Wednesday, July 6, 2022

No Bank Error

An attorney with 60 years in practice cannot claim ignorance of entrusted funds obligations to defeat an interim suspension in the public interest

Respondent further contends that, because of his ignorance as to the standards for Rules of Professional Conduct 1.15(a), he lacks the requisite dishonesty or venal intent necessary to establish intentional conversion under Rules of Professional Conduct rule 8.4(c). Respondent alleges that he has health issues and states that his wealth belies any allegation that his actions were motivated by financial pressure. He submits that an interim suspension would likely end his career and proffers that his impressive trial career is additional evidence that he does not pose a danger to the public.

Respondent's arguments are unavailing. 22 NYCRR 1240.9(a) provides for an interim suspension "upon a finding by the Court that the respondent has engaged in conduct immediately threatening the public interest. Such a finding may be based upon: ... (2) the respondent's admission under oath to the commission of professional misconduct... or (5) other uncontroverted evidence of professional misconduct.

The New York Appellate Division for the First Judicial Department described the situation

Respondent is an 87-year-old attorney who has practiced law for approximately 60 years. Respondent is the principal of a small firm and the sole signatory for its escrow account. In February 2020, a $517.50 check originating from the escrow account was dishonored due to insufficient funds (February 2020 Incident). The check was issued in connection with respondent's representation of a client who resides in China. Respondent represents this client individually as well as three hospitals that his client owns and operates in China.

He initially claimed bank error

In November 2020, respondent, in a pro se response to the AGC's request, claimed that the bounced check was the result of a bank error. Respondent later retained counsel and, in April 2021, in an amended response, admitted that there was no bank error. Respondent attributed the incident to his lack of training "in the operation and maintenance of law firm IOLA/escrow accounts." He admitted that he failed to keep a proper ledger for his IOLA account and did not maintain proper individual client ledger sheets. Respondent explained that he did not understand that "allowing his fees to accumulate over time in the same account where client or third- party funds were deposited was, in fact, prohibited 'commingling of funds'."

Respondent submitted that he "did not understand the concept of misappropriation [in] the context of IOLA Account funds" and "believed that if he knew he would be receiving funds on behalf of a client he could advance legal fee payments out of funds on deposit in his IOLA account prior to his receipt of the funds of the relevant client." He conceded that he transferred funds from his operating account to the IOLA account if the balance in the latter was insufficient. Respondent reaffirmed his amended response in a deposition before the AGC in October 2021.

The AGC's investigation of the February 2020 incident led to the discovery of two other incidents that undergird its motion for respondent's immediate suspension.

Ignorance no defense here. (Mike Frisch)

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