Consent Moots Sanction Disagreement

The New Jersey Supreme Court accepted an attorney’s consent to disbarment.

The consent mooted a disagreement over the appropriate sanction.

The special ethics adjudicator had recommended that a censure be imposed.

At issue was a complex transaction involving Respondent’s son where a third party was defrauded and he did not profit. 

A majority of the Disciplinary Review Board had recommended disbarment on its finding of knowing misappropriation with a dissent that found the recommendation an unwarranted expansion of existing law

We agree with the Majority’s conclusion that respondent was not aware of the alleged criminal scheme to divert the money and as a result, had no duty to take affirmative steps to prevent the implementation of a criminal scheme to divert the money. We also agree with the Majority that respondent did not, in fact, represent LaTour and that, as a result, respondent did not have a conflict of interest. Where we part ways with the Majority is that we cannot find that respondent knew the funds were not going for the purpose intended, namely purchase of the insurance policy. In our view, absent that knowledge, there can be no knowing misappropriation.

Respondent’s conduct was far from blameless. After the funds had been disbursed, he knowingly misrepresented to LaTour that the funds were still in his escrow account when, in fact, they were not. He also improperly insisted that LaTour withdraw his ethics grievance as a condition precedent to respondent returning the funds. While we do not find that respondent knowingly misappropriated the funds, we agree with the Special Ethics Adjudicator that he was negligent in that he did not take additional steps to ensure the funds were used for the purpose for which they were intended. We find the amount of money involved, $400,000 to be an aggravating factor. We find as mitigating factors (1) the fact that respondent reimbursed LaTour in full for the funds lost, and (2) the fact that respondent had no prior discipline in over thirty years as a member of the New Jersey bar and almost fifty years at the bar in New York when the events giving rise to this proceeding occurred. Based upon the foregoing, and our conclusion that there was no knowing misappropriation proven by clear and convincing evidence, we would recommend the imposition of a one-year suspension for respondent’s misconduct.

(Mike Frisch)