Flood Destruction Proof Does Not Rise

It is still possible to get disbarred in New Jersey for knowing misappropriation of entrusted funds.

The Disciplinary Review Board’s report  sustained findings of misconduct on the part of a previously reprimanded and censured attorney but was not persuaded that the following statement was proved false

We cannot make the same finding, however, in respect of respondent’s statement that his files had been destroyed in a flood. Although the evidence supports an inference that the files were not destroyed in a flood, but rather that respondent was withholding documents he perceived as detrimental to his position, the evidence does not rise to a clear and convincing standard. Respondent provided a plausible explanation for omitting the files from his insurance claim — that is, that he already had reached his policy benefit limit and did not include the loss of files in his claim because it would not have changed that benefit.

But

the evidence unquestionably establishes that respondent knowingly misappropriated escrow funds in the amount of $56,868.23 when he issued checks to himself from funds that he previously clearly had identified as escrow funds and at a time when he was not entitled to any fees. Respondent’s former real estate paralegal, Jones, explained that respondent’s legal fees already had been disbursed by check as part of every closing. This practice was further confirmed during the OAE’s prior investigation, after which respondent admitted to commingling based on his failure to negotiate those very checks.