The Lawyer Next Door
A five-year suspension was imposed on an attorney who misappropriated funds entrusted by his next-door-neighbor client by the New York Appellate Division for the Second Judicial Department.
The background
In or about March 2003, the respondent referred Kathryn Cerullo to an attorney, John P. Garvey, with whom the respondent had an existing business relationship, to assist Kathryn Cerullo with, among other things, estate planning and the creation of a trust.
On or about March 28, 2003, Kathryn Cerullo executed an irrevocable trust (hereinafter the trust) prepared by Mr. Garvey. Pursuant to Article 4 of the trust, the primary beneficiary was the Church of the Sacred Hearts of Jesus and Mary in Southampton (hereinafter the Sacred Hearts Church). Pursuant to Article 5 of the trust, the alternate beneficiaries, in the event that the Sacred Hearts Church no longer existed at the time of Kathryn Cerullo’s death, were Kathryn Cerullo’s nieces and nephews, including, among others, Mary Linda Goleski, Michael Cerullo, and Judith Ann Cerullo Kossow. The respondent was appointed trustee of the trust, subject to removal as provided by Article 7, Section 2, of the trust. The respondent executed the trust, as trustee, on or about March 28, 2003.
The misconduct
the respondent took advantage of his longtime relationship of trust with Kathryn Cerullo to unjustly enrich himself from the funds she entrusted to him, as a fiduciary, without her knowledge or consent. As Kathryn Cerullo’s attorney, attorney-in-fact, and the trustee of a trust established for her benefit, the respondent established a putative “trust account” in his own name, which he manipulated to garner over 75% of Kathryn Cerullo’s funds for his own use and benefit. As the Special Referee correctly found, the respondent disbursed to himself amounts that were as “facially outrageous” as the activities for which they purportedly were paid. Under the totality of the circumstances, we find that the respondent engaged in willful misappropriation, and that charge one was properly sustained.
As to sanction
In determining an appropriate measure of discipline to impose, we note the testimony of the respondent’s witnesses as to the respondent’s good reputation in the community, his participation in “numerous charitable undertakings for the poor in the community,” and his work as a Deacon in the Roman Catholic Church of Saints Philip and James. The Court also has considered, as requested by the respondent’s counsel, the following: the respondent has been a member of the Bar since 1977, having first been admitted in the State of Florida and then, in April 1978, pro hac vice in the Second Department, before being admitted to the New York Bar on November 28, 1978. Moreover, he is admitted to practice in the United States District Court for the Eastern and Southern Districts of New York, as well as the United States Court of Appeals for the Second Circuit. He has served as an arbitrator in the Eastern District, and was appointed by the Honorable Jack B. Weinstein to the Discovery Committee of the Eastern District, for the purpose of reconciling the inconsistencies between the rules of the Eastern and Southern Districts. However, we note that the respondent himself failed to offer proof of any mitigation at the hearing. Rather, he testified solely and consistently that his defense was that he did nothing wrong. To that end, the Special Referee found, and we agree, that “the respondent was evasive and not forthcoming in any way.” The Special Referee’s finding relative to the respondent’s credibility is entitled to great weight.
(Mike Frisch)