Opinion
Docket No. DRB 15-086
05-27-2015
Re: In the Matter of Eduardo R. Cruz-Lopez
BONNIE C. FROST, ESQ., CHAIR EDNA Y. BAUGH, ESQ., VICE-CHAIR BRUCE W. CLARK, ESQ. HON. MAURICE J. GALLIPOLI THOMAS J. HOBERMAN EILEEN RIVERA ANNE C. SINGER, ESQ. ROBERT C. ZMIRICH ELLEN A. BRODSKY CHIEF COUNSEL MELISSA URBAN FIRST ASSISTANT COUNSEL TIMOTHY M. ELLIS LILLIAN LEWIN BARRY R. PETERSEN JR. COLIN T. TAMS KATHRYN ANNE WINTERLE ASSISTANT COUNSEL
BONNIE C. FROST, ESQ., CHAIR
EDNA Y. BAUGH, ESQ., VICE-CHAIR
BRUCE W. CLARK, ESQ.
HON. MAURICE J. GALLIPOLI
THOMAS J. HOBERMAN
EILEEN RIVERA
ANNE C. SINGER, ESQ.
ROBERT C. ZMIRICH
ELLEN A. BRODSKY
CHIEF COUNSEL
MELISSA URBAN
FIRST ASSISTANT COUNSEL
TIMOTHY M. ELLIS
LILLIAN LEWIN
BARRY R. PETERSEN JR.
COLIN T. TAMS
KATHRYN ANNE WINTERLE
ASSISTANT COUNSEL
RICHARD J. HUGHES JUSTICE COMPLEX Mark Neary, Clerk
Supreme Court of New Jersey
Post Office Box 970
Trenton, New Jersey 08625
District Docket No. XIV-2012-0201E Dear Mr. Neary;
The Disciplinary Review Board has reviewed the motion for discipline by consent (six-month suspension or such lesser discipline as the Board may deem warranted) filed by the Office of Attorney Ethics (OAE), pursuant to R. 1:20-10(b). Following a review of the record, the Board has determined to grant the motion and to impose a six-month suspension on respondent for his failure to safeguard property belonging to a client or third party, disbursing trust account checks against uncollected funds, and conduct involving dishonesty, fraud, deceit or misrepresentation.
Specifically, on July 23 and July 29, 2010, respondent received from a client three checks, totaling $57,308.54. On those same dates, respondent deposited the checks into his trust account. These checks did not represent fees, retainers or escrows for the client's matters and, thus, there was no legitimate reason for respondent to deposit them into his trust account. On the same dates the deposits were made, respondent, despite knowing that the funds were not yet available, issued two corresponding trust account checks, totaling $56,312.54, back to the client, against the uncollected funds.
Additionally, respondent engaged in a scheme of deception to facilitate the client's efforts to cash both checks at a local check cashing establishment. Respondent wrote "settlement" on the memo line of each trust account check, to give the impression that the trust account checks represented the client's share of settlement funds. Respondent then cured the first, smaller check after it was returned for insufficient funds. He physically accompanied his client when he cashed the second check at the same location. When that larger check was also returned for insufficient funds, respondent convinced the owner of the check cashing business, Alan Udell, that he was pursuing litigation to collect the funds. Respondent, however, eventually allowed that lawsuit to be dismissed for failure to prosecute.
As the scheme unraveled, respondent ceased all communication with both Udell and his client. Udell, believing that respondent had died, contacted the OAE to seek advice and redress for respondent's actions, leading to the filing of the underlying grievance. As of the date of the stipulation, Udell had not been made whole and was owed restitution in the amount of $37,708.36.
In the stipulation, the parties agreed that respondent's actions described above violated RPC 1.15(a), Advisory Committee on Professional Ethics Opinion 454, 105 N.J.L.J. 441 (May 15, 1980), as amended, and RPC 8.4(c).
Standing alone, a reprimand is generally imposed when an attorney, in making disbursements against uncollected funds, also negligently misappropriates funds. A reprimand may still be imposed even if an attorney is guilty of additional ethics violations or has a non-serious ethics history. See, e.g., In re Gertner, 205 N.J. 468 (2011) (attorney drew checks against uncollected funds for a business enterprise with a client and, on four occasions, invaded other clients' trust funds; the attorney also entered into the business transaction with that client without complying with the conflict of interest rules; mitigation included the fact that the client was a sophisticated businessman who was aware of his right to independent counsel, that no clients were harmed from the brief invasion of client funds, and that the attorney voluntarily apprised the OAE about the four instances in which he invaded other client funds; no ethics history); In re Ambrosio, 200 N.J. 434 (2009) (attorney guilty of disbursing against uncollected funds, negligently misappropriating client trust funds, and recordkeeping violations; no ethics history); and In re Broder, 184 N.J. 294 (2005) (as the closing agent in a real estate matter, the attorney immediately wrote trust account checks against funds that had not been collected; he was also guilty of negligently misappropriating client trust funds and recordkeeping violations; no* ethics history).
When the ethics history is serious, or the attorney has engaged in the misconduct in multiple client matters, a censure has been imposed. See In re Ford, 208 N.J. 360 (2011) (disciplinary stipulation; attorney violated RPC 1.15(a) in one client matter when he created a shortage in the trust account by making disbursements against a check that had not yet cleared the trust account and was later dishonored; in another matter, the attorney violated RPC 1.15(a) when he mistakenly deposited a settlement check into the business account and proceeded to make disbursements from the trust account; attorney also stipulated that, in four additional client matters, he made disbursements against checks received from clients without verifying that the checks had cleared, a violation of ACPE Opinion No. 454; attorney also violated RPC 1.15(d) because his books and records were not in compliance with R. 1:21-6; attorney had received a reprimand in 1998, an admonition in 2002, and another reprimand in 2009).
In the instant case, however, the above precedent does not completely address the nature of respondent's ethics infractions, as (1) here, no negligent misappropriation occurred and (2) the misconduct that distinguishes respondent from the above attorneys is the scope and breadth of his violations of RPC 8.4(c). For cases involving egregious violations of RPC 8.4(c), even where the attorney has a non-serious ethics history, terms of suspension have been imposed. See, e.g., In re Steiert, 220 N.J. 103 (2014) and In re Carmel, 219 N.J. 539 (2014).
In Steiert, a six-month suspension was imposed on the attorney for violations of RPC 8.4(c) and (d). Through coercion, the attorney had attempted to convince his former client, who had been a witness in the attorney's prior disciplinary proceeding, to execute false statements. The attorney intended to use the former client's false statements to exonerate himself with regard to the prior discipline. In aggravation, the attorney's conduct was found to amount to criminal witness tampering. Additionally, the attorney exhibited neither acceptance of his wrongdoing nor remorse. Finally, the attorney had a prior reprimand, in 2010, for practicing law while ineligible and making misrepresentations in an estate matter. Proof of fitness was required as a condition to the attorney's reinstatement.
In Carmel, a three-month suspension was imposed on the attorney for his egregious misconduct, in violation of RPC 8.4(c). The attorney had represented a bank client in a successful real estate foreclosure proceeding against a borrower. To avoid duplicate transfer taxes, the attorney and bank chose not to immediately record the bank's deed in lieu of foreclosure. When a subsequent buyer for the property was under contract, the attorney discovered that, in the interim, an Internal Revenue Service (IRS) lien had been filed against the property. Because the IRS lien was superior of record to the bank's interest, the IRS would levy against the bank's proceeds from the intended sale of the property. Rather than disclose the prior IRS lien to his client, respondent fabricated a lis pendens for the foreclosure action, which was intended to deceive the IRS into believing that its lien was junior to the bank's interest. The attorney then sent the false lis pendens to the IRS, represented that it had been filed prior to the IRS lien, and attempted to engage the IRS in settlement discussions. Rather than settle, the IRS referred the matter to the U.S. Attorney's Office. The attorney finally admitted his misconduct. In mitigation, the attorney had an unblemished disciplinary history and paid off the IRS lien with his own funds, in the amount of $14,186 plus interest, in order to make both his client and the government whole.
Here, like the attorneys in Steiert and Carmel, respondent's actions constitute serious misconduct. It was undoubtedly respondent's intent to victimize the check cashing establishment, through fraud and deception, for the benefit of his client and himself. Respondent retained $500 from the first improper deposit, for purported legal fees, and was likely planning to retain a similar portion of the second deposit.
In mitigation, respondent has an unblemished disciplinary record and accepted responsibility for the unethical conduct by entering into the stipulation of discipline. Notwithstanding this mitigation, the Board considers respondent's conduct to be serious and determined that the appropriate discipline in this case is a six-month suspension. Enclosed are the following documents:
1. Notice of motion for discipline by consent, dated March 12, 2015;
2. Stipulation of discipline by consent, dated March 12, 2015;
3. Affidavit of consent, dated March 9, 2015;
4. Ethics history, dated, May 27, 2015.
Very truly yours,
/s/
Ellen A. Brodsky
Chief Counsel
Enclosures
c: (w/o encl.)
Bonnie C. Frost, Chair
Disciplinary Review Board
Charles Centinaro, Director
Office of Attorney Ethics
Eduardo R. Cruz-Lopez, Respondent