Nussbaum Lowinger Files for Chapter 11 Bankruptcy

Why It Matters

The filing centralizes a tangled web of criminal, civil and restructuring actions, shaping how creditors may recoup billions lost to fraud and influencing future oversight of law‑firm escrow practices.

Key Takeaways

• Nussbaum Lowinger listed $100‑$500M liabilities, $10‑$50M assets.
• Largest creditor: Elizabeth Capital Success $156.3M claim.
• Nussbaum admitted diverting $336M to investor Mendel Steiner.
• Bankruptcy halts ABC proceedings, delaying creditor recoveries.
• Criminal grand larceny charges pending; Nussbaum pleaded not guilty.

Pulse Analysis

Mark Nussbaum, once a go‑to real‑estate lawyer in New York, built his reputation on the “show‑capital” model—using escrow accounts to provide short‑term loans that let developers demonstrate funding readiness. Prosecutors allege he siphoned hundreds of millions from those accounts, diverting roughly $336 million to Brooklyn investor Mendel Steiner between 2022 and 2025. The scheme unraveled after a series of civil suits and a high‑profile lawsuit from nursing‑home investor Jacob Sod, who claimed $15 million of escrow funds were withheld. Steiner’s suicide in early 2025 added a tragic twist to the scandal.

The Chapter 11 petition filed Thursday placed Nussbaum Lowinger and Mark J. Nussbaum & Associates under federal bankruptcy protection, listing liabilities between $100 million and $500 million against a meager $10 million to $50 million in assets. Elizabeth Capital Success leads the creditor queue with a $156.3 million claim, followed by Blueberry Funding’s $58.7 million demand. The filing also freezes an ongoing Alternative to Bankruptcy Court (ABC) proceeding, which the appointed assignee, Sheldon Eisenberger, intends to contest. By centralizing claims in bankruptcy court, the restructuring officer hopes to accelerate distributions, though the ABC’s pending litigation could prolong resolution.

The Nussbaum collapse underscores growing scrutiny of law‑firm financial practices, especially those that blend client escrow with proprietary lending. Regulators may tighten oversight of escrow‑account management, while creditors across the real‑estate sector watch the case for precedent on recovering misappropriated funds. If the ABC is dismissed, the bankruptcy estate will become the primary vehicle for creditor recovery, potentially yielding lower recoveries than the proposed ABC distributions. Conversely, a successful contest could revive the ABC, offering a faster, albeit uncertain, path for investors seeking restitution.