Nearly 600 people in Manhattan had been approved for such work. But the job went to a lawyer named Mark D. Lebow, who is the husband of Patricia E. Harris, Mayor Michael R. Bloomberg’s most trusted aide.
Since then, Mr. Lebow has earned $352,000 in fees, more than $5,000 a week, according to court records.
The foreclosure crisis has caused a surge in the number of court-appointed receivers for distressed properties in New York, and politically connected lawyers are benefiting.
Yet even as the fees mount, totaling millions of dollars, it remains unclear why judges are selecting some of these lawyers, and whether the fees are being well spent.
The court system in New York State has long been criticized for fostering a system of patronage appointments that enriches lawyers and others with ties to influential politicians. Court officials defend the process of selecting receivers for distressed properties, saying judges are looking for people who they know have done good work.
Over all, the number of receivers appointed by judges to oversee distressed properties in the city jumped to 284 last year from 47 in 2007, records show.
Paul Vallone, a scion of one of Queens’s most powerful political families, earned nearly $17,000 for one assignment. Howard R. Vargas, a former commissioner of the Taxi and Limousine Commission, was awarded $28,000 for three cases. Marc Landis, a Democratic district leader and member of the transition team of the new state attorney general, Eric T. Schneiderman, was compensated $22,000 for supervising three buildings.
And those were for assignments that were given out earlier in the foreclosure crisis and that have already yielded fees. The newest appointments, with the billing to come, are filled with even more lawyers with ties to the powerful.
Dominick Calderoni, a law partner of State Senator Jeffrey D. Klein, a Bronx Democrat, was handed six receiverships. William C. Thompson Sr., the father of William C. Thompson Jr., the former city comptroller and mayoral candidate, got six. Gregory C. Soumas, a member of the city’s Board of Elections, received two, though he said one property went into bankruptcy, ending his involvement.
When a building goes into foreclosure, a judge appoints a lawyer as a receiver who acts a property’s temporary landlord during the process. Receivers are entitled to fees that typically amount to 5 percent of a property’s revenues. Judges can award less than 5 percent, but usually do not.
The court-appointed lawyers in turn usually hire property managers and other lawyers to assist in overseeing the properties. The receivers do not pay out of their own pockets for the costs of the property managers and other lawyers. That money comes from the properties’ revenues. “This is why mortgagees hate foreclosures,” said Harold Shultz, a senior fellow at the Citizens Housing and Planning Council, a nonprofit research group. “During this process all these people are sucking money out of the building.”
With complaints about the quality of receivers growing, city officials said they were considering state legislation to require people seeking to become receivers to be vetted by the city’s Department of Housing Preservation and Development. Receivers are now vetted only by the courts.
Not all receiverships come with high fees, or go to lawyers with ties to politicians.
Some lawyers are handed cash-poor and dilapidated buildings, and are hamstrung by a lack of resources. Some appointments can be low paying and time consuming.
Other lawyers, though, have won plum appointments. The receivership obtained by Mr. Lebow, the husband of Ms. Harris, the first deputy mayor, was one of the highest-paying in the city recently. In court papers, the judge did not explain why she gave Mr. Lebow the work.
There are now 605 people eligible to be receivers in Manhattan, according to court records.
Mr. Lebow is a partner in his own law firm, Lebow Sokolow, and has served on the board of the Metropolitan Transportation Authority since 2002. Mr. Bloomberg recommended him for the authority position. Mr. Lebow did not respond to six telephone and e-mail messages left over a month seeking comment on the receiver appointment.
Stu Loeser, a mayoral spokesman, would not comment. The judge in the case, Marylin G. Diamond of State Supreme Court in Manhattan, has recently retired, and did not respond to requests for comment. State Supreme Court judges, who appoint most receivers in these cases, are elected.
This article has been revised to reflect the following correction:
Correction: June 21, 2011
An earlier version of this article incorrectly described the position of Howard R. Vargas. He is a former, not current, commissioner of the Taxi and Limousine Commission.
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