Tenured Professor Gets Interim Suspension For Misappropriation Allegations

An interim suspension has been ordered by the New York Appellate Division for the First Judicial Department

based upon uncontested evidence, namely, written admissions and bank records, that he, inter alia, misappropriated client funds, which misconduct immediately threatens the public interest.

The court described the circumstances of the investigation

Respondent is a tenured professor at Rutgers School of Law, who also maintains a transactional law practice. In two instances, respondent withdrew IOLA funds that did not belong to him in order to meet his personal and business expenses. In one instance, in December 2013, respondent received a $220,000 contract deposit on behalf of his client, the seller in a real estate transaction, which he deposited into his IOLA account. Between January 2 and February 14, 2014, when the transaction closed, respondent repeatedly invaded the $220,000 contract deposit such that, as of February 11, 2014, his account balance had fallen to $500. Respondent replenished the funds he withdrew with funds from his two operating accounts.

In the second instance, on August 5, 2014, respondent deposited a $100,000 contract deposit he received from his clients, a married couple, whom he represented in connection with their purchase of a condominium; he deposited the funds into his IOLA account. At the time, respondent was holding $10,395.96 on behalf of another client in his IOLA account. Between August 5 and August 20, 2014, when the transaction closed, respondent invaded the IOLA funds by making transfers to his business and personal accounts such that, as of August 14, 2014, his account balance had fallen to $74,495.96.

On the same day as the closing, respondent replenished the funds he withdrew by transferring funds from his two operating accounts. Nonetheless, an IOLA check in the amount of $15,914.93, representing the payment of a flip tax, was dishonored due to insufficient funds; this is the dishonored check that precipitated the Committee’s investigation. On September 23, 2014, respondent replaced this check with a bank cashier’s check drawn against his IOLA account.

Respondent’s documentary responses also reveal that he commingled client funds with his personal and business funds, failed to maintain required IOLA account records, and, on one occasion, made a cash withdrawal from his IOLA account for $1,500.

 The response

In response to the Committee’s requests, respondent submitted written responses wherein he vigorously denied that he intentionally converted client funds, and explained that, due to his ignorance and misunderstanding of the escrow rules, during the period at issue, he mistakenly believed that he could withdraw and use client or third-party funds in his IOLA account as long as he had the same amount of funds on deposit in one of his other non-IOLA accounts, which he contended was always the case. Respondent explained that he had sufficient funds in personal liquid assets in his and his wife’s personal accounts, but he was reluctant to frequently withdraw funds from these accounts because he wanted to avoid conflict with his wife.

In mitigation, respondent explains in his cross motion that his misconduct on the aforementioned transactions occurred in the midst of significant personal and family health problems. In particular, in September 2009, both respondent’s wife and brother suffered from significant medical conditions. As a result of his personal and family situation, respondent took an unpaid leave from his teaching position for the 2010-2011 academic year. In or about 2012, respondent also started seeing a psychiatrist approximately three times a week. Respondent’s health problems caused him to take a second leave of absence from his teaching position in the fall of 2014 that continued into 2015. Respondent has been under Dr. Carol J. Weiss’s care since March 2015. Dr. Weiss opines that respondent “is not yet in a position where he can manage the stresses of the disciplinary investigation and proceeding . . .” and thus “it would be in his best medical interest for him to have additional recovery time, such as three to four months, before he faces such additional stresses.”

The attorney also explained that he reduced his teaching and outside workload. He asked that interim suspension not be imposed.

The court

The record sufficiently establishes that respondent repeatedly misappropriated and/or converted client funds, repeatedly commingled personal and client funds, and failed to keep required IOLA account records…

…the Committee’s motion should be granted and respondent suspended from the practice of law, pursuant to 22 NYCRR 603.4(e)(1)(iii), effective immediately, and until such time as disciplinary matters pending before the Committee have been concluded, and until further order of this Court. We further grant respondent’s cross motion to the limited extent of of redacting the bank account numbers in the financial information included in the motion and cross motion papers.

(Mike Frisch)