NY Attorney Gets Three Years in Cash4Cases Litigation Funding Scheme

A disbarred New York lawyer was sentenced yesterday to 36 months in prison for defrauding investors in his now bankrupt litigation finance firm called Cash4Cases.

According to the U.S. Attorney for the Southern District of New York, Jaeson Birnbaum previously pleaded guilty to securities fraud for misappropriating investors funds and pledging the same lawsuit recoveries as collateral to multiple parties, contrary to his representations.

U.S. District Paul A. Crotty imposed the sentence in Manhattan federal court.

According to U.S. Attorney Damian Williams and statements in the public filings and in court, over several years Birnbaum obtained more than $3 million in investments for Cash4Cases based on fraudulent misrepresentations. These investments were in the form of promissory notes, which purported to provide the investors with a security interest in the recoveries associated with certain specified lawsuits that were ostensibly purchased by Cash4Cases.

However, in fact, in some instances, the lawsuits that were either never funded by Cash4Cases or Birnbaum had previously pledged their recoveries to other parties, according to the U.S. attorney.

To help carry out his fraud, prosecutors said Birnbaum directed an employee to falsify his company’s books to make it appear that the recoveries from lawsuits that had already been paid out were still available to be pledged as collateral to new investors.

Prosecutors said he also misappropriated a “substantial portion of investors’ funds for his personal use and to make promised payments to earlier investors in Ponzi-like manner.” In one case, he misappropriated $530,00 for the down payment on a house in New Jersey, prosecutors said.

Birnbaum was also sentenced to a three-year term of supervised release and ordered to pay restitution to his victims in the amount of $2.6 million, according to tcourt documents.

“As a lawyer Birnbaum understood the importance of honest dealings and putting his investors first. Instead, Birnbaum chose to lie to his investors in order to steal their money and cover up his fraud by doctoring company records,” Williams said in announcing the sentencing.

According to court documents, Birnbaum also owned another litigation firm called Liberty Bridge. In 2020, both Cash4Cases and Liberty Bridge filed for chapter 7 bankruptcy. In connection with the bankruptcy, creditors, including victims of the charged criminal offenses and other investors and lenders, filed claims totaling approximately $61.5 million. To date, prosecutors told the court, based on information provided by the bankruptcy trustee, claimants in the bankruptcy case have received recoveries totaling only $19.8 million of the $61.5 million in claims, including an aggregate of $183,662 payments to the victims of the charged criminal offenses.

According to Birnbaum’s attorney, assets liquidated in the bankruptcy case will be used to repay investors of his defunct companies.

Birnbaum lawyers told the court that Birnbaum currently resides in Boca Raton, Florida, with his sister, and is currently launching three companies that offer shared platform business contract models, e-commerce, and social media advertising and marketing. “Birnbaum is hopeful that these ventures will take off and he will generate income to help satisfy his restitution obligations,” his lawyer stated in a sentencing memorandum.

According to his attorney, Birnbaum has “had issues with excessive alcohol use” and has been receiving treatment.

His attorney told the court that Birnbaum “made clear in his guilty plea and in his statement to probation, he fully accepts responsibility for his criminal conduct and its consequences.”