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