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In re Brown

Decided: May 22, 1986.

IN THE MATTER OF ARNOLD E. BROWN, AN ATTORNEY-AT-LAW


For disbarment -- Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.

Per Curiam

Acting on a presentment filed by a District Ethics Committee (the Committee), the Disciplinary Review Board (DRB) concluded that respondent, Arnold E. Brown, was guilty of "a number of incidents of misconduct that reveal an overall inability properly to represent clients and to exhibit proper judgment in the management of trust accounts." Although it agreed with the Committee's finding that "respondent was out-of-trust for almost four years," the DRB nevertheless determined that "this is not a misappropriation case as defined in In re Wilson, 81 N.J. 451 (1979)," and therefore recommended a one-year suspension.

We disagree. Our independent review of the record leads to the conclusion, established by clear and convincing evidence, that this proceeding is indeed controlled by Wilson and that respondent should be disbarred.

I

Although the Committee and the DRB dealt with complaints of four clients of respondent, the source of respondent's ethical problems came to light only after an audit of his books and records by the Division of Ethics and Professional Services (DEPS), predecessor of the Office of Attorney Ethics. The client complaints produced findings by the DRB of respondent's gross negligence in violation of DR 6-101(A)(1) (Annie Lou Gibbs); failure to preserve the identity of client funds and intentional delay in payment of taxes (Henry Wright); intentional failure to carry out a contract of employment contrary to DR 7-101, and failure to preserve the identity of a client's funds in violation of DR 9-102 (Mildred Hurt); and, again

contrary to DR 9-102, failure to preserve the identity of trust-account funds (Nathaniel and Mary Roberson).

The Roberson matter involved respondent's delivery of a trust-account check to the buyer's attorney in a real-estate transaction. The check represented deposit funds of $6900 held in escrow by respondent, who represented the seller. When the deal fell through, the buyer sought the return of the deposit. Because respondent's trust account check was twice dishonored, the buyer's attorney notified the ethics authorities, after which respondent delivered certified checks totalling $6900. It was the ethics complaint arising out of this transaction that prompted the DEPS audit, which is the object of our focus.

The audit covered the period August 1981 through July 1982. The trust accounts could not be reconciled because respondent was unable to produce individual client trust records. The auditor concluded that respondent's trust account "regularly had balances lower than $6900 and was frequently deficient."

Respondent's explanation -- and the heart of his defense -- is that in March 1978 he deposited in his trust account a $20,000 check of a client, Astroscope, Inc. Instead of waiting for the funds to clear the account before disbursing them, as required by DR 9-102, respondent issued checks in accordance with the client's instructions. When the bank dishonored the $20,000 check, the client was unable to make good on the check. The result, then, was a $20,000 deficiency in respondent's trust account. The client thereafter filed for bankruptcy.

Rather than reveal this unhappy turn of events to all the affected parties and to the attorney disciplinary authorities, or take steps towards restitution of the monies lost, respondent continually invaded the trust funds of one client to pay another. As respondent's brief puts it,

[h]e was forced into a process commonly known as "lapping," whereby the designated funds of one client are used to pay for another client's needs. However, [because respondent was] a sole practitioner, ...


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