Friday, January 12, 2018

Second Bite

An attorney who was disbarred in Florida received the lesser sanction of a three-year suspension by the New Jersey Supreme Court.

He must. however, secure Florida reinstatement to be able to seek reinstatement in New Jersey.

The Disciplinary Review Board found the conduct warranted "substantially different" discipline in New Jerse y because the record did not establish "knowing" misappropriation.

But there was other bad stuff per the DRB

In December 2006, respondent and Larry M. Webman launched an enterprise to sell parcels of land in Costa Rica, Central America. Respondent was aware that, in 1993, Webman had been convicted of felony wire fraud and engaging in a scheme to defraud, and that he had served eighteen months in a federal prison for those crimes. Additionally, respondent knew that, in March 2006, the Commodity Futures Trading Commission (CFTC), an independent federal agency that regulates futures and option markets, issued an order permanently enjoining Webman from any dealings with commodities futures sales or transactions.

Notwithstanding that knowledge, the attorney went forth with Webman.

It is true that we are bound by the facts contained in the Florida record. "A final adjudication in another court, agency or tribunal, that an attorney admitted to practice law in this state . . . is guilty of unethical conduct in another jurisdiction . . . shall establish conclusively the facts on which it rests for purposes of a disciplinary proceeding in this state." Rule 1:20-14(a)(5). Nevertheless, we are not bound by the Florida court’s legal conclusion that respondent had an overarching duty to maintain the deposit monies intact in his trust account by way of a constructive escrow agreement. Indeed, a portion of the Florida case that the referee cited in support of his finding of a constructive escrow, United American Bank of Central Florida v. Seliqman, supra, 5499, So.2d 1014, contains the following quoted language: "[i]n the absence of an express agreement, written or oral, the law will imply" certain duties of care upon the escrow agent, in this case, respondent.

Here, however, the parties had an express, written, and fully executed escrow agreement, as evidenced by paragraph six. Therefore, we cannot find clear and convincing evidence that respondent knowingly misappropriated purchasers’ deposit monies, either for himself or for another improper use.

Respondent, nevertheless, engaged in egregiously dishonest, fraudulent conduct, in violation of RPC 8.4(c). We find that he also assisted Webman in conduct that he knew was fraudulent, in violation of RPC 1.2(d), and ran afoul of Florida’s recordkeeping rules, equivalent to New Jersey R. 1:21-6 and RPC 1.15(d).

When respondent partnered with Webman and drafted the model purchase and sale agreement, he knew that Webman had been convicted of fraud in federal court, that Webman had spent time in a federal penitentiary for his crimes, and that a few short months before launching the PIPCR scheme, Webman had been banned for life from participating in the futures and commodities markets in the United States. Under such obvious circumstances, it was unconscionable, and perhaps deliberate, for respondent to draft such a lopsided escrow arrangement into the purchase and sale agreement.

It is also axiomatic that, in any purchase and sale agreement, the seller is presumed to own the property he is offering for sale. The facts here, however, suggest that the purchasers were not aware that PIPCR did not own the property when they turned over their deposits to secure the purchase price of their lots. But respondent knew that PIPCR and Webman did not own the Hardy property. He also knew that Webman would use those funds to purchase that very property and for other, unrelated purposes. Respondent also acted dishonestly by facilitating PIPCR’s $267,000 mortgage and loan for the Hardy property, which encumbered the property that he and Webman were actively marketing to the unsuspecting purchasers at the time.

(Mike Frisch )

Bar Discipline & Process | Permalink


Post a comment