BROOKLYN, NY— Federal agents arrested former Brooklyn State Supreme Court Justice Edward Harold King and Brooklyn businessman Yechiel 'Sam' Sprei on federal wire fraud charges tied to what prosecutors described as “multiple schemes to defraud real estate investors.”
The arrests marked a major escalation in a widening investigation surrounding Sprei, whose business dealings and court battles have drawn scrutiny from investors, lawyers and judges across Brooklyn’s legal and political circles.
One day before the indictment became public, voice memos allegedly sent by Sprei played inside a Brooklyn courtroom during a sanctions hearing tied to a separate civil lawsuit involving another group of investors who also accused Sprei of taking their money.
The recordings and text messages appeared to show Sprei coordinating legal strategy across opposing sides of the same case, directing lawyers to file misleading court documents and discussing plans to force judges off the bench through engineered conflicts of interest.
The evidence emerged during proceedings over whether sanctions should be imposed against escrow agent David Graubard and attorney Israel Goldberg.
Lawyers for international investors accused Graubard, Goldberg and Brooklyn Democratic power broker Frank Seddio of using frivolous litigation to obscure the whereabouts of $2 million investors placed into escrow while considering a partnership with Sprei.
On the witness stand, attorney Yeshaya Gorkin testified that although he formally represented Graubard, Sprei paid him and directed his legal strategy.
Gorkin said he was hired the night before a court hearing and immediately learned that Sprei controlled decisions in the case.
At the same time, Sprei also controlled the LLC suing Graubard to prevent the escrow money from being returned to investors.
Texts and voice recordings introduced in court appeared to support claims from investors that the litigation itself functioned as a coordinated effort to delay repayment and shield the missing funds.
In one July 16 voice memo, Sprei instructed Gorkin to seek a delay in an upcoming hearing.
“Doesn't matter, you can ask for a week, the court is not available after tomorrow anyways until after September, between me and you, so it's fine,” Sprei said.
Court records showed Gorkin and Seddio later agreed to privately ignore a court-imposed deadline and replace it with their own timetable, despite the investors’ opposition.
The deadline passed without the money being deposited into court.
According to testimony, the explanation sent to the court was false.
“Mr. Graubard had told me he did not have the money,” Gorkin testified.
Goldberg later joined the case as Graubard’s attorney. On the stand, Goldberg denied discussing recusal plans with Sprei.
But prosecutors introduced a voice memo in which Sprei described conversations with Goldberg about exactly that possibility.
“He says if he does the substitution of counsel, the judge will right away realize that oh, you did it because you want me to recuse myself,” Sprei said in the recording.
Sprei then described an alternate plan.
“He says the motion to withdraw is a good idea,” Sprei said. “Then he can come in as lawyer, and if he comes in, the judge will have to recuse himself.”
Mostofsky later stepped aside from the case after Goldberg appeared, citing their personal relationship. Goldberg testified that the two men socialized and had dinner at each other’s homes.
The next assigned judge, Richard Montelione, threatened contempt proceedings unless Graubard proved the escrow funds still existed.
According to court evidence, Sprei soon discussed plans to trigger another recusal.
“We start a brand new lawsuit against them,” Sprei wrote in a December text message reviewed in court.
“John Leventhal will be the lawyer, and the judge will have to recuse himself,” he added, referring to retired appellate judge John Leventhal.
“On what grounds?” Gorkin asked.
“Have to come up with some good stuff,” Sprei replied.
The recusal effort again succeeded after lawyers from Aidala, Bertuna & Kamins entered related proceedings involving sanctions against Seddio. Montelione stepped aside, citing a conflict tied to the firm’s previous representation of him. Another judge, Richard Velasquez, recused himself the following day without explanation.
The fallout surrounding Sprei’s legal network has accelerated in recent months.
King resigned from the bench in December amid an ethics investigation before federal prosecutors charged him with wire fraud.
Bankruptcy attorney Jonathan Pasternak received a three-year suspension after admitting he accepted more than $250,000 from Sprei without disclosing the payments to clients.
Attorney Adam Kalish also received a three-year suspension tied to misconduct connected to Sprei-related escrow work.
Graubard, Goldberg and Seddio all continue facing potential sanctions tied to the ongoing litigation.
Sign up for free local newsletters and alerts for the
Brooklyn, NY Patch
Patch.com is the nationwide leader in hyperlocal news.
Visit Patch.com to find your town today.