the ai g lawsuit that they brought in their own adversary proceeding where we do disagree with the bankruptcy court and the district court is the fact that they determined that upon creation of that trust it was a preference that was more to belong the five forty seven b and i would submit to the court that it was the trustees burden not my establish whether that property that was stolen from my client was actually the property of the bankruptcy estate or not isn't the problem for you the inability to trace the three hundred fifty thousand dollars to the money that ultimately winds up in the dryer account that is apparently as lore exists today yes it's my burden and  part of what i would ask that this court consider as a policy consideration is that that rule in this unique situation where a client's funds are stolen from an attorney's escrow account needs to be modified or relaxed because you have a situation unlike the other people who had money in the dryer carol who are either where he stole from his operating account from his ponzi scheme investors moneys he transacted business with those people in our situation a trust was created the minute judge beatty ordered that he hold those monies in escrow on behalf of his client the fact you're saying that the client fund ought to be treated as if it had a secure is a degree of security interest than elevates it among above other creditors absolutely what while i understand the spirit behind a suggestion which the lawsuit warning i'm sorry i understand the spirit behind that suggestion and one might imagine a world in which as a matter of policy somebody tiered the interests in that way but is there any law that allows us to simply say that because it's a client's funds as opposed to a different type of creditor well that's the that's the prioritization we ought to use frankly i think it's time to create that  because the minute the client's monies go into an attorney's escrow account it's being held in trust for the client the code of ethics on the one point one four creates a statutory trust the minute those funds at the posit into the attorney's escrow account here you had a court order from judge beatty back in february of zero eight which directed the dryer firm to hold these monies in trust on behalf of its clients the my sole burden should have been limited to showing that monies were actually deposited into the driver's escrow account when that happened and how much was deposited which we clearly were suggest that if money is deposited into an attorney escrow account and is and is coming golden then stolen by the lawyer and even if there's nothing left in any escrow account every person whose money was in the escrow account has a secured claim only for the cloying funds that were stolen because the client funds were in fact a trust predated at the outset of them from the moment it was the positive the other funds that were commingled such as what it was no money left at all in the escrow fund at the time that the law from goes belly up you're saying that if any any funds had been deposited subject to a trust into the escrow account those those would seems to me would impress with a security interest the funds that that are in the general pot and are not no longer in any escrow account well except in this case again the courts already determine the bankruptcy court which was not appealed what challenge and is now the war of the case that a new trust was created a new trust was created on the symbol for two weeks before driers bankruptcy yeah i agree with your honor and the obligation of the trustee is to last sure and preserve assets for the bankruptcy estate and in this regard where you had a commingling according to the a tally of operating account scheme monies and client funds yes you separate out the policy scheme monies and the operating account monies which clearly are arguably belonging to the debtor of the debtors a state as opposed to client escrow funds which never from the outset if they can be demonstrated that they were deposited for escrow purposes on behalf of the client never ever belong to the attorney who stole those monies until the the problem is that he took the money and put it somewhere else and that's that's true imagine  because those creditors he transacted business with directly they voluntarily dealt with this gentleman our client was compelled by court order to have their cell and funds deposit into his escrow account why was his hand because that was judge beatty's was because dreier was counsel no within their own at the seri a proceeding in their chapter eleven action t b s was initially their bankruptcy attorneys six years later they merged t withdrawer and that's the point that i settled the adversary proceeding in c b g s case t b s submitted in order to judge beatty that directed the settlement proceeds to indicated that they had now merged with drier and therefore the court directed that dryer hold these monies on behalf of its clients c p g is this is a matter of two partners t b s leaving and dryer escrow account and put into the account of the firm in which the lawyers representing you client and originally been in partners t v s continued to maintain their own escrow account even after they merged with the dryer ferber was just simply a separate account but it was all part of the end of the i see in other words they can take they kept their own clients and they continue to do business but they were financially degraded to certain extent because when judge beatty in october of zero eight directed that these settlement funds now be distributed first to the to pay administration expenses and of the trustee and finally to see the cheese secured creditors they actually paid themselves first out of their own escrow carol t b s account they paid the trustee a became partners in dreier lp and as we said as i said that that that deposit was fully dissipated as of two thousand two thousand and eight at the latest and no longer traceable and there's a second transfer which is the transfer in december two thousand code under section five forty seven the code are met and actually court found as much we know whether there were other competing client claimants to the money in the five nine six six account as of the time of claim requests a fighting took the took an appeal threw the dish according to the second circuit ultimately that was so but there are other claimants and that is the problem here and that is why i think the law is such that in a situation like this where there is a co mingled account i mean you're only able to do whose money but what which money belongs to do it becomes the burden of the claimant to trace its funds pursuing your adversaries three let's suppose the amount of client claimants was less than the amount in the five nine six six account even though other forms of creditors claimed would have pushed us well over the size of the amount it's the amount in the five hundred six why isn't there a rational way to think about this that the clients ought to come first and then you know think that the intent of the driver firm i think is is important to that determination here a trial of the palace did not put in any evidence if you guard to what the intent of the dryer firm was when funds were coming in the bank statements are in the record the bank statements the driver friends intent was to replenish the trust but if the trustee had said look as among the money i've been able to harness in the five nine six six account of making the election that in the as among clients general creditors and fraud victims clients come first and then once we paid them all at one hundred cents on the dollar every one else is paid readably would that have been within the trustees discretion i don't think it i don't think it is within the trustees discretion because if these creditors were similarly of that account was fifty thousand dollars so in truth most of you know we don't know what was what money went out but at the very at the very best case scenario for the balance here fifty eight thousand dollars was in the account at the end of march so they had to their trust had already been broken at the end of march except to the extent of fifty thousand dollars why the funds were not transferred out of the dryer firm i think is is because the  degree meant in the order of approval required the funds to be held in that account pending further of the court of leave as much as my understanding and not until october of two thousand and eight when judge be issued another order directing what should happen with those funds could the funds be released from that account s in state court including the victim's compensation board including the grievance committee so this is our court of last resort frankly and in response to honest question to counsel and which was part of the the malpractise claim that was brought against t b s is that the last order of judge beatty of october thirty required distribution of the settlement proceeds within fourteen days if it had been done within one day you'd still be having the result of it having been paid within ninety days of the bankruptcy filing so you'd analytically be in the same situation as you are now yeah except again i say that it's trustees burden to prove that these monies constituted funs of the estate and not the client and although we stipulated client account monies i wouldn't even be privy to that information and i thought that would have been their burden to prove at the time of the hearing on the preference issue which they did not but in finality  know i i i did not discuss the constructive trust the reason that i believe should apply in this instance which offer a lot rectifying and the whole purpose of constructive  its client that it's stalled the burden should not be on me to have to trace commingled funds somehow that obligation should be r person whose moneys were stolen gets maybe six to eight cents on the dollar whereas the bulk of their moneys go to people who were not remotely clinic did to the nine eleven terrorist attacks that resulted in them getting their settlement thank you thank you we'll reserve decision that's the last case on the calendar please injured