In re Clarke

71 A.D.3d 33, 891 N.Y.S.2d 342
Appellate Division of the Supreme Court of the State of New York·Decided December 10, 2009·Published·Cited by 2 cases

Opinion

OPINION OF THE COURT

Per Curiam.

Respondent Vernell A. Clarke was admitted to the practice of law in the State of New York by the First Judicial Department on June 12, 1991 under the name Vernell Ashton Clarke. At all times relevant to his misconduct, respondent maintained an office for the practice of law within the First Judicial Department. By order entered October 12, 2006, this Court indefinitely suspended respondent from the practice of law upon the basis of his failure to register with the Office of Court Administration (OCA). According to OCA’s records, respondent has been delinquent in his attorney’s registration since 1999. Respondent was unaware of his interim suspension until March 2007 and has voluntarily remained suspended pending the resolution of this proceeding.

The Departmental Disciplinary Committee now seeks an order pursuant to 22 NYCRR 605.15 (e) confirming findings of fact and conclusions of law made by the Referee and Hearing Panel, and suspending respondent from the practice of law for five years. The motion is predicated on findings that respondent engaged in a pervasive pattern of misconduct by deceiving his employer, Fidelity National Insurance Company (Fidelity), and four of Fidelity’s clients, with respect to work that he completely failed to perform in five separate matters (Code of Professional Responsibility DR 1-102 [a] [4] [22 NYCRR 1200.3 (a) (4)]), and by neglecting a total of six matters involving five separate clients (DR 6-101 [a] [3] [22 NYCRR 1200.30 (a) (3)]).

By his answer and prehearing stipulation of facts, respondent has conceded all of the factual allegations and admitted liability to all of the charges against him. As a result, the sole issue before us is the sanction to be imposed.

The charges, respondent’s admissions and his subsequent testimony indicate that he engaged in a pattern of deception to [35]*35conceal his neglect of matters assigned to him. During the relevant time period, respondent was New York Area Counsel for Fidelity. The first neglected matter began in 2001, when Fidelity assigned respondent to underwrite and supervise a series of mortgage refinance transactions affecting two parcels of land in Manhattan. After the entire transaction had closed, respondent failed to record the mortgage documents, nor did he cause any Fidelity employee to record them. Respondent concealed his neglect by: (1) falsely assuring counsel to the lender in an April 1, 2003 letter that the documents were recorded on January 23, 2003, and; (2) forwarding fraudulent endorsements to the Fidelity loan policies delivered at the closing, which falsely stated that the mortgage instruments were recorded on January 23, 2003 and reciting City Register filing number (CRFN) information which actually referred to completely unrelated transactions.

In the second matter, the same client engaged Fidelity in 2006 to insure a refinance transaction involving the mortgages on the same properties as the first matter, which involved new money being secured by a new mortgage on each property. Continuing to conceal his prior neglect, respondent issued a title commitment on behalf of Fidelity which recited the same fraudulent CRFN information as contained in the 2003 endorsements. Based upon the new title commitment issued by respondent, the lender closed the loan transaction on October 13, 2006 and Fidelity insured the new mortgage loan, unaware that the original loan documents had never been recorded. Fidelity was thus unable to record the 2006 loan documents.

In the third matter, respondent became responsible in 2003 for the refinancing by related entities of numerous sites in connection with a bankruptcy reorganization. Although a closing took place on December 24, 2003 and respondent recorded some documents in early July 2004, he did not record other documents until January 2005, and still others as late as April 2006. He never recorded the mortgage documents with respect to subject sites in Suffolk County. Respondent concealed his neglect by preparing and then by sending, or causing his assistant to send to the lender’s counsel, on July 20, 2005, an endorsement which contained false CRFN information for documents that, at the time of its issuance, had not been recorded and for documents that respondent never recorded. When, in April 2006, Fidelity was advised by a borrower’s counsel that the Suffolk County mortgages had never been recorded, respondent told a [36]*36Fidelity executive that he would personally record the documents, but he never did so. Nor did he ever direct any Fidelity employee to do so.

The fourth matter began in or about 2005, when Fidelity was employed to, inter alia, issue a title insurance policy insuring the vesting of title in a family partnership. Following the July 31, 2005 execution of two necessary deeds, upon réceipt of same, respondent failed to record the deeds. Following an inquiry from the family’s counsel by letter dated August 29, 2006, respondent assured counsel that the deeds had been recorded. He also forwarded official recording cover pages which he had fabricated and on which respondent had superimposed the facsimile signature of the City Register and the facsimile seal of the City of New York, which falsely indicated that the deeds were recorded on May 18, 2006. They contained bogus CRFN information from duly recorded instruments affecting entirely different properties in Queens.

In the fifth matter, a client retained Fidelity in May 2006 to provide title insurance for a transaction. Fidelity directed respondent to, inter alia, record release documents evidencing the satisfaction of three separate mortgages and the recording of three UCC release documents. Respondent failed to file any of those documents* nor did he direct any employee of Fidelity to record them. In response to four previous e-mails from Fidelity’s Dallas office inquiring about the recording status of the documents, respondent sent an e-mail on August 28, 2006 falsely stating that the documents were recorded on August 21, 2006. In a subsequent September 8, 2006 e-mail to the Dallas office, respondent attached six documents fabricated by him to indicate that all of the documents had been recorded. Each page included respondent’s false CRFN information (obtained from other duly recorded instruments regarding unrelated property), superimposed with the facsimile seal of the City Register and the facsimile seal of the City of New York.

The client owed combined state and city transfer taxes for these transactions totaling $472,500 and, at the June 16, 2006 closing, executed the appropriate transfer tax returns and advanced $472,500 to Fidelity to issue checks to the Department of Finance. However, respondent failed to file either the state or city transfer tax returns within the appropriate statutory period, and, in fact, never filed those returns. In December 2006, Fidelity discovered that the accounting file for the client still showed a positive balance of $472,500. When confronted, [37]*37respondent falsely advised Fidelity’s accounting personnel that the transaction had not closed on June 16, 2006. In support of this false assertion, respondent produced transfer tax returns which he altered to reflect a change of the date of transfer from June 16, 2006 to November 30, 2006, which would have made the transfer tax due still within the respective statutory periods. As a result of respondent’s failure to pay the transfer taxes in the statutory period ending in July 2006, approximately $159,000 in penalties and interest accrued on the unpaid taxes until respondent’s misconduct was discovered in December 2006.

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In re Clarke, 71 A.D.3d 33, 891 N.Y.S.2d 342 (N.Y. Ct. App. 2009).

71 A.D.3d 33 (In re Clarke) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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