Wednesday, June 11, 2014
The New Jersey Supreme Court has disbarred an attorney for knowing misappropriation of entrusted funds.
The Disciplinary Review Board rejected a variety of contentions
Respondent admitted that he used the trust account funds for personal expenses, during this time, because his business was doing poorly. Unquestionably, thus, he knowingly misappropriated trust funds.
Respondent’s claim that he was concerned with the bank’s solvency at the time is undercut by the fact that he mentioned this for the first time at the ethics hearing and that he admitted not knowing what the FDIC rules and regulations were with respect to the insured limits on bank accounts. If respondent were truly concerned about the safety of the monies in the trust account, he would have removed the funds, in one lump sum, and placed them in a trust account at another bank, instead of taking them out, in "dribs and drabs.,... to live on," as he so readily admitted.
Moreover, respondent’s argument that, despite his depletion of the trust account, the monies were still in escrow because he had personal accounts that contained enough funds to "cover" the shortages is meritless. First, he was required to maintain those funds in an attorney trust account, pursuant to R__~. 1:21- 6(a)(1). Second, the accounts that respondent had jointly with his wife were not under his complete control and, therefore, were not exempt from depletion. The same is true for the IRA account, which was subject to fluctuations, based on market conditions. Third, his personal accounts, on occasion, did not, in fact, have enough monies to "cover" the total amount of funds that should have been held in the trust account.
That the funds could be replenished with personal monies, as respondent claimed, is of no moment. Restitution or availability of other funds, even if available, is not a defense to knowing misappropriation.