In re Silberzweig & Sznitken

153 A.D.2d 1, 548 N.Y.S.2d 587, 1989 N.Y. App. Div. LEXIS 15739

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: December 13, 1989
• Status: Published

Opinion

OPINION OF THE COURT

Per Curiam.

In this proceeding the Special Referee sustained charges of professional misconduct alleging, inter alia, that the respondents withdrew interest earned on clients’ funds held in escrow accounts totaling $22,473.47 for their own personal use, that the respondents commingled client funds with funds belonging to the law firm, and that the respondents failed to maintain records pertaining to client funds entrusted to them, as required by 22 NYCRR 691.12.

The petitioner moves to confirm the report of the Special Referee. The respondents’ position at the hearing before the Special Referee was that all of the interest earned on escrow funds was withdrawn from the escrow accounts with the knowledge, acquiescence and consent of each and every client as part of the client’s legal fee. While there is a paucity of legal precedent, we are of the opinion that escrow funds and any interest earned thereon are the exclusive property of the client.

After reviewing all the evidence, we are in agreement with the report of the Special Referee. The respondents are guilty of the misconduct outlined above. The petitioner’s motion to confirm the report of the Special Referee is granted.

In determining an appropriate measure of discipline to be imposed, we have taken into consideration the respondents’ cooperation throughout these proceedings as well as the lack of ample case law precedent or of a court rule regarding ownership of the interest earned on clients’ funds. Nevertheless, even without such precedent or rule, the respondents should have known not to use the interest which accrued on the clients’ escrow funds for their own use. Thus, the respondents are adjudged guilty of professional misconduct. Accordingly, the respondents are censured for their misconduct and are directed to make restitution of the interest to their clients.

Mollen, P. J., Mangano, Thompson, Bracken and Spatt, JJ., concur.

Ordered that the petitioner’s motion to confirm the report of the Special Referee is granted; and it is further,

Ordered that David Silberzweig and Neil Sznitken are hereby censured for their professional misconduct; and it is further,

Ordered that David Silberzweig and Neil Sznitken make restitution of the interest to their clients and render an accounting of that restitution to this court within 60 days after service of this opinion and order upon them.