Disabled Not Disbarred

The New York Appellate Division for the First Judicial Department has granted a disability suspension request of an attorney who had been disbarred for misappropriation in the United States District Court for the Southern District of New York.

The federal court disbarment was affirmed by the Second Circuit. 

The background facts

In 2004, Abrahim Raphael retained respondent to represent him in connection with a federal criminal investigation and subsequent indictment concerning his role in the embezzlement of funds from his employer, International Gemological Institute (IGI). On September 13, 2005, Raphael pled guilty in the United States District Court for the Southern District of New York to conspiracy to commit money laundering and conspiracy to commit wire fraud (18 USC §§ 371, 1349, 1956[h]). His sentencing was adjourned for him to, inter alia, make restitution to IGI.

In July 2007, Raphael wired $250,000 to respondent’s operating account for the payment of restitution to IGI. In September 2007, respondent advised Raphael that he was not holding the restitution funds in an escrow account and that to avoid any “tax problems” he needed Raphael to sign a letter stating that the $250,000 was a loan to respondent, which Raphael did.

In January 2008, respondent told Raphael that he had spent $50,000 of the restitution funds and requested that Raphael provide additional funds for the restitution. Raphael then borrowed an additional $50,000 which he remitted to respondent. Respondent ulitmately only paid $120,000 to IGI for restitution. From March 2008 through September 2009, respondent requested that Raphael’s sentencing be adjourned approximately 15 times for various reasons which included the representation that Raphael was trying to raise the funds necessary to pay restitution as per the plea agreement.

In 2009, Raphael disclosed to James O. Druker, Esq., his counsel in a separate tax matter, that respondent had spent some of the $250,000 which was supposed to have been paid to IGI. In August 2009, Druker substituted respondent as Raphael’s counsel and in September 2009, disclosed respondent’s conduct to Judge Kimba Wood, who was presiding over respondent’s case.

On January 21, 2010, Judge Wood sentenced Raphael to three years probation. In order to meet his restitution obligation, Raphael borrowed an additional $30,000 from his brother and assigned to IGI his claims against respondent and his right to $100,000, which Druker had requested from the Lawyers’ Fund for Client Protection. That same month, after Raphael was sentenced, Judge Wood referred respondent to the Southern District’s Committee on Grievances (Grievance Committee).

In September 2009, Druker also filed a complaint on Raphael’s behalf with the First Department Disciplinary Committee (DDC), which initiated an investigation of respondent’s conduct. During 2010, in connection with the DDC investigation, respondent answered the complaint and was deposed.

In March 2011, the Grievance Committee directed respondent to show cause why it should not impose discipline, based on a statement of six allegations charging respondent with misappropriation, conversion, commingling and improperly entering into a business transaction with a client without required disclosures.

In July 2011, respondent was again deposed by the DDC.

In December 2011, after learning that IGI intended to commence a civil action against him, respondent executed an Affidavit of Confession of Judgment in which he swore that Raphael had given him $250,000 to hold in trust for the benefit of IGI for the purpose of restitution which was to be paid over to IGI prior to Raphael’s sentencing. Respondent spent approximately $180,000 of the funds he received from Raphael on personal and business expenses unrelated to Raphael’s case. To date, respondent has not repaid any of these funds.

The court considered the impact of charges based on the same facts brought by Departmental Disciplinary Committee (“DDC”)

…the DDC brought four charges against respondent, one of which (Charge 3) was based on Raphael’s complaint, alleging that respondent violated Code of Professional Responsibility DR 5-104(a)(22 NYCRR 1200.23[a]) (improper loan transactions with a client). Significantly, the DDC did not charge respondent with misappropriation or conversion of Raphael’s restitution funds. By subsequent stipulation, the DDC inter alia amended the language of Charge 3, referring to the $224,000 as “Rafael’s funds” to read that “respondent had already used, at a minimum, $224,000 of the proceeds of the loan from Raphael for his own personal and/or business purposes” (emphasis added). Respondent admitted to Charge 3 as amended by the stipulation, as well as two other charges.

On March 15, 2012, a hearing on sanctions was held before a Referee. The DDC did not call any witnesses but relied solely on respondent’s admissions to the charges in the pre hearing stipulation as well as other documentary evidence. Respondent testified on his own behalf in mitigation and called character witnesses. In post hearing memoranda, the DDC argued for a nine-month suspension and respondent urged a public censure.

By report dated October 25, 2012, the Referee sustained the three charges against respondent and recommended that he be suspended for six months.

And thus

The instant proceeding presents what appears to be an unprecedented situation in that the Committee seeks to disbar respondent based on a finding in a federal disciplinary proceeding that he, inter alia, intentionally converted client funds, notwithstanding that, in its own proceeding, the DDC stipulated, and a Referee concluded, that respondent had not done so. Thus, respondent may have an arguable defense under 22 NYCRR 603.3(c)(3).

Disability not disbarment

Respondent has submitted sufficient documentation from his various medical providers as to his current medical condition and how that, due to such condition, he is presently unable to adequately assist his counsel in preparing a defense.

The attorney was profiled in the New York Times.

He was admitted to practice in 1968. (Mike Frisch)