New Jersey: Leave No More Than $250 Of Personal Funds In Escrow Accounts

The New Jersey Supreme Court reprimanded an attorney in a matter that had commenced with a notice of random audit from the Office of Attorney Ethics (“OAE”) in October 2014.

The attorney had failed to comply with the notice despite demands for several years but the audit eventually took place as described by the Disciplinary Review Board

…several recordkeeping deficiencies came to light during the OAE’s December 2018 demand audit of respondent’s financial records. In the Zuccheri matter, after respondent made September 2015 disbursements totaling $200,113.53, her PNC ATA ledger balance failed to reflect an additional $10,000 held in the PNC ATA related to an unspecified client matter, and showed another $5 less than the actual balance held in the account. Had respondent reviewed her bank statements and reconciled her attorney accounts, such discrepancies would have become immediately apparent.

There was also commingling in that the attorney had kept excess funds in the escrow account

In respect of commingling, for almost three years (August 6, 2015 to July 5, 2018), respondent left between $1,788.95 and $3,041.95 of her own funds in the PNC ATA, purportedly to avoid an account closure by the bank. Those amounts, however, were far in excess of the funds reasonably necessary for the payment of unforeseen bank charges. The OAE recommends that attorneys leave no more than $250 of personal funds in the trust account for that purpose.

Sanction

None of respondent’s violations, viewed alone, were of a serious nature. Without more, they might warrant only an admonition, particularly in light of her unblemished ethics history since her 2007 admission to the bar.

Yet, two aggravating factors must be considered in order for us to craft the appropriate quantum of discipline. First, as a result of respondent’s poor recordkeeping, Zuccheri was deprived of $19,000 for almost three years. Second, we note the default nature of these proceedings. “A respondent’s default or failure to cooperate with the investigative authorities operates as an aggravating factor, which is sufficient to permit a penalty that would otherwise be appropriate to be further enhanced.” In re Kivler, 193 N.J. 332, 342 (2008) (citations omitted).

For the totality of respondent’s misconduct in this, her first brush with disciplinary authorities, we determine that a reprimand is warranted. Vice-Chair Gallipoli, and Members Singer and Zmirich voted for a censure.

(Mike Frisch)