No Disbarment For “Brazen Crimes Of Dishonesty”

The New Jersey Supreme rejected a recommendation of disbarment of its Disciplinary Review Board in favor of a five-year suspension.

The Court having determined that a five-year suspension from the practice of law is the appropriate quantum of discipline for respondent’s unethical conduct

As is its custom, the court order does not explain its reasoning; rather only the result.

The DRB’s sanction discussion

Here, for the 2013 through 2015 tax years, based on respondent’s decision to provide his accountant with false information concerning his firm’s finances, he underreported to the IRS a total of more than $1 million of his firm’s gross receipts and, in 2014, he overstated his firm’s expenses by more than $50,000. Thereafter, for the 2016 through 2018 tax years, respondent escalated his criminal behavior by altogether and willfully failing to file any federal income tax returns, despite his firm earning more than $8 million in gross receipts during that timeframe and, thus, owing a substantial tax obligation to the federal government. Finally, for three quarters during the 2017 tax year, respondent willfully failed to report and remit to the IRS a total of $56,904 in payroll taxes that he had withheld from his employees’ paychecks.

In our view, respondent’s protracted criminal scheme to evade his significant tax obligations is, arguably, just as egregious as that of the disbarred attorney in Long. Although respondent did not appear to have attempted to frustrate the government’s investigation of his conduct or to place his subordinates in potential legal jeopardy, as occurred in Long, respondent’s criminal conduct spanned a greater timeframe and resulted in a far more serious tax loss to the federal government. Significantly, unlike Long, who criminally failed to report more than $800,000 in personal income during a four-year period, resulting in a $388,362 tax loss to the federal government, respondent’s criminal conduct (1) spanned six years, during which time he concealed millions of dollars of his firm’s gross receipts from the IRS; (2) resulted in diverse, serious criminal tax infractions, including repeatedly failing to remit payroll taxes that he had withheld from his employees’ paychecks; and (3) caused a staggering $715,746 total tax loss to the federal government. Moreover, unlike the attorney in Long, respondent did not fully satisfy his restitution obligation to the federal government at sentencing.

In contrast to Long, who ultimately accepted responsibility for his crimes, respondent, as described by Judge Beetlestone, “could not bring himself to clearly accept responsibility, suggesting, rather, that” his criminal behavior was the product of recklessness and “that his crimes [were] simply errors of omission.” Consequently, we echo Judge Beetlestone’s concern that respondent has failed to appreciate the seriousness of his criminal actions by claiming, erroneously, that his conduct “happened because . . . he wasn’t paying attention.”

Conclusion

In conclusion, respondent willfully cast aside his successful legal practice by his brazen crimes of dishonesty towards the federal government, which suffered a substantial tax loss far greater than that caused by attorneys who have 25 received terms of suspension for committing similar tax related crimes. As the government noted during sentencing, respondent willfully failed, for years, to fulfill his significant tax obligations, even after the IRS had warned him that its civil examination had become a criminal investigation. Given the staggering tax loss to the federal government that resulted from respondent’s prolonged criminal scheme, his inability to clearly accept remorse for his actions before a federal judge, and his lack of any compelling mitigating factors, we determine that respondent is “‘[in]capable of meeting the standards that must guide all members of the profession.’” In re Cammarano, 219 N.J. 415, 421 (2014) (quoting In re Harris, 182 N.J. 594, 609 (2005)). Thus, to effectively protect the public and preserve confidence in the bar, we recommend to the Court that respondent be disbarred.

Additionally, in Member Hoberman’s view, respondent’s repeated failure to remit to the federal government payroll taxes that he had withheld from his employees’ paychecks, despite his fiduciary duty to do so, constitutes the knowing misappropriation of escrow funds, in violation of the principles of In re Hollendonner, 102 N.J. 21 (1985).

Vice-Chair Boyer and Members Campelo, Rodriguez, and Spencer voted to recommend the imposition of a three-year suspension, retroactive to respondent’s February 1, 2023 temporary suspension, with the condition that, prior to reinstatement, he demonstrate either that he has fully satisfied his restitution obligation to the federal government or has complied with a recognized restitution repayment plan with the federal government. 

(Mike Frisch)