Friday, March 26, 2021
An attorney whose lax supervision of a non-lawyer employee facilitated a $2.7 million misappropriation has been reprimanded by the New Jersey Supreme Court as reciprocal discipline for a six-month New York suspension.
As explained by the Disciplinary Review Board
When respondent initially trained Teitelbaum, he properly supervised Teitelbaum’s work. Thereafter, respondent failed to regularly review, audit, and reconcile the firm’s attorney trust accounts, or to supervise Teitelbaum. Indeed, as time progressed, respondent delegated more responsibility to Teitelbaum, allowed him to make online bank account transfers, and authorized him to be a signatory on the firm’s attorney trust account. Between 2009 and 2013, as a result of respondent’s utter abdication of his recordkeeping duties, Teitelbaum misappropriated more than $2.7 million from the firm’s accounts, including the attorney trust account, comprising more than $2.1 million in client funds, in more than 200 client matters, and more than $573,000 in law firm funds. Additionally, between 2005 and 2009, respondent improperly deposited more than $15,000 in personal funds in his firm’s attorney trust account, out of ignorance of the Rules of Professional Conduct, rather than for an improper purpose.
Teitelbaum’s scheme came to light when, in June 2013, TD Bank notified the OAE of a $274.47 overdraft of respondent’s New York attorney trust account. Teitelbaum intercepted a letter that the OAE had sent to respondent in connection with the overdraft and replied to it, without respondent’s knowledge. On June 27, 2013, because the TD Bank account was a New York account, the OAE forwarded the notice of overdraft to the Lawyers’ Fund for Client Protection of the State of New York.
The attorney had consented to the New York sanction and made full restitution.
Although respondent consented to a six-month suspension from practicing law in New York, the OAE recommended a reprimand for his violations of the New Jersey Rules of Professional Conduct. New Jersey disciplinary precedent supports that position.
The core of respondent’s misconduct is his failure to supervise his nonlawyer bookkeeper. Attorneys who fail to supervise their nonlawyer staff typically receive discipline ranging from an admonition to a reprimand, depending on the presence of other ethics infractions, prior discipline, or aggravating and mitigating factors.