Court Orders Former East Hampton Town Justice To Return $1 Million In Misappropriated Funds


Former East Hampton Town Justice Catherine Cahill has been ordered by a State Supreme Court justice to pay back $1,045,400 of what the court says are misappropriated funds transferred into a shared account she had with her late husband while she was a sitting town justice.

According to court records, in 2005, Ms. Cahill’s husband, attorney Marvin Hyman, transferred approximately $1.9 million from an account he held with a business partner, Nelson Gerard, as Buckskill Farm LLC, a real estate holding company, to a personal bank account he shared with his wife.

“We respectfully disagree with the judge’s decision. At this point, we do intend to appeal,” said Ms. Cahill’s attorney Stephen Angel of Riverhead, who refused to speak further about the case. “It was a deal that was done by her deceased husband. She inherited the problem. She intends to appeal.”

Mr. Hyman entered into the business partnership with Mr. Gerard in 2003, the court records show, in an operating agreement for the subdivision of a vacant 9.6-acre parcel with an agricultural reserve in the Town of East Hampton. The partners considered selling a portion of the land to the town for around $2 million; as part of the negotiated deal, Mr. Hyman was to be awarded a portion of the proceeds or one of the remaining lots and would then give up his interest in Buckskill Farm LLC.

However, according to Mr. Gerard’s attorney, Jeffrey Stark of Uniondale, Mr. Hyman went ahead with the sale on his own after submitting to the town a new subdivision map with a “substantially expanded reserve area.” According to court records, in September 2005, Mr. Hyman closed on a deal with the town for 6.8 acres of the property at a price of $1.9 million without Mr. Gerard’s knowledge.

Mr. Hyman initially deposited the proceeds from the land sale into the Buckskill Farm LLC account and then transferred almost the entire amount, $1,895,400, to his personal bank account that he shared with his wife, Justice Cahill, according to court records.

“He did the sale by himself, unbeknownst to his partner, and wrote himself a check for $1.9 million unbeknownst to his partner,” Mr. Stark said of Mr. Hyman. Mr. Stark added that Mr. Hyman and Mr. Gerard had an ultimate agreement that if the sale were to go through, Mr. Hyman could keep $850,000 from the sale, or one of the remaining lots. Based on that agreement, the judge in the decision, Justice Paul Bailey Jr., allowed Mr. Hyman’s estate to retain that same amount.

Mr. Stark said that Ms. Cahill will be required to pay interest on the $1,045,400 as well. “The interest is 9 percent a year since 2005. It’s a very large number,” he said. Interest in this case would bring the total to approximately $2.25 million.

According to the April 21 judgment by the State Supreme Court, Mr. Hyman had been terminally ill at the time of the money transfer. Mr. Stark said that Mr. Hyman deposited the money into his personal account when he knew that he was dying.

“Hyman, as the lawyer for the LLC, deposited the proceeds of the sale into the LLC bank account, and then wrote a check to himself for all but a few pennies of that money,” Mr. Stark said. “He was stealing the money, in my opinion. He knew he was dying, and he thought that would be a good thing to do for his family.”

Court documents state the Mr. Hyman believed that he was entitled to all of the proceeds from the sale of the land to the town because it was solely the reserve area that was being sold and that he had an operating agreement with Mr. Gerard that would allow Buckskill to retain the remaining four lots. Mr. Gerard denied that there was ever any such agreement.

The Supreme Court’s decision states that Mr. Hyman had “deliberately and stealthily carried out his plan to spirit away the proceeds of the sale out from under the nose of his partner.”

Mr. Hyman died on December 15, 2005, at which time. Ms. Cahill became the executrix of his will and substituted in legal action against him. According to court documents, in October 2007, Ms. Cahill refused to answer pertinent questions in a deposition with regard to the money transfer, including whether or not she had ever discussed the sale of the property or the $850,000 or one lot agreement with her husband, citing spousal privilege. She later testified in court that her husband “indicated to me that he did not agree to anything.”

The plaintiffs in the case argued that the spousal privilege does not attach to “ordinary conversation relating to matters of business which there is no reason to suppose [the spouse] would have been unwilling to hold in the presence of any person.”

The April 21 decision goes on to state: “Indeed, the Court finds Cahill’s testimony as a whole to be not credible,” and that her answers to questions were “vague and disingenuous.” In addition, the record states that “… the Court finds that Cahill’s professed ignorance on matters fully within the comprehension of any lawyer or judge is not credible.”

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