Matter of Perez

517 A.2d 123, 104 N.J. 316, 1986 N.J. LEXIS 1242
CourtSupreme Court of New Jersey
DecidedNovember 3, 1986
StatusPublished
Cited by17 cases

This text of 517 A.2d 123 (Matter of Perez) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Matter of Perez, 517 A.2d 123, 104 N.J. 316, 1986 N.J. LEXIS 1242 (N.J. 1986).

Opinions

PER CURIAM.

This disciplinary proceeding results from a random compliance audit of the trust funds of respondent, John Perez, by the Division of Ethics and Professional Services (Division) pursuant to Rule 1:21-6(c). At the time of the audit, respondent was a sole practitioner. Upon receipt of the auditor’s report, the Division filed a Notice of Motion with the Disciplinary Review Board (DRB), that respondent be temporarily suspended from the practice of law on the grounds of his continuing and significant invasion and misuse of client trust funds, use of trust accounts for personal purposes, and failure to maintain records required by Rule 1:21-6, all in violation of DR 9-102(A), [318]*318(B) and (C).1 The DRB denied the Division’s motion on the condition that respondent cease practice as a sole practitioner, enter into the employ of a law firm, and have no involvement in or responsibility for the financial aspects of the practice. Respondent continued in the employ of the law firm until September 1985 when he ceased practicing law and went into business. Based on the findings resulting from the compliance audit of respondent’s trust account, the District V-A Ethics Committee (DEC) filed a complaint. After a hearing, it concluded that respondent had violated DR 9-102(A), 9-102(B)(3), 9-102(B)(4), and 9-102(C), and recommended a public reprimand.

I

The DRB conducted a hearing. It then issued its Decision and Recommendation, which summarized the charges and relevant evidence in pertinent part as follows:

1. BUCCA-BERVAN LIQUORS
In April 1981 Joseph Bucca, a close friend, asked Respondent to lend him $3,500, the amount he needed to meet the $30,000 sale price for real estate and a liquor license. Respondent who had anticipated borrowing $20,000 received only 12,000. In the interim, he had promised to lend money to Mr. Bucca. To keep his commitment to Mr. Bucca, Respondent withdrew funds from a trust account in the name of 814 Parker Street, Inc., owned by a close friend, William Whiteman. On April 8, 1981, Respondent had deposited in this account $3,500 as part of the proceeds of a real estate transaction. Before he mailed the closing documents and his trust check to Mr. Whiteman, Respondent explained in a telephone conversation what he had done. Respondent maintained that Mr. Whiteman understood and had no problem with the way he handled the transaction. The check dated May 13, 1981, was deposited by Whiteman on June 29,1981, at which time it cleared. In his unpaginated affidavit of April 18, 1983, to the Disciplinary Review Board, Respondent said:
I know that I should not have taken the funds from the trust account but Mr. Bucea was desperate and I had left him with no alternatives at that moment [319]*319because he had expected the money from me [Respondent’s affidavit, page 7, paragraph 1],
2. GOMES AND MARTIN
Respondent represented Mr. Gomes and Mr. Martin in a real estate closing on March 15, 1982. Respondent never deposited the cash paid to him for fees and disbursements. In closing out the file, Respondent disbursed a total of $403 from the trust account on May 14, 1982. Several months later when he was reconciling his trust accounts, he noticed that he had not deposited funds to cover the disbursements. On August 10, 1982, Respondent deposited $403 to balance out the account.
3. EXXON/CUOZZO MATTER
On April 15, 1982, Respondent received $4,000 in cash from Anthony V. Cuozzo to be used for the purchase of property. Since the banks were closed, he took the money home and secreted it. While attending funeral services for his father-in-law, he learned his home had been burglarized. At that time, he had forgotten about the money and did not report it as stolen. When he began reconstructing his accounts, he realized that he had not deposited the $4,000. He also realized there had not been funds in the account to cover the check for $2,093 that was issued to Exxon on April 21, 1982.
4. AFONZO AND MERCHANT/CLOVER MATTER
On May 5,1982, Respondent deposited $4,000 into his trust account to the credit of the Merchant/Clover transaction. Disbursements totalling $3,141.30 were made on June 9, 1982. Respondent’s trust account, however, had a negative balance of $77.71 as of June 7, 1982. On June 9, 1982, Respondent deposited $8,467.66 into his trust account on behalf of the Afonzo real estate closing, the same date as the Merchant/Clover disbursements. The Afonzo trust funds were therefore invaded.

In addition to the above matters, the auditors concluded that:

Respondent had used a $4,000 deposit he received May 5,1982, for other clients, and in another case, that he invaded the trust funds of a client in the amount of $4,129.81. The auditors further found interest charges for a $9,500 loan by Respondent were automatically charged by the bank against Respondent’s trust account.

Respondent admitted that he withdrew funds from his trust account, denied any intentional misappropriation, and stated that he was unable to keep his books or administer his office as he should have over the period in question because of the death of his father-in-law and the serious illness of his wife and son. He also noted that none of his clients had suffered any loss by reason of his infractions.

Upon its review of the record, the DRB found that the DEC’s finding of unethical conduct on respondent’s part was fully [320]*320supported by clear and convincing evidence. Specifically, the DRB found that:

Respondent misused $3,500 from the trust account of William Whiteman so he could honor his commitment of loaning that amount to another friend, Joseph Bucca. Although Respondent later obtained permission of the client to do this, this came after the fact. He acknowledged that he knew this was wrong, but claimed he did so because Mr. Bucca was desperate and relied upon his promise. The Board further finds Respondent in several situations utilized clients’ funds for the benefit of other clients, also that he disbursed funds against trust accounts before he received any funds. The Board finds Respondent failed to: (1) preserve the identification of client’s funds, DR 9-102(A); (2) maintain complete records of funds coming into his possession and render appropriate accounting to his clients, DR 9 — 102(B)(3); (3) promptly pay to clients funds in his possession, DR 9-102(B)(4); and (4) comply with the record keeping provisions of R. 1:21-6.

More significantly, the majority of the DRB found that:

Respondent did not knowingly misappropriate funds from his trust account. Since his recordkeeping was virtually nonexistent, the Board majority concludes that he acted recklessly or negligently. The situation here is unlike that of Wilson, supra,

In determining the proper discipline for respondent, the DRB studied respondent’s misconduct as well as his character and background.

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Matter of Perez
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Bluebook (online)
517 A.2d 123, 104 N.J. 316, 1986 N.J. LEXIS 1242, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-perez-nj-1986.