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In re Warhaftig

Decided: April 21, 1987.

IN THE MATTER OF ARNOLD M. WARHAFTIG, 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, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.

Per Curiam

[106 NJ Page 529] In this disciplinary proceeding, arising out of a presentment filed by the District XII Ethics Committee, respondent is charged with invading trust account funds by withdrawing anticipated legal fees in advance of real-estate closings. The Disciplinary Review Board (DRB or Board) concluded that respondent had engaged in unethical conduct, but that knowing misappropriation had not been established by clear and convincing evidence. The Board therefore recommended that respondent

be publicly reprimanded. Because we conclude that respondent's conduct clearly constituted knowing misappropriation under In re Wilson, 81 N.J. 451 (1979), we decline to adopt the DRB's recommendation, and instead order that respondent be disbarred.

I

The charges filed against respondent were the result of a random compliance audit conducted by the Office of Attorney Ethics pursuant to Rule 1:21-6(c). The audit took place in November and December, 1983, and covered the two-year period ending on October 31st of the same year. The audit findings were summarized in the Board's Decision and Recommendation:

The audit disclosed that respondent

continually issued checks to his own order for fees in pending real estate matters. He would replace the "advance" when the funds were received for the real estate closing [audit report at 3].

In one case, a real estate closing occurred on September 19, 1983. Funds totalling $70,722.33 were deposited into respondent's trust account on September 20, 1983. In another case, a real estate closing took place on October 28, 1983. The funds totalling $150,686.27 were deposited into his trust account on October 31, 1983. However, respondent had issued a check to his order for $910 on June 16, 1983 which represented his fee of $455 for each of these two closings. The audit report revealed other instances where respondent similarly took advance fees. A summary of these instances follows:

Fees Taken In Advance of Closings

Days in

Advance 1-30 30-60 60-90 90-120 120

Number of

Instances 6 9 3 2 2

Total

Withdrawn $2,600 3,935 1,110 ...


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