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Author The Money Board Posts: 29037 05/26/06 04:48:36 Research Whiz

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Powerful Aruba Family Sues Miami Law Firm for Malpractice

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Powerful Aruba Family Sues Miami Law Firm for Malpractice www.law.com ­ Jessica M. Walker ­ Daily Business Review ­ May 26, 2006

One of Aruba's wealthiest and most powerful families alleges that a partner at its longtime law firm, Podhurst Orseck in Miami, made an error in judgment that led to the loss of a $15 million property.

Five members of the Mansur family, who have Dutch citizenship and business interests in Aruba, filed suit in Miami­Dade Circuit Court in March alleging that Podhurst partner Katherine Ezell mishandled their lawsuit against two family members entrusted with managing Terminal Island in Miami Beach. That's a deep port off the MacArthur Causeway that serves as a ferry terminal for the exclusive Fisher Island community off Miami Beach.

The suit alleges that Ezell's and Podhurst Orseck's errors in the case allowed the investment managers of the property, brothers Luis and Elias Mansur, to abscond with the profits from the island's $15 million sale in May 2004.

The plaintiffs have "clearly been damaged," their attorney, Daniel Koch, of Koch & Trushin in Fort Lauderdale, Fla., said in an interview. "The question is, what are the damages? If we can show that with the proper legal advice the property could have been rescued, it could be close to $20 million."

Podhurst Orseck has retained Michael Josephs, of Josephs Jacks & Miranda in Miami. Josephs said in an http://redcatsboards.yuku.com/topic/10050/Powerful-Aruba-Family-Sues-Miami-Law-Firm-for-Malpractice#.Vy0n_hUrJE4

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Powerful Aruba Family Sues Miami Law Firm for Malpractice in Money Board's Repository of Wisdom Archive #6 Forum

interview that the Mansur family called the shots in the original litigation and was to blame for its failure.

"How the [Podhurst] lawyers kept the case alive as long as they did was amazing," Josephs said. "They were hamstrung because of the decisions made by the client."

The Mansurs made their fortune distributing liquor and Marlboro brand cigarettes in Latin America.

Controversy has swirled around certain members of the Mansur family, including published allegations of drug trafficking and money laundering. Two Mansur family members ­­ Eric and Alex Mansur ­­ were indicted in U.S. District Court in Puerto Rico in 1994 on narcotics and racketeering charges. Much of the case was filed under seal, including final judgments for both defendants, which were entered in November 2002.

BEGAN WITH CRIMINAL CASES

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New Rule In Matawan, NJ Podhurst Orseck began representing the Mansur family more than two decades ago on criminal matters, New Rule Inand the family began using the firm for other legal services, according to Josephs. Podhurst Orseck, Matawan, NJ [Better Finances] Learn More

founded in 1967, is a small but well­regarded firm with 11 attorneys. The firm is known for its work in complex litigation, particularly its aviation liability practice.

The current Mansur controversy revolves around Luis and Elias Mansur. They were the investment managers of Terminal Island, which was held in trust by them and the plaintiffs in the recent legal malpractice suit.

Luis and Elias Mansur had borrowed money against Terminal Island, which they did not repay. In 2003, the lenders, TotalBank and Interbank Aruba, filed foreclosure actions against Terminal Island. The Mansur plaintiffs asked Podhurst Orseck to resolve their problem with the island.

According to the suit, plaintiff Ruben Mansur advised Podhurst attorney Ezell that the investment managers were financially unstable and were planning to abscond with any proceeds from the sale.

The Podhurst attorneys "knew there was a plan to sell Terminal Island and that the investment managers were going to abscond with the money and take it overseas where it could never be touched," said Brad Trushin of Koch & Trushin, who is representing the Mansurs along with Koch.

Initially, Ezell drafted and filed a lis pendens, a claim on the property asserting that her clients were owed money from any sale that occurred. As the suit progressed, according to the recent malpractice suit, she learned that there were questions about the validity and enforceability of the Interbank Aruba mortgage.

But Ezell made a shift in legal strategy that the Mansur plaintiffs contend torpedoed their case and caused them to lose the island. According to the suit, Ezell advised the Mansur plaintiffs to withdraw the lis pendens and execute a release in favor of TotalBank and Interbank Aruba.

"Then the Podhurst firm said to my clients, 'You've got two mortgage foreclosure actions pending. Your only or best recourse is to make nice with the investment managers and work with them to get the property sold,'" Trushin said. The Podhurst firm, he said, promised to monitor Terminal Island to make sure the Mansur plaintiffs got their share of the sale proceeds.

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Powerful Aruba Family Sues Miami Law Firm for Malpractice in Money Board's Repository of Wisdom Archive #6 Forum

That approach did not work. When the island was sold for $15 million to Barco Holdings in 2004, Interbank and TotalBank were paid off. But the investment managers transferred the money overseas.

Ezell then filed suit on behalf of the Mansur plaintiffs in Miami­Dade Circuit Court asking for an accounting of the property sale and for appointment of a special master to investigate the misuse of trust assets.

The investment managers responded that the trust granted them the authority to sell the property and hold the proceeds, and further argued that Ezell's legal action was filed in the wrong jurisdiction.

Since the trust that owned Terminal Island was based in the British Virgin Islands and since none of the parties were U.S. citizens, the investment managers argued that Miami­Dade was an improper jurisdiction for the case. Then­Circuit Judge Michael Chavies sided with the investment managers and dismissed the case.

'FAILED TO PROTECT ASSETS' The legal malpractice suit argues that Podhurst and Ezell allowed the island and the proceeds from its sale to slip through the Mansur plaintiffs' fingers.

"The issue is what the Podhurst firm should have done," Trushin said. "Once they decided to move in the course of action they took, they failed to protect the assets. The Podhurst firm is a very highly regarded firm. For whatever reason, they did not act in the best interest of their clients. I think this was an error in judgment that could not be fixed later."

But Josephs said that the decision to file the case in Miami­Dade was made by the Mansur plaintiffs and that Podhurst Orseck simply followed its clients' wishes when it developed its litigation strategy.

The case could be costly if the Mansur plaintiffs prevail. The balance owed to the two banks was $7.1 million, leaving nearly $8 million in profit from the island's sale. But the plaintiffs contend that the $2.8 million mortgage to Interbank Aruba was unenforceable and that with the proper legal strategy could have been nullified. If that were the case, the profit from the sale would have been closer to $11 million.

After dividing up the shares between the investment managers and the plaintiffs, Koch said that his clients should have received a minimum of $5 million in the worst­case scenario, which included having to sell the island and paying off the mortgages. But if the Mansur plaintiffs can prove that a change in legal representation could have saved the island altogether, the damages could be a lot higher.

Terminal Island is in a prime location close to Miami Beach and provides access to the big mansions on Fisher Island. With the investment managers out of the picture, the Mansur plaintiffs might have held onto the island, either selling it for a larger profit or managing it to generate more profit. In that case, damages could run up to $20 million, Koch argued.

The litigation already has cost Podhurst Orseck its lucrative Aruban clients and has been emotionally draining for the parties involved, including veteran Podhurst partner Robert C. Josefsberg. http://redcatsboards.yuku.com/topic/10050/Powerful-Aruba-Family-Sues-Miami-Law-Firm-for-Malpractice#.Vy0n_hUrJE4

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"This has not been a happy experience for the firm," Josephs said. "Bob Josefsberg and Kathy Ezell have represented [the Mansur family] for over 20 years. Everything else they've ever handled has been handled with great success and happiness on the part of the clients. And the only reason this didn't work out was the restrictions the Mansur plaintiffs placed on the firm." The case is in the early stages of discovery, and Josephs expects to begin depositions over the next month.

"These people owe Bob Josefsberg and the firm so much, and this is a horrible way to repay them," Josephs said. "But people get blinded when they're fighting with family."

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