Million Dollar Escrow Shortfall Draws Short-Term Probation

An attorney who “failed to safeguard entrusted funds of at least $1 million” in connection with real estate transactions was placed on probation for six months by order of  the Pennsylania Supreme Court.

The misconduct arose in a series of businesses in which the attorney had an ownership interest. He was aware of and covered for misconduct by other persons associated with his various entities.

He was not criminally prosecuted.

The Disciplinary Review Board found that the conduct violated Rule 8.4(c) and noted that the attorney “admitted that he concealed the shortfalls in the esccrow accounts and expressed remorse. He appears chastined by this experience and willing to accept discipline.”

“Willing to accept discipline?” How refreshing.

The DRB rejected alleged Rule 1.15 (safekeeping property) charges because

There was no evidence presented that clearly and satisfactorily demonstrated that [he] at any time participated in real estate closings, or in any other way presented himsellf as a lawyer to anyone in connection with his ownership interests and job responsibilities for those entities. Respondent’s duty under Rule 1.15(a) was to safeguard funds contingent upon the existence of a client-lawyer relationship. He did not violate this duty, and he did not violate [the Rule].

The lenient sanction proposed by the DRB and adopted by the court is a direct result of the above (and in my view highly debatable) legal conclusion. Although not made crystal clear in the DRB findings, it does appear that the misconduct directly related to the operation of escrow accounts for which the attorney was responsible.

The Office of Disciplinary Counsel had sought disbarment. (Mike Frisch)