Wednesday, November 8, 2023

Disaster Relief

As is its wont, the New Jersey Supreme Court imposed a lesser sanction than that proposed by its Disciplinary Review Board in a  matter involving an attorney admitted in 1977 with a previously unblemished disciplinary record.

From the DRB report

we unanimously determine that respondent committed misconduct in violation of the Rules of Professional Conduct. However, we are unable to reach a consensus on the appropriate quantum of discipline. As set forth below, four Members determine to recommend to the Court that respondent be disbarred for the totality of her misconduct, and four Members determine that a two-year suspension is the appropriate quantum of discipline.

The court noted the split and imposed a one-year suspension,

Genesis of the case

On September 4, 2018, Caroline Record, Esq.,  sent a letter to the Office of Attorney Ethics (the OAE) documenting a conversation she had with respondent during a real estate closing. In her letter, Record stated that, in the presence of both her client and the listing realtor, respondent “spontaneously started discussing that she had come up with a way to take money from clients that she was surprised no one had thought of before.” Specifically, Record recalled that respondent had stated that, based off of the number of real estate closings in which she represented sellers, “if she permitted [the] seller to be assessed a realty transfer fee without disclosing that the seller was a senior citizen and entitled to a reduced fee, she could then keep the difference when the correct fee was paid to the county,” which respondent estimated would allow her to keep approximately $50,000 to $100,000 per year. Record stated that, after she told respondent that a random audit would uncover such fee abnormalities, respondent replied that, if she maintained an undisclosed or unreported account, the random audit would not uncover the practice.

The letter led to an investigation and audit.

respondent emphasized that:

at no time did I advise anyone – nor did I intend to suggest – that I was personally taking such action by falsifying realty transfer fees. Even taking Ms. Record’s letter at face value, she does not seem to suggest that I indicated I was actually engaging in such misconduct, but merely states she was concerned that I had made an observation of such a possibility.

The investigation led to findings of misconduct, including with respect to Superstorm Sandy relief

Here, respondent’s misconduct is most analogous to, yet, more egregious than, the misconduct in Berger because she committed fraud by misrepresenting her living situation on multiple disaster relief and loan applications, even after receiving notice that her claim that she was living at the Boardwalk Property was false. Further, respondent failed to demonstrate any remorse for her actions during the ethics proceeding. Rather, respondent repeatedly claimed that she did not read the applications and, thus, was unaware that she was not entitled to the disaster relief funds. It is simply no excuse for an attorney of nearly forty-years, who was considered an expert in the field of real estate law, to be willfully blind to the content of the documents she was executing and the concepts of “primary residence” and “occupation of a residence.”

Moreover, respondent did not just misrepresent information on documents in her own Superstorm Sandy applications. For at least seven years, respondent engaged in a carefully constructed scheme to bleed clients of funds to which she was not entitled. Respondent’s misconduct went beyond the retention of excess estimated recording fees in real estate closings. She and her secretary knowingly agreed that they would charge clients for purported survey review services without disclosing that charge to clients, nor explaining that the charge was in addition to Shershinger’s land survey preparation. Additionally, respondent charged her clients for services for which she incurred no costs, such as bank fees, a sewer tax, release of mortgage fees, and title insurance.

We find that respondent’s misconduct in the real estate matters is particularly egregious because she was an experienced practitioner who frequently lectured on the topic of real estate law and, in fact, testified that she “rewr[o]te” the CLE book for real estate law “somewhere around” the years 2015 through 2017. Thus, respondent had a heightened awareness of the practices of real estate attorneys, but nevertheless chose to engage in misconduct because “everyone else was doing it,” rather than attempt to steer her colleagues toward ethical conduct. Additionally, we emphasize, in aggravation, that the 2015 through 2017 timeframe, during which respondent claimed that she rewrote the CLE book on real estate law, encompasses the two years following the Court’s pronouncement in Fortunato that it was impermissible to retain excess recording fees.


Accordingly, Chair Gallipoli and Members Hoberman, Petrou, and Rivera find that respondent’s criminal course of fraud, towards multiple government agencies, in connection with the Superstorm Sandy disaster relief matter, coupled with her prolonged course of deception by charging her clients fees in real estate matters that she never had incurred, evidenced a disturbing pattern of greed and a total lack of moral fiber. Consequently, in order to protect the public and preserve confidence in the bar, those Members determine to recommend to the Court that respondent be disbarred.

Vice-Chair Boyer and Members Campelo, Menaker, and Rodriguez disagree with the disbarment recommendation, determining that, although respondent engaged in a prolonged and serious course of misconduct, her conduct was not so egregious as to warrant the ultimate sanction of disbarment. Accordingly, those Members determine that that a two-year suspension is the appropriate quantum of discipline.

(Mike Frisch)

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