*1 respondent, respondent then to retransfer or not matter provided herein. as shall be resentenced as mod- Division is affirmed Appellate judgment ified. WILENTZ, Justice For affirmance —Chief modification O’HERN, HANDLER, POLLOCK, CLIFFORD, Justices and STEIN—7.
GARIBALDI For reversal —none. FLEISCHER, AN L. MATTER OF EDWARD
IN THE ATTORNEY-AT-LAW. SHULTZ, AN BARRY THE MATTER OF H. IN ATTORNEY-AT-LAW. SCHWIMER, AN L. THE MATTER OF JAY IN ATTORNEY-AT-LAW. May 1986. September 1984 Decided Argued *2 Johnson, Director, Jr., David argued E. for the cause Attorney Office of Ethics. argued (Walder,
Justin P. Walder the cause for Sondak, Berkeley Brogan, attorneys; & Justin P. Walder Aprile brief). Dominic on the J.
PER CURIAM. These disciplinary proceedings respondents, involve three who They constitute all members of former law firm. are charged infractions, notably with various ethical most misappropriation of clients’ Although one member of firm, respondent Fleischer, primarily responsible disbursements, respondents knew of and three all
the firm’s misappropriation. in the participated (Ethics IX Ethics Committee the District hearing, After finding, among other presentment, Committee) returned funds for knowingly used clients’ respondents had things, Disciplinary Review Board Thereafter their own benefit. in- respondents had overwhelming evidence that (DRB) found Relying on In re clients’ funds. misappropriated tentionally (1979), DRB recommended disbarment Wilson, 81 N.J. record independent review of the respondents. Our all three same conclusion. us to the leads *3 DRB, are: by the facts As found the outstanding bill to an office firm failed to an When law pay Respondents’ 1982 28, district on September the filed a court complaint supplier, supplier for a trust account check against The firm this bill by the firm. paid $503.24 rejected of insufficient 1982. The check was because December 21, dated representing the creditor told the Fleischer attorney funds. Respondent having with this bank account and was some promised his firm problems Fleischer for this bill. Respondent had been set aside specifically money check, did. This too, the which he check, the to attorney redeposit requested the bill Fleischer promised returned for insufficient funds. Respondent was making in law firm took no action the However, would be paid immediately. 1983 the good contacted 2, on check. The creditor’s on attorney February this (DEPS). later Services Respondents Division of Ethics and Professional then obligation through this their personal paid Board for March 1983 with this 25, a notice of motion on DEPS filed that the law based on its auditor’s report suspension Respondents’ temporary operating using both trust and expense its trust account pay was had 24 instanc- obligations. found that the trust account the auditor Moreover, Board and 1983. This 31, December 1982 7, January es of overdrafts between their trust account reconstructed could have carried the matter so Respondents accounting reviewing this additional reports, their own accountant. After by motion based 1983 denied the 15, suspension Board on June temporary would continue to review their accountant Respondents’ representation their financial records. against was filed Respondents by a five-count 25, 1984, complaint On April charged with were Ethics. The three respondents the Office of Attorney (Count One); negligence commingling gross and funds, misuse of trust funds, Two), (Count clients’ funds misappropriation failure to account for properly (Count Three); funds remit clients’ clients’ and failure to funds, promptly (Count Four)] being overdrawn on trust account on their numerous occasions obligations, and violation of their and which fiduciary professional placed jeopardy, gross negligence handling clients’ and in funds serious clients’ (Count Five). alleged funds acts of misconduct were to have occurred These admitting between 1981 and 1983. filed an answer failed to Respondents they commingling records and but funds, books and denied keep required any claiming their conduct and was inadvertent unintentional. misappropriation, grossly negligent, contending further denied that were had they They they good acted in faith at all times. The matter was heard Ethics Committee by finding candid on October 1984. While contrite, Respondents rejected their the Ethics Committee contention know utilized they they benefit. clients’ funds for their own findings, Based on the DRB these concluded: the Board record, review of the full is satisfied conclusions of the Upon finding guilty District IX Ethics Committee of unethical conduct Respondents convincing are clear evidence. fully by supported are clear. a cash facts in this case As a result of flow problem, commingled operating from their funds account into their Respondents obligations, one account, trust account. From this all office and they paid Although this client. each knew was continued it. practice improper, they Wilson, governed (1979), In re 81 N.J. These cases are by which clearly defines as use unauthorized of clients’ funds any lawyer entrusted to him, stealing, including not but also unauthorized use for only temporary gain own or not he whether derives lawyer’s purpose, personal or benefit therefrom. at n. [Id. 1], revolving It evident Respondents created palpably account commingling all one received into account so would have sufficient money obligations. funds to meet both their client personal Respondents claimed using belonging did not at their firm realize, time, funds to clients accounting the law firm. Poor operate however, no excuse procedures, ignoring being clients’ funds were At obvious; used. the Committee hearing, acknowledged belonging used they had, fact, their clients because a number of the firm’s had been checks returned for *4 Wilson, supra, insufficient funds. These had under Respondents misappropri- ated clients’ funds. claimed did not Respondents they these funds. misappropriate intentionally overwhelming. The evidence to the is contrary finds Board, therefore, DR Respondents 9-102. That no client intentionally misappropriated funds, Gavel, suffered a loss is and In re N.J. irrelevant fortuitous. 22 265 248, (1956). Wilson, supra, created of disbarment unless presumption extraordinary mitigating factors are shown. contrite, were Respondents cooperated fully proceedings brought accounting the ethics and had their records up injured standard. No clients misconduct and none were by Respondents’ mitigating These considered in other of complained. be factors types may
444 Wilson, supra, rejected progeny them in but and its have offenses, misappro- Marks, (1984). 96 N.J. if in cases. See Matter Even considered
priation greatly outweighed aggravating mitigation, factors. These are other they by of the Bar. was members Schultz Respondent [sic] experienced Respondents Fleischer, in New in 1966 and in New York 1965, admitted Jersey Respondent claim and and 1973 and 1959. Schwimer, Respondents’ Respondent keeping accounting disingenuous. regarding the records is They of naivete commingled these accounts so could borrow clients’ funds. they deliberately Wilson, supra, rejected 81 N.J. at 458. was This, too, mitigating factors in this case do not override The Board finds Wilson, supra. the Board recommends be Therefore, mandate Respondents disbarred. us, pressed argument they respondents have Before intentionally misappropriate their clients’ trust record, however, inescap- examination of the leads Our argument respon- must fail and that able conclusion dents’ intentional has been established convincing clear and evidence. struggled their law firm 1979 and formed marginal practice
with a law into the summer of when they employment bookkeeper. of their Left to terminated devices, account, using operating their own ceased creditor, subject levy by began judgment to a and which as the sole firm bank account. The to use their trust account clear testimony respondent painfully Fleischer makes operating respondents knowingly commingled the and trust expenses, accounts to meet firm several occasions checks that were returned for insufficient funds. The wrote following exchange between Mr. Deakin of Ethics Commit- Fleischer, Walder, tee, respon- Mr. counsel for respondent dents, illuminating: making out of isn’t it true to the extent were disbursements Well, you Q. using clients’ funds? were you it a little bit
A I would have to concede that that’s true and sound may we unusual it’s no excuse but we were so naive we didn’t what appreciate doing. has from time to time there Well, were, Mr. been Fleischer, Q. stipulated shortages it? account, correct, even in the trust that is isn’t fact, A Yes. *5 night as So follows follows if Q. the trust account day were using to overdrawn from time time which it was, were you clients’ funds to own there’s no
pay your about is there? expenses, question that, depositing everything A That’s anything but we were true, that came into the office obligations into that account in order to to make sure all our try were met. presuming ME. WALDER: In fairness I think the use of a your question meaning account, it was trust funds when it is trust really everything going not trust funds funds, because into it necessarily heading was under the of trust that’s where I think account, your question wrong be, in may you know, terms of the facts of the case. respectfully, ******** At least to the extent there were Q. bounced on those occasions checks, you must have been aware that obviously did not have sufficient firm funds you the trust isn’t that correct? account, A. Yes. No about is there? Q. that, question
A. there’s no No, question. That would Mr. I that if a Q. answer Walder’s observation. assume check bounced must have said to or should have said to you certainly yourself enough we must not have of our own funds this account because yourself bouncing we’re checks. Isn’t that correct? logical A Yes, that’s that’s correct. conclusion, Although respondents justify misappropriations seek to naivete, grounds respondent testimony on the Fleischer’s response interrogation by Kenny to Mr. of the Ethics Commit- tee, Shultz, supplemented by testimony respondent as shows unmistakable awareness that knew were do- ing something wrong. using You knew all were clients’ funds on did not? Q. you occasions, you doing something
A We knew we were we not were to do and the supposed depositing everything was we in that we weren’t account, sure on problem kept invading each and occasion whether were funds or not. every We knew using operating to we were be the trust account for supposed expenses. You knew knew needed the Q short, you you you money did not? survive, you A I would so, say yes. do like all Q. it, would Okay. Why you answer that. you First of But all, MR. SCHULTZ [sic]: stupidity. beyond that, there was this commingling but there wasn’t an intentional because I calling remember Mr. Fleischer almost distinctly the bank every Friday speaking manager saying, ‘Do we what is the you know, have — making balance?’ And never out a check really when there weren’t funds in *6 Fleischer I know, and I I did and Mr. because believed, did, there. We know got talking meetings, we to ‘We’ve to it, about used say, stop when we were together,’ got get in there we’d the money is, we’ve money bookkeeper, say wrong there and while it was we didn't we it know, stupid, you deposited taking funds. I’m that we didn’t. We we were positive believe anybody’s commingling doing we had our in because money knew what we were long putting of there for time. there and we were period things were so bad that we couldn’t hire another our left, When bookkeeper go we have done and what we should have done is What could bookkeeper. something didn’t at that or like that for a loan which we do to our parents time. KENNY: But knew and all admit had cash flow MR. you you you all admit that? you problem, MR. SCHULTZ: Absolutely. at in time to MR. KENNY: You made a conscious decision some put point through were due for fees and due what money, you ultimately you your closings negligence or all into one account settlement or real estate whatever business out of that account? your operate MR. SCHULTZ: That we did. Fleischer, response questions by testimony by Further Venino, respon- makes clear Ethics Committee member dents used their trust funds to survive. meeting other you [sic] called or one Was there ever a by you Q. for had account checks bounced which you
two when one of these trust partners have out trust monies and or someone else would we been say look, paid you just everything using and now a check we have written the trust account for something this? for trust has let’s do about bounced, purposes A. We met at that time, yes. meeting, usual? And what was the result of the business as Q. we A. to be frank with continued and know Well, you, practice perfectly there no excuse but it was a matter of probably self-preservation. didn’t use the monies that in the trust In other if were Q. words, you might if did is that what survive, survive, wouldn’t account, you you you you’re saying? Mr. conclusion, A. could make that Well, Venino, yes. you go using MR. VENINO: did choose to into this venture of the trust Why you regular account? account? Because didn’t have you money your doing things. MR. It was an FLEISCHER: easy way testimony, respondents’ contention that light In of that intentionally misappropriate clients’ funds is unbelieva- Equally ignorance is their assertion that their ble. incredible accounting banking practices was at the root of the proper contention, respondents point support their problem. making disburse- calling their bank before practice of argu- funds. Their if there sufficient ments to ascertain not reflect outstand- balance did that because the bank ment is misap- from intentional checks, resulted not their overdrafts ing proof of their As further from inadvertence. propriations, but innocence, instances when point to alleged they did from the account because declined to withdraw their own funds for benefit. to invade clients’ not want poor argument, stating that rejected that The DRB using are no excuse accounting procedures or even here an isolated confronted agree. We are not We *7 admitted to a bookkeeping mistake. occasional an operating account using their stop to joint decision conscious disbursements, pay all using account to their trust and start lawyers no defense expenses. It is including operating knowing them from prevents accounting system that design an Lawyers have a trust funds. using clients’ whether sufficient accounting practices are duty to that their assure Disciplinary funds. Former of trust prevent misappropriation respondents’ the time of 9-102, in effect at Rule which was funds in a deposit trust the mandated misappropriations, funds with commingling of those account, prohibited separate appropriate maintenance of funds, required the other forward carried requirements have been The records. same 1.15. Professional Conduct into Rule of does not evidence colleague that the dissenting states Our know- were ever finding funds of clients the sustain the asserting that The dissent continues ingly invaded. per- less would be respondents’ misappropriation proof of It defalcation. admitted their if had not suasive inferring questions the reasonableness also ac- operating trust the combined of client funds because funds should times when trust at various count was overdrawn the Hypothesizing deposit in that account. have been might or an overdrafts have been attributable to bank error lien, urges Internal Revenue the dissent a remand for Service development complete disagree. of a more record. We Perhaps proof inescapable. the use of clients’ funds is against respondents would the case be weaker if had not wrongdoing, admitted their the fact is that the defendants but respondent, as Mr. made the admissions. When such Fleisch- er, that a bounced account check admits trust demonstrates his that he “did not have sufficient firm funds in the awareness * * *,” ignore trust we cannot admission. No possibly public could have member of confidence system disciplinary misappropria- blind to admitted tions. concessions, respondents’
Apart from the record conclu sively specific trust demonstrates their use separate instances, respondents In three overdrew the account 13, 1982, funds. On contained December matter, (Samaro) $2,000 deposited Samaro to Baldasare the firm During of trust funds into its account. combined remainder January of that month and the firm’s account had an or a negative separate days. overdraft balance on 20 (Ocana) transaction, Laboratory Ocana Abbott $23,300 deposited of trust funds for this client to its checking Subsequently, account. the firm issued a check to $22,795, Ocana for but was returned for insufficient funds *8 because the firm’s bank had account been overdrawn to the $4,885.55. extent of redeposited, When this check was a bounced for second time because the trust account was $9,451.08. to the overdrawn extent of check did clear $10,000 until relating trust funds to another of the firm’s joint deposited clients was into the trust account. occasion, involving On a third the account Mario Lima and (Lima), Maria Aurelio Lima another check failed to clear. deposits Based expenditures relating to the Limas' account, $6,956.38 there should have been the account when $1,335 to Limas. respondents cheek Once issued a for had the account unpaid check was returned because again, the $490.45. balance of an overdraft Attorney Ethics by the Office of The accountant retained are proposition that trust funds explained the self-evident “[i]f ** * then represented to be on hand as supposed long as be overdrawn as those bank account should never regardless of possession of the firm supposed to be funds concluded, it co-mingling the accountant of funds.” As infer that the balances indicate to overdraft “reasonable least violated trust funds at to the non-trust disbursements as in represented such the matters extent of the balances Ocana, any explanation Samaro, and Lima.” In the absence of trust account establish respondents, the overdrafts of the misappropriation of those clients’ funds. accountant, Ontell, acknowledged respondents’ Mr.
Even own that “the facts of by the OAE the accountant retained to a of trust violation transactions indicated Samaro Ocana support affidavits in Although Ontell later filed funds.” Mr. remand, acknowl- withdrew from his request a for a he never transactions established that the and Ocana edgement Samaro misappropriated clients’ respondents for suggested the need Although respondents’ accountant unnecessary. analysis is With analysis, we such further believe ac- have maintained a trust knowledge that should full count, bookkeeper and combined their respondents fired their could use the operating trust and accounts so expenses. As the dis- personal operating use and demonstrate, used defendants December bursements for expenses personal for themselves pay the combined draw, pay and to office spouses, pay themselves and their sum, deliberately designed system expenses. personal and permit trust funds for them to use that would funds arose need to use the trust professional use. Their pay practice was insufficient the income from their because *9 support expenses meeting, they and to At a firm themselves. acknowledged they paying personal expenses were from account, practice the but continued the combined as matter of result, self-preservation. As a the dissent’s assertion that the respondents present were unaware until the using simply If trust funds cannot stand. the Court were to dissent, adopt respondents’ the the view of conduct would larceny lawyers. by constitute handbook for respondents The dissent also asserts that are entitled the treatment, presumably premise to differentiated that one respondents culpable or more of the was less than the others. agree principle We alleged violations of Rules individually, Professional Conduct should be determined collectively. Here, the clearly convincingly evidence estab respondents. lishes violations each of the The initial deci sion joint to combine the was a of respon accounts decision dents, regularly who thereafter discussed status of the Each account. of the decided that the combined should pay personal accounts be used to for their firm and expenses. Although they practice improper, knew each individually defendant decided to continue it because the stay Throughout had insufficient funds to afloat. proceedings, respondents represented entire have been counsel, same sought have not to distinguish among responsibility themselves terms for their defalcation. context, this we are unable to find that of the defendants culpable. should All be excused.
Finally, respondents point
Fucetola,
to In re
Unlike the and Fucetola Here, the just keeping than violations. us more record involves operating and trust funds for three combined expenses. office express personal purpose paying are Furthermore, in their trust account the overdraft balances short, specific an invasion of attributable to misappropriation. this is a case of intentional Wilson, is not a misuse such Under loss. ground no client a 81 N.J. defensible on suffered prior respondents' at is the fact that 457-59. Also irrelevant 459-60; unblemished, subsequent records are Id. at 4; respon n. and that unlikely, are Id. at 460 misappropriations currently requirements for complying dents only records, appropri proper Id. at 459. maintenance of ate is disbarment. sanction Ethics Financial are ordered to reimburse the costs. appropriate administrative
Committee CLIFFORD, HAN- Chief WILENTZ Justices Justice POLLOCK, opin- DLER, join GARIBALDI and STEIN this ion. dissenting opinion. separate has filed
Justice O’HERN Justice, O’HERN, dissenting. One record before us. concur in on the cannot disbarment may eventually guilty found be
or more members of the 452 unique procedural violation but the posture Wilson of this findings
case calls for further factual before I vote would disbar. Wilson, (1979),
Under knowing misappro In re N.J. priation ordinarily will warrant disbarment. “[MJaintenance public confidence this Court and in the bar as a whole requires discipline in misappropriation strictest cases. That important confidence is so that mitigating rarely factors will requirement override the of disbarment.” Id. at 461. A Wil disbarment; thus, invariably son violation almost results in *11 ordinarily engage such a case will our closest attention because consequences lawyer the for a Lawyers are so final. procedural entitled to no less fundamental fairness than others facing disciplinary alo, 544, 550, sanction. In re 390 U.S. Ruff 1222, 1225, (1968). 88 S.Ct. 20 L.Ed.2d I find the procedures in lacking this case and would therefore not vote to disbar.
First, cooperation, in the respondents interests of the entered stipulation into a presenter with the at the District Ethics Committee presented any level. No evidence was knowingly client were ever against respon- invaded. The case perhaps dents consists of inferences drawn from their too perhaps contrite and recognition too belated that the intermin- gling of clients’ funds their inevitably with own would almost result in some being clients’ funds used for the firm’s business purposes. Nonetheless, respondents the seemingly prepared for this if case as it not a were case but rather a record-keeping opening case. At the hearing of the before Committee, place District Ethics a discussion took concern- ing phrase Stipulation one in Count Five of Facts that “[a]ny keeping stated that bookkeeping discrepancies record or may which have existed were due to inadvertence and lack of bookkeeping skill. All records were maintained and accounted for.” It suggested phrase has been that deletion of this from stipulation respondents should have alerted to the fact that hearing they charged at the knowing misappro- would be deletion, however, concerned of the The discussion priation. period during this recognized respondents fact that operat- account, and time, as well as business their trust accounts, one account. handled under ing were clear that Conversely, is not of this fact. were well aware misappropriation. any knowing aware of complaint solely of the proceeded then basis The case not to chosen stipulation. Had and the revised Committee, quite it is inconceivable present any evidence to the misap- any knowing guilty them one could have found by the retained D’Apolito, an accountant propriation. Nicholas Ethics, of the analyzed the reconciliation Attorney Office of Ontell, Ac- Public T. a Certified respondents’ books David affidavit, D’Apolito concluded “based In his countant. I have not received performed, upon follow-up work have contrary to the any evidence from either Mr. Ontell or the my of March as stated in affidavit dispute of the facts H. my alter conclusion this affidavit which would 1983 or Fleischer, Jay Law- Esq., and Shultz, L. Barry Esq., Edward Fleischer, Shultz, Schwimer, & Schwimer Esq. of the firm rence records to appropriate maintained books have not l:21-6(b)(2) this consti- required R. for clients’ funds as 9-102(B)(4)and 9-102(A)(l) (2), DR of DR tutes a violation the affidavit 9-102(C).” missing from Notably DR *12 know- that the individuals definitely concludes statement time. particular at a any clients’ funds ingly misappropriated affidavit previous “[i]n in his D’Apolito had concluded infer to reasonable contrary, it is to the of evidence absence * * * drawn the checks the transactions noted above from * ** * ** invasion of an represent account against the trust * * * trust funds.” clients’ or client’s [other] [some] dan- in mortal not believing themselves Secondly, apparently individual weigh their to did not undertake respondents ger, de- a common to informed consent They gave responsibility. our cases Nonetheless, from it is clear charges. these fense to a collective not on responsibility professional evaluate that we 454 grading
basis but an individual responsibility basis See, each of the individuals. In re e.g., Shamy, 59 N.J. 326 (1971). are sharp responsibility There in among differences simply now, individuals involved here and I find it unfair after stipulations entered, join together. have been to them all
Finally, clearly we must ourselves be convinced that there was, fact, in an intentional or knowing misappropria- invasion Sears, tion of (1976). In re N.J. high This standard the reluctance which should characterize emphasizes decision and to sanction the serious disciplinary which impose consequences attend As a such a decision. such a if it matter, limits, decision does practical to an his preclude, attorney’s practice chosen We opportunity profession. such a should restriction after careful deliberation in impose only only [Id. circumstances which warrant it. at clearly 197-98.] then, carefully, complaint professional We must look at the against misconduct that was filed these individuals. The first complaint charged count of the that the commin- gled approximately years, two violation of Rule l:21-6(a) 9-102(A). Disciplinary Rule This continuation of alleged gross negligence unethical conduct was to constitute the handling adversely of clients’ funds and reflect on the respondents’ practice fitness to law. So much have admit- ted.
The count charged failing second them with to balance or many close out cliént ledger trust accounts. Client sheets were reflecting set out six credit undisbursed balances. The absence sheets, ledger required Rule, specified was twelve Allegedly, instances. eleven checks were in the shown ledger where a client sheet existed but did not reflect the charged transaction. failure main- journals tain of receipts and disbursements and reconcile every Each accounts. one of matters these specifically addressed and the accounts were reconciled in the stipulation. parties The concede the records were inade- quate. specific third count concerned seven instances of over-
drafts made on trust account. Each instance was dealt *13 stipulation ac- in the and all of the funds were with complaint for. The stated that account items counted the trust prior represented were returned “conclusive evidence of constituting misappropriation” a client’s and invasion of funds respondent’s prac- adversely upon reflected fitness to otherwise concededly to fitness to tice law. This evidence was relevant law, but conclude that a check practice cannot bounced prior of a of a client’s represents conclusive evidence invasion constituting many misappropriation. We know that on funds occasions, error, through the Internal Service or even Revenue funds, causing an an attorney’s will seize trust account others credit frequently return check. Banks do not unintentional of a deposited periods of time accounts with funds extended though the hand. We could never conclude even on alone, misap- that, standing check a bounced would constitute propriation. transactions, alleges
The fourth count a series of account negative commencing in trust December disclosed “extensive The count concluded that these account balances. * * * shortages trust reflect a derelic- prolonged and 9-102, fiduciary of R. and DR requirements tion of the 1:21-6 misapplication of are evidence of 1-102(A)(4) (6).” Respon- client funds violation of DR negative instances of balances dents’ accountant found certain misappropriation: demonstrate concluded it did not but the trust because account, and, further, Because did not balance Respondents information to them tele- relied bank balance Respondents upon provided bookkeeping of uncleared of the effect bank, department phone This lack undebited was not considered. checks and disbursements accurately together only of an use Respondents' primarily orderly procedure, information as caused on dated and inaccurate account, one rely given balance business to the account day. allegations the first four incorporates The fifth count accountability failures led and concludes that counts “[t]hese ‘revolving’ operation Respondents’ natural result in to their as deposit trust invaded account wherein each new expendi- necessary personal office and accommodate both *14 456 previously
tures and on behalf trust disbursements of invaded deposits.” respondents they The conceded that had an account commingled, in which trust and business funds were but they knowingly did not admit funds. that invaded clients’ Notwithstanding specific the fact that more than 22 items mentioned in complaint, the several counts of the this Court no finding makes that the of any particular funds client were ever knowingly any specific invaded on occasion. Court points to specific (Samaro, three Lima) matters Ocana and that are said to demonstrate an intent to invade clients’ But funds. majority’s disposition not turn upon does an analysis of partner which on drew the funds or partner what that knew. Thus, I must examine the record for evidence of a knowing mis- appropriation of clients’ funds. analysis respondents
The detailed submitted on behalf of explains respect that conclusions with to the invasion of trust upon funds based either bank statements or returned items are simply improper accounting an viewpoint. from Even as to 1982, critical month of December when the Samaro incident occurred, respondents’ depos- accountant states that the “firm $6,379.47 $17,- its in trust account were in excess of the * * * 716.68 referred to as non-trust disbursements [in OAE’s have never that conceded account].”1 they misappropriated these funds. The affidavit Mr. that Fleischer filed with District Ethics Committee stated:
Although commingling we our concede dereliction with to the respect knowledge no funds, client was shorted and there an my funds was never intent or belief on our that client funds in our part trust were used or prejudice that loss or has any occurred our clients. believe that a any audit will show that we not complete client’s misappropriate any course, does not our This, lessen to the responsibility respect 1 Our Committee Advisory Professional Ethics has firms provided against mortgage draw other clients' may collected when and certified closing. N.J.L.J. checks are at a real estate Advisory Opinion presented 105 (May 1980). keeping
commingling referred to the funds or the record practices sloppy above. addition, refrained the record disclosed on the account when believed clients’ from draws recently case We noted another funds would be involved. that the questioning argument at “revealed OAE’s oral had knowing misappropriation been estab- position was lished, handling respondent’s negligence rather but gross to warrant disbarment even money sufficiently *15 money. client’s That is not the [though] did not know it was he Noonan, (1986) 102 160-61 rule of re N.J. Wilson.” (emphasis original). in respondents’ testimony takes at the majority
The note of respondents hearing, concluding that committee therefrom knowingly misappropriated funds. 444-447. Ante at This con- clusion respondents’ they realized, is based on testimony that at hearing, they had used clients’ funds since the time of in danger insufficient funds. checks had been returned for contrite, they lawyers reasoning such is that are not when faults; they ac- acknowledging their when criticized for not faults, More- they are held to have confessed. knowledge their inconclusive, over, they do not reflect since the statements are testimony, that fact, respondents clarified further which understanding. Respon- they discussing present use clients’ funds never intended to dents testified on hand. were sufficient funds always believed there of respondents funds these with Charging hard-pressed be charging them a crime. We would akin against disparately situated convictions such to sustain criminal before us. The we have individuals based the evidence problem and not of this District Committee was unaware Ethics although finding it “inconceivable to candidly acknowledged it: respondents were invad- panel know this * * * * * * using the funds of ing the of funds clients [and] benefit,” prefaced for their the Committee clients’ funds own feeling of this by noting that is the these comments “[i]t 458
hearing panel that a complete audit should be done this matter to resolve Disciplinary doubt that the Review Board may have.” allegations
Were these presented against individual, an might appropriate be tó sustain principle on a disbarment gross See, neglect. e.g., Katz, (1982). In re N.J. But where we deal with such scope differentiated responsibility, think it proceed is unfair to theory on the group ethical responsibility. Ontell, the accountant retained the respon- specifically dents to examine the exhibits submitted to the District Ethics Committee and the affidavit the auditor for Attorney Ethics, Office of analyzed all of the documents and concluded that cannot be stated that there has “[i]t been an invasion and misappropriation of clients trust absence complete of a examination and audit solely me and on the facts analysis set forth in the Affidavit of Mr. D’Apolito.” It was in response to this affidavit that Mr. D’Apolito, auditor, the OAE’s stated that he would conclude only had appropriate not maintained books and records to account for D’Apolito clients’ funds. did not state that he found an invasion of clients’ trust funds. He did *16 qualify state, later his affidavit to example, for facts “[t]he stated in my [original] 21, affidavit of March 1983 relative to Samaro, Ocana and Lima would indicate that at the least [funds put clients were in jeopardy.” of] I realize that very it is difficult to sort specifics out the of the charges as to each individual However, client's account. responsibility inescapable, where, especially here, as we seek impose responsibility collective on the firm.
Because of the complexity matter, of this I would remand it Special to a Master to determine whether individual client’s invaded, funds were whether such invasion knowing was a invasion the attorneys responsible, and the state of knowl- edge of each of the individuals involved. WILENTZ, and Justices Justice
For disbarment —Chief POLLOCK, and HANDLER, STEIN CLIFFORD, GARIBALDI —6. O’HERN—1.
Opposed—Justice
ORDER of MOR- L. FLEISCHER that EDWARD It is ORDERED GANVILLE, to the bar of this State was admitted who disbarred, and is further it be reimburse EDWARD L. FLEISCHER
ORDERED appropriate administrative for Financial Committee Ethics costs; and it is further permanently- L. be that EDWARD FLEISCHER
ORDERED law; it is further enjoined practicing from and restrained and comply with L. FLEISCHER that EDWARD ORDERED Attorney the Office of Guideline Number Administrative attorneys. resigned suspended, disbarred or dealing with Ethics ORDER MORGAN- H. BARRY SHULTZ is ORDERED that It be this VILLE, the bar of State admitted to who was disbarred, it is further the Ethics reimburse BARRY SHULTZ H.
ORDERED costs; and administrative appropriate Financial Committee it is further re- permanently be H. BARRY SHULTZ
ORDERED law; is further practicing enjoined from strained Adminis- comply with SHULTZ that H. BARRY ORDERED Attorney Ethics 23 of Office Guideline Number trative *17 attorneys. resigned or suspended, dealing with disbarred ORDER SCHWIMER, It is L. ORDERED that JAY of MANALA- PAN, formerly MORGANVILLE, who was admitted to disbarred, bar this State be and it is further ORDERED that JAY L. SCHWIMER reimburse the Ethics costs; Financial for appropriate Committee administrative it is further
ORDERED that JAY L. SCHWIMER be permanently re- enjoined law; practicing strained and from is further ORDERED that L. comply JAY SCHWIMER with Adminis- trative Guideline Number Attorney 23 of Office of Ethics dealing suspended, resigned attorneys. disbarred or CO., PLAINTIFF-RESPONDENT, CHARLES GENDLER & INC. v. CORPORATION, DEFENDANT, TELECOM EQUIPMENT AND CO., LTD., NIPPON ELECTRIC DEFENDANT-APPELLANT. January Argued May 29, 1986 Decided 1986.