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In re Lehet

Decided: March 9, 1984.

IN THE MATTER OF JOHN L. LEHET, AN ATTORNEY AT LAW


On an Order to Show Cause why respondent should not be disbarred or otherwise disciplined.

For disbarment -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. Opposed -- None.

Per Curiam

[95 NJ Page 466] This matter arose from a report of the Disciplinary Review Board recommending a three-year suspension based primarily on several allegations of respondent's misuse of clients' funds and inadequate recordkeeping. After oral argument, the Court referred to the District Ethics Committee an additional matter involving respondent's misuse of a client's funds. Following receipt of the Committee report on that matter, we heard further oral argument. We conclude that the circumstances call for disbarment.

The District VII (now District XIII) Ethics Committee (Hunterdon, Mercer, and Somerset Counties) consolidated seven complaints of misconduct for hearing. Three were dismissed with findings of no unprofessional conduct. The Board considered the Committee's findings of unethical conduct in the four remaining matters. The most serious involve two instances of mishandling of clients' funds. We discuss these two first and will summarize the others thereafter.

Kline Matter

Respondent's misconduct came to light in December 1980 when he failed to put a promised check in the mail. The $1500 check represented the proceeds of a car accident case. Mrs. Kline, the dissatisfied client, brought the matter to the attention of the Division of Ethics and Professional Services (now the Office of Attorney Ethics). Because of the overtones of a trust account diversion, that office referred the letter to the Committee and wrote to respondent on March 6, 1981, requesting an explanation of the facts and circumstances involved. Respondent did not reply. The client withdrew her complaint after she settled the matter with respondent. The Division remained concerned. Following a demand for production of books and records, the Division's auditor visited respondent on May 5, 1981. The auditor learned that respondent had indeed turned over the insurance proceeds to his client promptly after receipt but had not used a trust account for that purpose; instead, he simply endorsed the $1500 check over to the client and received her personal check for his fee.

In response to a request to produce his clients' ledger book, respondent stated that he did not maintain one. An on-the-spot perusal of one month of respondent's bank statements and cancelled checks made clear that respondent was in violation of R. 1:21-6 because he failed to maintain required records and he used the trust account for personal expenditures. An audit could not be done at that time because there were no trust account records. Respondent asked for time to put his affairs in

order. A followup visit on May 22, 1981, revealed serious deficiencies in the "reconstructed" trust account records. That audit showed that respondent used his trust account to pay $1992 on a personal mortgage, $265 for payroll, $6159 to buy a car, and $2085 to buy another car; that the account was at one point short $4572 to cover recorded deposits of $15,819 for two clients; and that his business account contained numerous overdrafts and checks returned for insufficient funds, and had been the subject of a 1980 IRS levy.*fn1

The respondent admitted these recordkeeping deficiencies but insisted that the funds used for personal purposes were his own and not those of his clients. The Committee concluded that although he did not have any criminal intent to misuse the funds, his actions violated DR 1-102(A)(6) (conduct adversely reflecting on fitness to practice law) by maintaining overdrafts and allowing the IRS to levy on his accounts, by generally failing to maintain a proper recordkeeping system in violation of R. 1:21-6, and by failing to separate clients' funds in violation of DR 9-102.

Nuhn Complaint

This matter involves respondent's misuse of or failure to segregate $3000 of clients' funds that were escrowed to cover a disputed builder's lien on the Nuhns' home. They complained of respondent's neglect in prosecuting an action against the builder, of ...


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