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Matter of Iulo

Decided: July 7, 1989.

IN THE MATTER OF DENNIS J. IULO, AN ATTORNEY AT LAW


On an order to show cause why respondent should not be disbarred or otherwise disciplined.

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

Per Curiam

This disciplinary proceeding results from an audit of the trust funds of respondent, Dennis J. Iulo, by the Office of Attorney Ethics pursuant to Rule 1:21-6(c). In 1981, an attorney involved in a real estate closing with the respondent was aggrieved by the failure of respondent to pay off an outstanding mortgage on the involved property. When questioned about the failure to pay off the mortgage, respondent said that it had been an inadvertence. He mailed a $9,000 check to the mortgagee bank on May 29, 1981, but the other attorney soon learned that the check had bounced.

The matter was brought to the attention of the District XI Ethics Committee. Defendant had an accountant prepare a reconciliation of his trust account. This disclosed shortfalls in the trust account, which resulted in respondent's temporary suspension from the practice of law on December 17, 1982. 91 N.J. 618. This suspension was continued pursuant to a consent order. These discrepancies in respondent's account eventually led to an investigation by the Passaic County Prosecutor and resulted in the respondent's conviction by a jury of two counts of misapplication of entrusted property, in violation of N.J.S.A. 2C:21-15.

The case comes before us on an appeal from the decision and recommendation of the Disciplinary Review Board (DRB), which heard the matter on a motion for final discipline filed by the Office of Attorney Ethics, pursuant to Rule 1:20-6(c)(2). The basis for the disciplinary proceedings was respondent's 1987 criminal convictions for misapplication of entrusted funds in the attorney trust account. The DRB recommended disbarment in reliance on the rule of In re Wilson, 81 N.J. 451 (1979), that a knowing misappropriation of client's funds almost invariably warrants disbarment.

I

In disciplinary proceedings, a criminal conviction is conclusive evidence of respondent's guilt. R. 1:20-6(c)(1); In re

Peia, 111 N.J. 318, 320 (1988). Therefore no independent examination of underlying facts is necessary to determine guilt of the crime used as a basis for establishing a violation of our Rules of Professional Conduct. In re Bricker, 90 N.J. 6 (1982). Ordinarily "[t]he only issue to be determined is the quantum of discipline to be imposed." In re Peia, supra, 111 N.J. at 320; R. 1:20-6(c)(2)(ii).

The distressing aspect of this case is a gnawing uncertainty about the "underlying facts" that the jury verdict establishes. The jury verdict convicted the defendant of Counts One and Three of a multi-count indictment. Those two counts charged that the defendant "did apply and/or dispose of" clients' funds valued at approximately $40,548.97 and $30,802.59, which were to be held in trust for the clients on their behalf. Those two figures represented the balance shown on reconciliation statements prepared by the defendant's own accountant for the two dates, March 23, 1981 ($40,548.97), and June 9, 1981 ($30,802.59).

In actuality, however, these were not two separate misapplications but the total running accounts of the respondent's trust account reconciled at two different dates two and one-half months apart. Obviously, the original deficiency of March 23, 1981, continued in substantial portion until June 9, 1981, and to some extent was reduced. The names shown on the reconciliation are the same.

But there is no smoking gun to be found in the proofs. There is no purchase of a Cadillac with client's funds. Rather, the case was made out solely by the accountant's report showing that on these two distinct dates respondent was out of trust in the amounts shown on the exhibits designated "Status of Trust Account." The only other evidence related to defendant's actions subsequent to the discovery of the shortage, including loans from a personal friend that went into the trust ...


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