Years after his death, the fight to secure money that attorney Jay Korn allegedly stole in a Ponzi Scheme continues.
Korn took his life by jumping from the rooftop of his Hempstead-based law firm on March 24, 2010. It was alleged by people that had invested money with him that Korn ran a Ponzi scheme that defrauded dozens of investors of up to $23.7 million.
Now, four years later, lawyers are still trying to secure funds, this time from Korn’s widow, Ellen Korn, whom the attorneys say was complicit in her husband’s scheme.
“For years, Mrs. Korn lived a life of splendor using the money of the investors,” reads the complaint that was filed against her in United States Bankruptcy Court. “The defendant knew or had reason to know when she signed joint income tax returns that there were hundreds of thousands of dollars in unreported income.
“While Jay Korn’s misdeeds have left many investors impoverished, Mrs. Korn remains a person of substantial means,” the complaint later reads.
In 2010, prosecutors asserted that Jay Korn, a longtime Rockville Centre resident, was the head of a Ponzi scheme. Like a typical Ponzi scheme, Korn would take money from investors, promising them a large return on their investment. But instead of investing the money, prosecutors said he used part of it to pay off other investors and pocketed the rest for himself and his law firm, Korn & Spirn.
Lawyers are now seeking money from Ellen Korn because they believe she knew about her husband’s scheme and has directly profited from it.
Scott Mandelup, a partner and Pryor and Mandelup and one of the attorneys handling the case, explained that the reason it has taken so long to complete the action against Ellen Korn was because she made a motion to dismiss the case before the complaint was answered.
“That motion was just recently decided and denied by Judge Sandra Feuerstein of the District Court,” Mandelup said. “A conference is in the process of being scheduled. And then the case will proceed with discovery and preparation for trial.”
Mandelup is seeking to recover a little more than $2 million from Ellen Korn. He says the money was transferred from the law firm’s attorney trust account to the personal accounts of Jay and Ellen Korn. “We believe most or all of it came from people who had identified themselves as investors that we believe … were part of a Ponzi scheme,” he said.
Through other actions, about $85,000 has been recovered for investors in Korn’s scheme, separate from Ellen Korn. But because of the scope of Korn’s Ponzi scheme, Mandelup said it is unlikely that investors were going to get all of their money back, and that this action against Ellen Korn would likely be the last taken in relation to Jay Korn’s scheme.
“I think the scope of the distribution to creditors will be largely dependent on how we do in this adversary proceeding,” Mandelup said.
As of press time Tuesday, Ellen Korn’s attorney, Michael Cornacchia, could not be reached for comment.