Wednesday, January 13, 2021

Numba One

The New Jersey Supreme Court has disbarred an attorney.
 
The Disciplinary Review Board recommended that sanction for the attorney's involvement in a complex series of arrangements that involved conflicts of interest, business transactions with clients and other misconduct that included the misuse of entrusted funds.
 
The board noted that an attorney-client relationship was not required to find disbarment -worthy misuse of other people's money.

The circumstances are set forth in an opinion of the court in the attorney's bankruptcy

When this unfortunate series of events commenced, Michael Attardi ("Attardi") was a screen writer and an aspirant film producer who had authored and attempted to finance several film scripts. Joseph Anselmo ("Anselmo") was a commercial finance broker who offered to assist Attardi with funding his film scripts and further offered to introduce him to the Defendant for legal representation. In or around June 2006, Anselmo introduced Attardi to the Defendant. Attardi retained the Defendant's law firm Klafter & Mason, LLC ("K&M"), to represent Attardi's businesses in exchange for a two percent equity interest in his various companies. Attardi began working on a film entitled, "Numba One," which was to be a live-action, mafia comedy starring Federico Castelluccio. Numba One, LLC ("Numba One") was a Florida limited liability company, formed for the purpose of producing the movie. Attardi and the Defendant were identified as the original managers of Numba One, and Attardi was the registered agent. Subsequently, Attardi learned that The Writers Guild of America would not permit him to be paid for his script as manager of the production company. Therefore, Attardi resigned as a manager of Numba One, and Andy VanRoon ("VanRoon") became a manager of Numba One. At all times thereafter, VanRoon and the Defendant acted as the two co-managers of Numba One.

In or around the later part of 2010, the Plaintiffs invested a total of $690,000 in Numba One with the understanding that the money was being placed in an escrow account until the total budget amount of $3,000,000 could be raised, further providing that the money would be  returned if the $3,000,000 could not be raised by September 2, 2011. The Plaintiffs' $690,000 was deposited under the name of Numba One into K&M's trust account. There can be no question, as confirmed by the credible testimony of Bade, Scire and Phillips, as well as the operative documents, that Plaintiffs invested their money with the understanding and assurances that not a single dollar would be released until the entire $3,000,000 raise had been achieved. In this regard, the Court notes the operative language appearing in Numba One's Operating Agreement and Confidential Private Offering Memorandum. Pursuant to the Operating Agreement, "[t]he monies shall be placed into a dedicated escrow bank account and will be released to [Numba One] only when the total budget amount of Three Million Dollars ($3,000,000) has been achieved." Plaintiffs' Exhibit 25. Similarly, the Confidential Private Offering Memorandum states that, "[a]ll funds received will be deposited into a dedicated bank escrow account until the Total Minimum Offering being offered hereby is obtained." Plaintiffs' Exhibit 32. These restrictions on the release of the invested funds confirmed the representations included in certain promotional literature prepared by Numba One and shown to potential investors. See Plaintiffs' Exhibits 26 and 35.

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2021/01/the-circumstances-were-set-forth-in-an-opinion-of-the-bankruptcy-court-when-this-unfortunate-serie.html

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