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Matter of Steinhoff

Decided: March 17, 1989.

IN THE MATTER OF RICHARD M. STEINHOFF, 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

[114 NJ Page 269] Once again, we confront the devastating effect of drugs on a young life. Lawyers, no less than athletes and other members of society, are at risk. Respondent's attorney described his case as a "modern American tragedy." A brilliant, hard-working, young attorney, so able that he served as a court official while still a law student, has fallen victim to the use of cocaine. Admitted to the bar in 1981, he practiced first as Public Rate Counsel in the Public Advocate's Office and thereafter opened his own office in association with another young attorney in late 1982. His associate and secretary described the progressive deterioration of his work habits as he became more dependent on drugs. It affected all aspects of his practice: the way he dressed, the way he handled his cases, the way he handled his clients (one threatened to kill him for his neglect), and, more importantly, the way he handled his trust account.

It is this last aspect that is the primary focus of our ethical inquiry. Respondent does not dispute that in the midst of his decline unauthorized withdrawals were made from his clients' trust fund for his own benefit. He contends, however, that at the time of the misappropriation he was caught in the grip of a drug dependency that caused him to lose control over his behavior and stripped him of the ability to appreciate or understand the full consequence of his acts. According to Steinhoff, this dependency demonstrated that he did not "knowingly" misappropriate clients' funds, an event that almost invariably results in disbarment under In re Wilson, 81 N.J. 451, 453 (1979).

The case arises from a conflict between the recommendations of a Special Master and the Disciplinary Review Board (DRB). The report of the Special Master recommended a discipline less severe than disbarment. In the view of the Special Master, this case exemplified the rare case that would not require disbarment under Wilson, supra, 81 N.J. at 461. The DRB disagreed with the Special Master's report and recommended disbarment of the respondent for the misappropriation.

The critical allegations of the complaint involve several instances of misuse of clients' funds in the spring of 1983. On April 29, 1983, respondent received a $7300 attorney's check as a deposit on a real-estate closing to be held in trust until the closing. Instead of depositing the $7300 in his trust account, respondent deposited $6800 and took $500 in cash. He used this to cover shortages in his business account. In May 1983, respondent received a $5,000 deposit on another closing from which he later drew an unauthorized $2800 check to "cash," thus invading either or both of the two trust balances in his account. There were other instances of "cash" withdrawals from his trust account when respondent delayed in clearing the trust receipts to cover the necessary disbursements of the closing.

To his credit, respondent does not deny what the records disclose. He says, however, that "I didn't steal any money in my own mind." And with respect to the $2800 withdrawal he claims, "I have no independent recollection as to the actual occurrence of that item rather than my position that I did not -- I don't believe myself capable of theft."

It cannot be doubted that respondent's judgment was impaired by cocaine. Anyone who doubts the effect of cocaine on the health and well-being of the young person need only to read this record. At first attracted to the drug by its promise of heightening his mental prowess while he was working the long hours of a young Rate Counsel, respondent soon became pathetically dependent. His respiratory tract became so severely damaged by the ingestion of the drug that he bled from its use. Had he not checked himself into a detoxification program in early 1984, he is certain that he would have died.

But this was the end and not the beginning. For our purposes we are concerned with his competency, particularly in April and June of 1983 when he withdrew his clients' funds. The question is whether he suffered such a loss of competency, comprehension, or will of such magnitude as would excuse conduct that was otherwise knowing or purposeful. In re Jacob, 95 N.J. 132, 137 (1984).

Hence, the hearing before the Special Master focused on the respondent's mental state in the spring of 1983. Concededly, by the time of a September 1983 closing, respondent's conduct was bizarre if not irrational. At that date, respondent represented clients in a transaction where the proceeds from the sale of one property was being used to purchase another property. Although the purchase of the second property required additional funds of $10,000 to close, rather than collect funds from his clients, respondent disbursed to them an extra $5,000. In other ways his partner described irrational conduct on his part. He said:

By the end of the summer I couldn't even talk to him. * * * [H]e became more and more distant and more erratic. And I would -- I would read some letters that he was doing, and it made no sense to me. And in conversations with people, and just the way he was, ...


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