New Jersey Strikes Again

In a matter in which the Disciplinary Review Board rejected a special master’s finding of intentional misappropriation compelling disbarment, the New Jersey Supreme Court ordered a three-month suspension.

The DRB majority had recommended a censure.

There was a vigorous dissent in the DRB by four members

We dissent from the majority opinion and vote to recommend respondent’s disbarment.

There is no “smoking gun” here — no spontaneous admission or an overt act, demonstrating that respondent knew that he invaded client funds. Indeed, the Court has acknowledged that “proving a state of mind — here, knowledge — poses difficulties in the absence of an outright admission.” In re Johnson, 105 N.J. 249, 258 (1987). The Court accepted, however, “the complementary propositions that an inculpatory statement is not an indispensable ingredient of proof of knowledge, and that circumstantial evidence can add up to the conclusion that a lawyer ’knew’ or ’had to know’ that clients’ funds were being invaded.” 

We believe the “circumstantial” evidence in this case strongly “adds up” to the conclusion that respondent knowingly misappropriated client funds. We so conclude on several bases.

At issue was $50,000 that the attorney never received but nonetheless spent using entrusted funds

…like the special master we find incredible respondent’s testimony that he believed that his trust account held the $50,000 retainer. Specifically respondent did not dispute  making the thirteen disbursements from his trust account that Lakind identified. His explanation for making them was his mistaken belief that DeVito had wire-transferred $50,000 to the trust account as a retainer – funds that he could use at his own discretion. Respondent claimed that, because he failed to maintain adequate records or to open his bank statements, he did not realize that DeVito had never wired the funds. In our view, however, respondent’s apt juggling of his trust, business, and personal accounts belies his assertion.

The dissent details the record evidence that supported the special master’s intent finding, notes that the attorney is a “master of delay” who dragged the bar case out over a ten year period while he continued to practice with “impunity…and, worse, now asks us to reward him for obstructionist behavior by urging mercy due to the passage of time.”

The investigation began as a random audit in July 2008. The majority report sets out the “torturous” path from then till now. 

Another day in New Jersey bar discipline, the place where forgiveness reigns.

I have noted before that, when I got into bar discipline away back in 1984 (thanks George Orwell) New Jersey was universally recognized as the toughest sanction place for unethical lawyers.

Something happened. (Mike Frisch)