqiy. For the foregoing reasons, Vion and its counsel respectfully request that their motion seeking to disqualify Mr. Conroy from representing Maurello in this case be granted, and to the extent Maurello is now a part of the legal team at Schwartz Law, P.C., that the firm too be disqualified from representing Maurello. 9 CONCLUSION It is respectfully requested that the Court enter an Order barring and disqualifying Matthew Conroy, and to the extent necessary, the firm of Schwartz Law, P.C., from representing or advising Maurello in this case. Dated: Fairfield, New Jersey September 10, 2015 Respectfully submitted, _____________________________ Vafa Sarmasti, Esq. vafa@sarmastipllc.com SARMASTI PLLC Attorneys for Plaintiff Vion Holdings LLC 729 Seventh Avenue, 17th Floor New York, NY 10019 Telephone (212) 736-9119 Facsimile (212) 736-3820 To: Harold J. Levy, Esq. Schwartz Law, P.C. Attorneys for defendant John Maurello, D.C. 666 Old Country Road, Ninth Floor Garden City, New York 11530 Telephone (516) 745-1122 Facsimile (516) 745-0844 10