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In re Franklin

Decided: November 16, 1976.

IN THE MATTER OF BENJAMIN FRANKLIN, III, AN ATTORNEY-AT-LAW


For suspension for one year -- Chief Justice Hughes and Justices Sullivan, Pashman, and Schreiber. Concurring and dissenting -- Justice Clifford and Judge Conford. Clifford, (concurring in part and dissenting in part). Judge Conford joins in this opinion.

Per Curiam

The respondent, an attorney at law of this State, was the subject of a complaint, filed with the Morris County Ethics Committee, that charged him with submitting "exaggerated, fraudulent, or non-existent" expenses on his weekly reports, between January 1, 1973 and July 21, 1973, to the Rockaway Corporation, of which he was president and chief executive officer. This conduct allegedly violated (1) DR 1-102(A)(3) which provides a lawyer shall not "[e]ngage in illegal conduct that adversely reflects on his fitness to practice law" and (2) DR 1-102(A)(4) which prohibits a lawyer from engaging "in conduct involving dishonesty, fraud, deceit or misrepresentation."

In his answer the respondent conceded that he could not substantiate these expenses. However, he denied any violations of the Disciplinary Rules and claimed that his dispute with the Rockaway Corporation had been settled.

Although no testimony was presented at the formal hearing before the Ethics Committee, an Agreed Statement of Facts between the Ethics Committee's prosecutor and the respondent was admitted into evidence with three exhibits. These exhibits included the settlement agreement between the Rockaway Corporation and respondent, a report of Peat, Marwick, Mitchell & Co., certified public accountants, submitted to the Rockaway Corporation, and 12 weekly expense vouchers which respondent had submitted to the Corporation between May 12, 1973 and July 21, 1973. After the hearing respondent submitted an affidavit in which he acknowledged that "some of the claimed reimbursements were insupportable."

On the basis of this record the Morris County Ethics Committee submitted a presentment to this Court in which it found that respondent had submitted fraudulent expense vouchers to his employer between January and July 1973 and had received "reimbursement in substantial amounts for entertainment expenses which he never incurred." The Committee

concluded that this conduct violated DR 1-102(A)(3) and (4).

Respondent had practiced law in this State between 1947 and 1960. He then became general counsel and secretary to the Rockaway Corporation's corporate predecessor. On January 1, 1966, he was elected president and chief executive officer of the Corporation and continued in that capacity until August 3, 1973. He has not practiced law since January 1, 1966.

As an emolument of his position respondent was entitled to reimbursement of business expenses incurred for entertainment, food and liquor. The annual amounts which he incurred between 1966 and 1972 for these purposes ranged between $13,538 and $67,384. In the period between January 1, 1973 and July 23, 1973, these expenses totaled $44,037. The stipulated facts before the Ethics Committee included the assertion that "[n]either party to this stipulation is prepared to factually prove or disprove the validity of" any of these reimbursements. However, the letter report sent to the Rockaway Corporation by Peat, Marwick, Mitchell & Co. recited that individuals whom respondent claimed to have entertained were asked to verify the occasions. Based on the oral responses, no support for $11,775 out of the $44,037 of the 1973 expenses was found. In making this calculation the accountants included as unsupportable expenses those which were claimed for group meetings after at least half of the alleged participants had stated no meeting occurred.

The settlement agreement recited that differences had arisen between the Corporation and respondent in connection with expenses, for which respondent had been reimbursed between 1966 and 1973, in the aggregate amount of approximately $319,000. The agreement provided that Franklin would pay $5,000 and assign to the Corporation his interests in two pension plans which had a total aggregate value, including respondent's contributions, of $46,000. In

return the Corporation released him from any expense account claims it might have had.

The third exhibit introduced at the hearing consisted of weekly expense reports between May 7, 1973 and July 21, 1973, with supporting itemized daily statements. No testimony or evidence was introduced concerning these expenditures, other than the accountant's hearsay ...


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