Pennsylvania lawyer who kept employee who stole from his aunt’s estate is suspended after the employee stole again

Hello everyone and welcome to this Ethics Alert, which will discuss the recent Pennsylvania Supreme Court Order suspending a lawyer for 6 months after a nonlawyer employee stole from seven estates after the lawyer learned that she had stolen from his aunt’s estate and kept her as an employee.  The case is Office of Disciplinary Counsel v. William T. Krzton, Case No. 86 DB 2021.  The Order and Report and Recommendations of the Disciplinary Board of the Supreme Court of Pennsylvania are here: https://www.pacourts.us/assets/opinions/DisciplinaryBoard/out/86DB2020-Krzton.pdf   

According to the Disciplinary Board’s Report, the lawyer hired the employee in 2008 to handle estate accounting and perform other duties:  “In 2013, (the lawyer) became aware that (the employee) had stolen $3,300 from the decedent estate assets of Anita Mains by drawing one check on the estate account on which she had forged (the lawyer’s) signature. Ms. Mains was (the lawyer’s aunt and he served as executor for her estate.”  “(The lawyer) testified that ‘$3,300 was what my fee was going to be  to the estate, so nobody lost any money except me’ (the lawyer) admonished (the employee) not to take monies again and gave her a ‘second chance.’”

The lawyer admonished the employee and required her to repay the estate through a reduction in pay; however, she continued to steal money from estates. In May 2016, the lawyer was informed by the executrix of an estate that the employee was misrepresenting account balances.  The lawyer told the executrix that she must be mistaken.  The executrix then met with the bank and provided her allegations to a detective with the Allegheny County district attorney’s office.

The amount stolen from that estate was more than $96,000.00. The lawyer then investigated and discovered that, between July and September 2016, the employee had stolen from six additional estates, for a total amount of about $191,000.00.

Notwithstanding the lawyer’s knowledge of the investigation on July 1, 2016, he continued to employ the employee for two more months. He testified that he kept her on because he was “not literate” on her computer, he had several pressing client matters, and the employee did not have access to estate files and checkbooks during that time.

The employee pled guilty to criminal charges of theft and forgery, was sentenced to nine months to 18 months in prison, and was ordered to pay restitution of more than $202,000.00. The lawyer settled a lawsuit filed by the executrix for $92,500.

The Disciplinary Board found that the lawyer violated ethics rules requiring lawyers to act with reasonable diligence, keep clients reasonably informed, keep accurate accounting records, and supervise nonlawyers to ensure that their conduct is compatible with a lawyer’s professional obligations.

According to the Report: “Inexplicably, despite his knowledge of Ms. Hale’s dishonest conduct, (the lawyer) made no efforts to enhance supervision of her activities to ensure compliance with record-keeping responsibilities and prevent further thefts”   The lawyer’s “dereliction of his ethical duties had very serious consequences, as (the employee’s unfettered access allowed her to steal $191,026.99 from seven other estates.”

The Board’s Report also found that the lawyer violated trust account rules and failed to diligently handle another estate matter, which caused a 13 year delay in resolving the estate.

The lawyer was admitted to practice in Pennsylvania in 1976.  The Board considered his long career with no prior discipline, good reputation, cooperation in the investigation, and the fact that he made some reimbursement to the estates as mitigating factors and recommended a six month suspension.  In its August 6, 2021 Order, the Pennsylvania Supreme Court agreed with the Disciplinary Board and imposed the six month suspension. 

Bottom line:  This is another (and rather extreme) example of a lawyer who apparently abrogated his obligation to supervise an employee who stole nearly $200,000.00 of other people’s money that was held in trust.  Lawyer’s must supervise their employees and carefully consider whether to continue to employ an employee who has been proven to have stolen money.  It certainly could have been worse for this lawyer and, according to media reports, he has retired from practicing law.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

New York lawyer who misappropriated $63,700.00 from trust funds by check and ATM card suspended for 3 years

Hello everyone and welcome to this Ethics Alert which will discuss the recent 3 year suspension of a New York lawyer who made 30 cash ATM withdrawals between July 2014 and June 2016 from his trust account totaling $18,700.00 (and more than $45,000.00 by check) from a $192,548.41 trust deposit.  The case is Matter of Pollack, Docket No: 2018-06614 (Feb. 13, 2020 Slip Op 01064.  The appellate court opinion is here:   http://www.courts.state.ny.us/reporter/3dseries/2020/2020_01064.htm

According to the opinion, the lawyer made 30 cash withdrawals totaling $18,700.00 from his trust account with an ATM card beginning in April 2014.  He also withdrew more than $45,000.00 from the account by check.  The lawyer deposited more than $80,000.00 into the account in September 2016, to replenish the misappropriated amounts.

The lawyer also deposited his earned own legal fees into the trust account, which was an improper commingling of funds.  The lawyer told investigators that he was unaware that his bank had linked his trust account to his debit card and that his mistakes were unintentional. The lawyer also said he had diabetes and depression and those conditions contributed to his inability to recognize his mistakes, although he did not know about the conditions at the time.

The opinion concluded that the lawyer’s actions were likely caused by “willful ignorance” rather than the health conditions he claimed as a mitigating factor and, notwithstanding those factors and the lawyer’s expressions of remorse, the 3 year suspension was appropriate.

The opinion states that (the lawyer’s) “diabetic condition cannot reasonably account for the lack of attention and oversight over his bank accounts over an extended two-year period.”  “Assuming that the respondent truly did not know that he was invading funds that he knew were ‘not to be touched,’ willful ignorance, rather than uncontrolled diabetes, is the more plausible explanation for the respondent’s use of escrow funds for personal expenses.”

The opinion noted that the lawyer had been admonished in 2018 for fabricating a judicial decree and received two letters of advisement in 2017 for failing to keep clients reasonably informed about the status of legal matters.

Bottom line:  This lawyer misappropriated over almost $64,000.00 from trust funds apparently for his own use and had prior discipline; however, somewhat surprisingly, was not disbarred, which would probably have been the sanction in most other states and jurisdictions, including Florida, regardless of the mitigation.

Be careful out there.

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida 34683

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

Joseph Corsmeier about.me/corsmeierethicsblogs

Maryland Court of Appeals disbars lawyer for, inter alia, serious trust account and other violations, negligence, and calling a witness a “baby-snatching bitch”

Hello everyone and welcome to this Ethics Alert, which will discuss the recent Maryland Court of Appeals opinion which disbarred a lawyer for, inter alia, engaging in a pattern of mismanaging client trust funds and other trust account violations, failing to appear in court on behalf of several clients, failing to respond to requests by both Bar Counsel and clients, urging a former client to provide Bar Counsel with false information in attempt to interfere with the investigation, failing to adequately communicate with clients, and calling a non-client witness a “baby-snatching bitch”.  The case is Attorney Grievance Commission v. Garland Montgomery Jarrat Sanderson, Case No. 24-C-18-002381 AG, and the July 23, 2019 opinion is here: https://www.courts.state.md.us/data/opinions/coa/2019/3a18ag.pdf

In the very long opinion, the court addressed the substantive issues, evidence, Bar rule violation, and aggravating and mitigating factors and disbarred the lawyer.  With regard to the disparaging remarks to the non-client witness, in November 2015, the lawyer was representing the parent of a child in a case involving CINA (Children in Need of Assistance).  At a hearing in the case, a social worker for the Baltimore County Department of Social Services provided testimony.

After the hearing, the lawyer approached the social worker in the hallway outside the courtroom and there was testimony that the lawyer and the social worker had a brief but heated exchange of words that ended with the lawyer calling the social worker a “bitch.”  The social worker testified at the disciplinary hearing that the lawyer actually referred to her as a “baby-snatching bitch.”

The opinion upheld the disciplinary judge’s finding that, in using the disparaging language, the lawyer violated Rule 8.4(e) of the Maryland Lawyer’s Rules of Professional Conduct.  That rule prohibits attorneys from, either by words or conduct, expressing bias or prejudice when acting in the lawyer’s professional capacity, including discrimination based on race, sex, religion, disability, age, or sexual orientation. The judge in the disciplinary matter concluded that the lawyer violated Rule 8.4(e) in his exchange with the social worker because his remarks were disparaging.

The lawyer argued the word’s widespread use in hip-hop music made the use of the term alone insufficient to support a violation of the rule of professional conduct and that, in some instances, the word “bitch” actually implied a level of respect. The court rejected that argument out of hand and stated that the lawyer’s language “in no way demonstrated any such level of respect.”

Bottom line:  This disbarment was a result of the lawyer’s multiple egregious violations of Maryland Bar rules and it is clear that this court (and most likely other courts) will not tolerate the use of such disparaging language while the lawyer is acting in the capacity of a lawyer.  Not sure what this lawyer was thinking (or not thinking)…

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

3 New York law firm partners suspended for 6 months failing to supervise office manager who stole more than $200,000.00 from trust account

Hello everyone and welcome to this Ethics Alert, which will discuss the recent suspensions of 3 New York law firm partners for failing to supervise an office manager who stole more than $200,000.00 from the firm’s trust account.  The May 29, 2019 opinions and orders are here:

In the Matter of Louis P. Karol, Case No.  2016-01156 http://www.nycourts.gov/courts/AD2/Handdowns/2019/Decisions/D59287.pdf,

In the Matter of Michael J. Hausman, Case No. 01157 http://www.nycourts.gov/courts/AD2/Handdowns/2019/Decisions/D59288.pdf

In the Matter of Howard L. Sosnik, Case No. 2016-01158 http://www.nycourts.gov/courts/AD2/Handdowns/2019/Decisions/D59289.pdf

According to the opinions, in May 2013, the law firm was notified of a returned check written from the firm’s escrow (trust) account. The firm hired an accounting firm, which conducted an audit and discovered shortages of over $200,000.00.  The audit also revealed that the employee had been transferring money between escrow (trust), operating and payroll accounts without any “rhyme or reason” for a period of at least 3½ years.  The law firm replenished the misappropriated funds and cooperated in the investigation.

The opinions also state that a review of monthly bank statements would have put the partners on notice of questionable transfers between account which should have been an early warning to give the accounting records greater scrutiny.  One partner testified that the office manager was a “dedicated and trusted employee” and he and his partners occasionally checked transactions to make sure disbursements equaled deposits; however, the opinions stated that this was insufficient supervision.  The partner that the firm did not report the employee to police since “(we) didn’t want it to get out there that we were foolish because that would hurt us”; however, the firm instituted new bookkeeping practices.

“We find that had the Firm’s partners provided proper oversight, including a review of the Firm’s escrow account bank statements, the questionable transfers between the Firm’s escrow, operating, and payroll accounts, including those transfers which were made using online access, should have served as an early warning to the respondent and his partners to undertake greater scrutiny of the escrow account transactions. The failure to detect these early warning signs is directly attributable to the respondent’s and his partners’ failure to provide proper oversight of the escrow account.”

The opinions found the following mitigation:  “acceptance of responsibility and candor; the absence of venal intent; the Firm’s replenishment of the misappropriated client funds so that no client sustained a continued financial loss; the Firm’s cooperation with the petitioner’s investigation; the remedial actions taken to institute proper bank and bookkeeping practices to avoid a reoccurrence; the expressed remorse; the character evidence; and the respondent’s unblemished disciplinary record…”  After discussing the facts and mitigating factors, the Court imposed a 6 month suspension on each lawyer.

Bottom line:  This is another very unfortunate cautionary tale.  Partners in a law firm must be fully aware that they will be held responsible for the proper supervision of employees, even if that employee is “dedicated and trusted”.  If the firm employee steals money, particularly if the employee steals money from the law firm trust account, the lawyer will potentially be subject to severe discipline.

Be careful out there!

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeierabout.me/corsmeierethicsblogs

3 New York law firm partners suspended for 6 months failing to supervise office manager who stole more than $200,000.00 from trust account

Hello everyone and welcome to this Ethics Alert, which will discuss the recent suspensions of 3 New York law firm partners for failing to supervise an office manager who stole more than $200,000.00 from the firm’s trust account.  The May 29, 2019 opinions and orders are here:

In the Matter of Louis P. Karol, Case No.  2016-01156 http://www.nycourts.gov/courts/AD2/Handdowns/2019/Decisions/D59287.pdf,

In the Matter of Michael J. Hausman, Case No. 01157 http://www.nycourts.gov/courts/AD2/Handdowns/2019/Decisions/D59288.pdf

In the Matter of Howard L. Sosnik, Case No. 2016-01158 http://www.nycourts.gov/courts/AD2/Handdowns/2019/Decisions/D59289.pdf

According to the opinions, in May 2013, the law firm was notified of a returned check written from the firm’s escrow (trust) account. The firm hired an accounting firm, which conducted an audit and discovered shortages of over $200,000.00.  The audit also revealed that the employee had been transferring money between escrow (trust), operating and payroll accounts without any “rhyme or reason” for a period of at least 3½ years.  The law firm replenished the misappropriated funds and cooperated in the investigation.

The opinions also state that a review of monthly bank statements would have put the partners on notice of questionable transfers between account which should have been an early warning to give the accounting records greater scrutiny.  One partner testified that the office manager was a “dedicated and trusted employee” and he and his partners occasionally checked transactions to make sure disbursements equaled deposits; however, the opinions stated that this was insufficient supervision.  The partner that the firm did not report the employee to police since “(we) didn’t want it to get out there that we were foolish because that would hurt us”; however, the firm instituted new bookkeeping practices.

“We find that had the Firm’s partners provided proper oversight, including a review of the Firm’s escrow account bank statements, the questionable transfers between the Firm’s escrow, operating, and payroll accounts, including those transfers which were made using online access, should have served as an early warning to the respondent and his partners to undertake greater scrutiny of the escrow account transactions. The failure to detect these early warning signs is directly attributable to the respondent’s and his partners’ failure to provide proper oversight of the escrow account.”

The opinions found the following mitigation:  “acceptance of responsibility and candor; the absence of venal intent; the Firm’s replenishment of the misappropriated client funds so that no client sustained a continued financial loss; the Firm’s cooperation with the petitioner’s investigation; the remedial actions taken to institute proper bank and bookkeeping practices to avoid a reoccurrence; the expressed remorse; the character evidence; and the respondent’s unblemished disciplinary record…”  After discussing the facts and mitigating factors, the Court imposed a 6 month suspension on each lawyer.

Bottom line:  This is another very unfortunate cautionary tale.  Partners in a law firm must be fully aware that they will be held responsible for the proper supervision of employees, even if that employee is “dedicated and trusted”.  If the firm employee steals money, particularly if the employee steals money from the law firm trust account, the lawyer will potentially be subject to severe discipline.

Be careful out there!

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

 

 

Florida lawyer disbarred for improper use of trust funds and “engag(ing) in dishonest and deceitful conduct”

Hello everyone and welcome to this Ethics Alert which will discuss the recent (November 21, 2018) Florida Supreme Court disciplinary opinion which disbarred a lawyer for misusing client trust funds and, inter alia, “engag(ing) in dishonest and deceitful conduct by using one client’s funds to pay obligations owed to another client.”  The referee had recommended that no discipline be imposed.  The case is: The Florida Bar v. Jeremy W. Alters, Case No.: SC14-100 and the link to the case is here:  http://www.floridasupremecourt.org/decisions/2018/sc14-100.pdf

Procedurally, the lawyer was suspended on an emergency basis on December 28, 2011 after the Bar filed a petition for emergency suspension; however, he was reinstated by the Court based upon the referee’s recommendation on January 25, 2012.  The Bar filed a Complaint on January 22, 2014 and, after hearing oral arguments on May 21, 2018, the Court suspended the lawyer on its own motion, pending the issuance of this opinion.

According to the facts, the lawyer’s partner supervised the trust account an, starting in September 2009, multiple improper transfers were made from the trust account.  The lawyer was the majority shareholder of the firm and he became aware of those improper transfers in February 2010.  He also became aware of additional improper transfers in December 2010. The Bar Complaint states that all of the trust account shortages were repaid by September 2011; however, there were shortages of over $1 million in 2010 and 2011.

The lawyer did not report the improper transfers to the Bar or to other firm partners and, according to the opinion, he did not make any efforts to prevent further improper transfers and ensure compliance with trust accounting rules. The partner who supervised the trust account when the improper transfers occurred later left the firm and was also charged with violating Bar rules. That lawyer made consent agreement for discipline with the Bar and testified at this lawyer’s disciplinary hearing.

The referee discounted testimony from the law firm’s comptroller that the lawyer personally directed many of the improper transfers; however, according to the opinion, there was unchallenged evidence that at least 10 transfers were made to the firm’s operating account to cover payments made to the lawyer’s personal bank account, the improper transfers continued after the lawyer took direct control of the trust account, and the lawyer personally made a transfer of one client’s funds to cover the obligations to another client in December 2010.

The lawyer also deposited personal funds, loans, and proceeds from a co-counseling agreement to make up shortages, which constitutes commingling.  The Bar Rules have been revised to permit this commingling to cover shortages and lawyers are also required to report trust account shortages to The Florida Bar.

The lawyer argued that he did not intend to violate the Bar Rules.  The opinion rejected that argument and cited several cases, including Florida Bar v. Riggs, 944 So. 2d 167, 171 (Fla. 2006), which held that “(k)nowingly or negligently engaging in sloppy bookkeeping amounts to intent under rule 4-8.4(c).”  The opinion also stated that the court “has disbarred attorneys even for gross negligence in maintaining a trust account,” pointing to cases where although the attorneys may have not directly taken trust account funds, they had “abandoned their professional duty to safeguard their clients’ funds.”

According to the opinion, “the referee recommends that (the lawyer) only be found guilty of having violated Bar Rules 4-1.15 (Safekeeping Property) and 5-1.1(b) (Application of Trust Funds or Property to Specific Purpose)” and “(b)ased on her findings of fact, recommendations as to guilt, and findings in aggravation and mitigation, the referee recommends that (the lawyer) not be further sanctioned.”

The unanimous opinion reversed the referee’s not guilty findings on multiple rule violations, including improperly transferring funds out of the trust account and failing to report trust account shortages to the Bar, and disbarred the lawyer stating “(t)he Court has long held that the misuse of client funds is one of the most serious offenses a lawyer can commit”. “Disbarment is the presumptively appropriate sanction, under both the (Florida) Standards (for Imposing Lawyer Sanctions) and existing case law, when a lawyer intentionally misappropriates trust funds.”

The opinion further stated that disbarment was appropriate because, in addition, the lawyer did not stop the improper transfers once he learned of them, did not initiate corrective procedures, and the wrongful transfers continued after he took control of the trust account.   “(The lawyer) entirely abandoned his duty to protect clients’ funds held in trust.” “This Court will not allow attorneys to abdicate their responsibility to protect clients’ property and enjoy the privilege of practicing law.”

With regard to the imposition of costs, the referee recommended that the Bar be awarded “only its administrative costs of $1250, and that (the lawyer) be awarded his costs in the amount of $143,913.35, despite recommending that (he) be found guilty of having violated two Bar Rules…we find that the referee abused her discretion; we disapprove the referee’s recommended award of costs, award the Bar its costs of $305,360.03, and award (the lawyer) nothing.”   The opinion also states “the court directs that no further proceedings in this case shall be held before Circuit Judge Marcia B. Caballero as referee.”

Bottom line:  This Florida Bar disciplinary case, which began in 2011, was one of the most media intensive, protracted, and contentious that I have seen in my many years of practice.  The Florida Supreme Court has made it very clear in its opinion that it will not tolerate trust account violations such as these, even if the lawyer claims that he or she did not intend to violate the Bar rules.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

 

Delaware lawyer suspended for failure to supervise and permanently prohibited from handling law firm trust and financial records

Hello everyone and welcome to this Ethics Alert, which will discuss the recent Delaware Supreme Court opinion suspending a lawyer for 6 months and permanently prohibiting him from handling law firm financial records due to failure to supervise.  The disciplinary case is In the Matter of Andrew M. Beauregard, Delaware Supreme Court Case No. 477,2017.  The June 5, 2018 opinion is here: http://php.delawareonline.com/news/assets/2018/06/andre_beauregard_law_license_suspended.pdf

According to the opinion, in March 20015, a client filed a complaint with the Delaware Office of Disciplinary Counsel after receiving two $1,000.00 checks in a retainer refund, when there should have been just been a $1,000.00 payment. The lawyer investigated and suspended the employee and hired two new bookkeepers who advised him that there were no missing funds.

A law firm compliance audit in 2015 found issues with bank reconciliations, failing to remove earned fees from accounts, and negative client balances in a fiduciary account in the amount of approximately $7,000.00 to $8,000.00 each month.  The lawyer stated that he addressed the deficiencies, hired inside and outside bookkeepers, upgraded the firm’s accounting software, and increased the time he spent supervising nonlawyer employees.

The opinion stated that the lawyer was “responsible for the maintenance of his law firm’s books and records.  As managing partner of the firm, (the lawyer) failed to exercise reasonable supervision over non-lawyer employees charged with the keeping of the law firm’s books and records, failed to take reasonable action to correct known books & records violations, and misrepresented his law firm’s compliance on his 2015 Certificate of Compliance.”

The opinion further stated that, although the lawyer reviewed trust account records each month, the review “could not have been done with any precision” since there were negative balances for four to five clients over a five-month period ending in April 2015.  The lawyer discussed the shortages with the employee handling the firm’s trust accounts, who was a PhD in business administration and had worked at other law firms, and the employee said the negative balances were a “glitch in the program” and had nothing to do with any shortages. The employee later testified that there had been some overpayments which resulted in the negative balances.

The lawyer had previously been publicly reprimanded in 2005 for failing to supervise client funds after an employee stole $140,000.00 from his prior law firm where he served as managing partner. The 2005 reprimand order mentioned that the lawyer’s mother and father-in-law died, he had shoulder surgery, and he was “diagnosed with a debilitating medical condition” and ordered him to dissolve the law firm.

The 2018 opinion found that the lawyer’s prior discipline was an aggravating factor. “(The lawyer) was previously disciplined for substantially the same books and records violations, and thus should have been in a hyper-vigilant state when he assumed the same supervisory responsibilities at his new law firm.”  “Lawyers cannot stick their heads in the sand and blind themselves to their professional obligations.”

The opinion also found mitigating factors of lack of dishonest or selfish motive, timely and good faith effort to correct violations, cooperation in the disciplinary proceedings, and good character and reputation evidence.  The lawyer was suspended for 6 months beginning July 2, 2018 and was permanently prohibited from handling firm financial books and records; however, he will be permitted to represent defendants in criminal cases assigned by the Delaware Office of Conflicts Counsel during the suspension.

Bottom line:  This lawyer failed to properly supervise non-lawyers who were supposed to be properly maintaining his law firm’s trust records and “stuck his head in the sand” with regard to his professional obligations.  In addition, I am not aware of any previous Bar case where a Court permanently barred a lawyer from supervising his law firm trust accounts and financial records.  Lawyers beware: we are ultimately responsible for our trust account’s compliance with the Bar Rules in our jurisdiction.  This lawyer paid for the failure to comply with a 6 month suspension and permanent ban on handling trust accounts.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

Florida lawyer who hired convicted federal felon and failed to notice trust account theft of $4.8 million is disbarred

Hello everyone and welcome to this Ethics Alert, which will discuss recent Florida Supreme Court opinion which disbarred a lawyer who hired an individual who had been convicted of a felony wire fraud and who then stole $4.8 million from the lawyer’s trust account.  The case is: The Florida Bar v. Randall Lawrence Gilbert, SC15-204, and the March 22, 2018 opinion is here:  http://www.floridasupremecourt.org/decisions/2018/sc15-2004.pdf

According to the opinion, the lawyer hired Sacks as a bookkeeper in February 2005 after he was referred by a friend. During the interview, Sacks told the lawyer that he was living in a halfway house after having been recently released from federal prison.  He also claimed that he was a disbarred New York attorney and that he was a certified public accountant.

The lawyer conducted no research or investigation regarding Sacks’ claims or the reason for the felony and alleged disbarment. Sacks was actually never a New York lawyer or a CPA and he had been convicted in 2002 on “11 counts of “wire fraud” and a sentenced to ‘41 months imprisonment, followed by a total of five (5) years [probation, and ordered to pay] [r]estitution in the amount of $7,906,332.14.’”

In an April 2005 meeting with Sacks’ probation officer, the lawyer also signed a form acknowledging the risk of hiring Sacks which stated that Sacks had been ordered to pay $7.9 million in restitution and provided the above details regarding the conviction. The probation officer also told the lawyer that he did not believe that it would be appropriate for Sacks to work at a law firm given his criminal history.

Five months after being hired, Sacks forged the lawyer’s signature on a trust account check for nearly $21,000.00 that was used to pay for cosmetic surgery for Sacks’ girlfriend.  The lawyer then fired Sacks and made false statements to the probation officer regarding the reason that he fired him.  The lawyer then sent Sacks to therapy and rehired him in October 2005.

Sacks carried business cards identifying himself as a JD and a CPA.  The lawyer eventually gave Sacks “full rein” over the real-estate closing side of his practice, which grew quickly after the mortgage foreclosure crisis in 2008 and he also made him the firm’s chief financial officer.

Sacks deposited funds into the firm’s trust account which were intended to pay off mortgages on client properties, then transferred the properties to a shell company that he created to keep the mortgages active with monthly payments; however, he misappropriated millions of dollars.

The opinion states that Sacks handled all law firm trust account matters and prepared information for the law firm’s CPA.  The lawyer claimed that he reviewed financial reconciliations prepared by Sacks and looked at the first and last page of bank account statements. The thefts were discovered in February 2014 when the lawyer received a call from another lawyer asking why a mortgage for that lawyer’s client was still pending when it should have been satisfied.

The law firm’s title insurer had to pay more than $3.6 million in claims.  The lawyer lost $1 million when Sacks did not pay off the mortgage on his home in a refinancing and also paid approximately $1.03 million to individuals who lost money as a result of the thefts.

The referee found that the lawyer “delegated all matters regarding the administration of the firm’s trust account to Sacks, including preparing trust account reconciliations, acting as the firm’s contact person and intermediary with the trust account reviews by Old Republic, Gilbert’s title insurance underwriter, and dealing with the firm’s CPA.”  He was also “curiously uncurious” about the employee’s criminal past and claims of expertise.

The referee recommended a two-year suspension, followed by two years’ of probation.  The opinion stated “Indeed, this case gives new meaning to the phrase ‘turning a blind eye” and, after reviewing the mitigation, aggravation and case law, disbarred the lawyer.

Bottom line:  This is a very extreme example of a lawyer completely failing to supervise a non-lawyer with access to a trust account and also engaging in conduct involving dishonesty and misrepresentation.  Lawyers are required to supervise non-lawyers, particularly if they are provided with access to the lawyer’s trust account, which is not recommended.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

Referee report recommends that The Florida Bar pay $143,913.35 in defense costs incurred by accused lawyer

Hello everyone and welcome to this Ethics Alert which will discuss the recent recommendation by a referee that The Florida Bar pay $143,913.35 in costs incurred by an accused Broward County lawyer in defending a Bar discipline proceeding and denying the Bar’s request for $305,360.03 in costs.  The disciplinary matter is: The Florida Bar v. Jeremy Alters, Case No. SC14-100 (Fla. SC).

The referee, who is a Miami-Dade circuit judge, issued a recommendation on The Florida Bar’s Amended Motion to Tax Costs dated September 26, 2017.  That recommendation was filed with the Florida Supreme Court on October 5, 2017 and is here: https://efactssc-public.flcourts.org/casedocuments/2014/100/2014-100_order_222937.pdf.  The referee’s recommendation on The Florida Bar’s amended motion to tax costs is also dated September 26, 2017 and was filed with the Florida Supreme Court on October 5, 2017 and is here: https://efactssc-public.flcourts.org/casedocuments/2014/100/2014-100_order_222936.pdf.

The Florida Bar filed a Petition for Emergency Suspension in 2011 and the lawyer was suspended on an emergency basis by Supreme Court Order December 28, 2011.  The referee recommended that the suspension be lifted in her report dated January 20, 2012 and the Supreme Court lifted the suspension by Order dated January 25, 2012.

The Florida Bar then filed a complaint against Alters in January 2014, along with a companion complaint against Kimberly Boldt, who was also a managing partner at the law firm of Alters Boldt Brown Rash & Culmo.  The Bar complaint alleged that the two lawyers made improper trust account transfers of over more than $2 million between September 2009 and October 2010 from client trust accounts to law firm operating accounts.  The Bar dropped the charges against Boldt and sought disbarment for Alters throughout the proceedings.

The referee issued a report of referee on November 14, 2016 recommending that Alters be found guilty of only two of the six alleged violations and not guilty of intentional trust account violations or misappropriation. The two violations to which the lawyer had previously admitted were lack of supervision and failure to take corrective action, but not willful misconduct.  The Report of Referee is here:  https://efactssc-public.flcourts.org/casedocuments/2014/100/2014-100_miscdoc_333910.pdf

In her September 22, 2017 recommendation on the lawyer’s motion to tax costs and fees, the referee criticized The Florida Bar for ignoring evidence in pursuing Alter, who she stated was the wrong attorney, and recommended that The Florida Bar pay Alters’ defense costs in the amount of $143,913.35 in defending the Bar proceedings.

The referee also recommended denial of the Bar’s request for $305,360.03 in costs, stating that it was excessive considering the less serious rule violations that the referee found that the lawyer violated.  “They (the costs) are all associated with the violations the bar was unable to prove.”  The referee also stated that: “There is nothing in the rules that requires a taxation of costs against a respondent where the costs were directly associated with failed claims and not necessary in connection with the rules violations that were found to have occurred.”

According to the referee’s recommendation, Boldt was not credible and there was a clear difference between how the Bar treated Alters and Boldt. The Bar “ignored evidence that was front and center and refused to believe or even interview credible witnesses.”  In addition, the Bar “was supplied with evidence that Boldt authorized the improper transfers but did nothing with it.”  The referee also stated that the Bar relied heavily on text messages provided by Alters’ former brother-in-law, even though they were shown to have been changed; however, notwithstanding this, the Bar dropped charges against Boldt and continued to pursue disbarment against Alters:

“In fact, dating back to January 2012, the Bar had documentary evidence (draft) letter and transmittal emails from Boldt) and testimony by Bruce Rogow and Respondent that Ms. Boldt was not being candid and that it was she, Ms. Boldt, not Respondent, who authorized the improper transfers in January and February 2010.  The Bar also had evidence she was in charge of the day to day operations of the firm from around August or September 2009 until she left sometime in June or July, 2010.  Why the Bar chose to side with her and ignore the evidence remains a mystery, but it must pay the cost of that bad choice because there were no justiciable issues of law or fact; simply, there was no evidence that Respondent authorized or that he knew about the improper trust account transfers when they occurred.”

The referee also recommended that, regardless of her findings of guilt on two admitted Bar rule violations, the Florida Supreme Court should not impose any discipline on Alters.

Bottom line:  This is an unusual case, to say the least.  It is very rare for a referee to recommend that the Bar pay an accused lawyer’s costs and deny the Bar’s costs and even rarer for the Florida Supreme Court to uphold such a recommendation.  We will see what happens.  Stay tuned…

…and be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier about.me/corsmeierethicsblogs

New Jersey lawyer disbarred after trust account checks used as payment for phone sex were dishonored

Hello everyone and welcome to this Ethics Alert which will discuss the recent New Jersey Supreme Court opinion which adopted the New Jersey Disciplinary Review Board’s recommendation and disbarred a lawyer after 3 of his trust checks in the amount of $36.00 for phone sex were dishonored.  The case is In re James P. Madden, No. D-17, 078323 and the Court’s January 4, 2017 opinion is here: http://drblookupportal.judiciary.state.nj.us/DocumentHandler.ashx?document_id=1079192.  The Disciplinary Review Board’s September 30, 2016 opinion is:  In re James P. Madden, No. DRB 16-010 at p. 26 (N.J. Sup. Ct. Disciplinary Rev. Bd. and is here: http://drblookupportal.judiciary.state.nj.us/DocumentHandler.ashx?document_id=1079192

The New Jersey disciplinary authorities began investigating the lawyer after receiving notice of overdrafts from the lawyer’s trust account.  The overdrafts were caused by three $36.00 charges from UNI Information Inc., a provider of “adult entertainment” in the form of “‘phone sex talk.”

According to the Disciplinary Review Board’s Decision, from April 2010 through early 2013, the lawyer paid more than $14,000.00 from his trust account to UNI for the “adult entertainment”.  The lawyer stated that he charged the phone sex calls to his trust account “because he had personal funds in the account, at that time, and did not have a business account, but was in the process ‘of reestablishing one as soon as possible’”  The lawyer stated in a 2013 letter to the Office of Attorney Ethics that his mother had passed away in 2011 and he became depressed and had “little or no motivation.”  He also provided evidence that he had been in “episodic psychotherapy” since 2011.

The Board’s Decision found that the lawyer had violated New Jersey Bar Rules in 5 separate client matters, commingled personal and client funds, and failed to cooperate and abide by a court order after failing to provide trust account documents and comply with an order to produce the trust documents, failure to keep proper records.

The Decision also found that the lawyer “continuously invaded client funds to support his alcohol, gambling, and phone sex proclivities.”)  “(F)or respondent’s knowing misappropriation of client funds … we recommend respondent’s disbarment.”  The New Jersey Supreme Court adopted the Review Board’s Decision and disbarred the lawyer.

Bottom line:  This another bizarre case involving a lawyer who took $14,000.00 from his trust account for phone sex.  This lawyer appears to have completely lost control of his actions and his life and also tried to justify his actions with self-serving excuses.

Be careful out there and don’t do this please.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com