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In re Pena

October 22, 1999


The opinion of the court was delivered by: Per Curiam

Argued September 14, 1999 -- Decided October 22, 1999

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

This matter arose from a grievance filed by Esther Perez, her husband, Lorenzo Perez, and grandson, Jorge Collar (the grievants), alleging that respondent sold their home located at 314 48th Street, Union City (the 48th Street property) without their authorization or knowledge, and that they had never received the sale proceeds.

Additionally, the grievants complained that respondent misappropriated certain proceeds from a fire insurance settlement relating to a 1984 fire at the 48th Street property. After an investigation by the District Ethics Committee (DEC) and the Office of Attorney Ethics (OAE), a formal complaint was filed against Pena. The complaint charged respondent with violating the following Rules of Professional Conduct (RPC): sections 1.7(b) (conflict of interest), 1.15(a) (knowing misappropriation of client funds), 8.1(b) (false statement of material fact in connection with a disciplinary matter), 8.4(a) (violation of the Rules of Professional Conduct), and 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation).

A Special Master was appointed who found respondent had violated RPC 1.7(b), RPC 8.1(b), and RPC 8.4(a) and (c). The Special Master found, however, that there was not clear and convincing evidence that respondent had misappropriated any insurance proceeds. The Disciplinary Review Board (DRB) sustained the Special Master's findings and recommended that respondent be suspended from the practice of law for eighteen months. We observe that both the Special Master and DRB found that respondent did not misappropriate the grievants' insurance proceeds. Based on our independent review of the record, we agree.

There is no evidence that respondent took client funds or that any client funds had been entrusted to him. The sellers received all of the funds to which they were entitled. As the DRB stated in its Decision:

"Simply put, there is no evidence, let alone clear and convincing, that respondent took his clients' money."

Respondent filed a petition for review challenging only the DRB's finding that he engaged in dishonesty, fraud, deceit or misrepresentation. Specifically, respondent claims that the record does not support the findings of dishonesty by clear and convincing evidence. Respondent does not contest the finding that he engaged in a conflict of interest by representing his clients, the grievants, in their sale of the 48th Street property to his close personal friends.

Our responsibility in attorney disciplinary matters is to conduct an independent review of the record, R. 1:20-16(c), and to determine whether the charges have been proved by clear and convincing evidence. In re DiMartini, 158 N.J. 439, 441 (1999). Our review of the record leads us to different factual Conclusions from those of the DRB. Although we find respondent guilty of ethical infractions, we conclude that the appropriate discipline is a six-month suspension.


Respondent was admitted to the bar in 1984. He worked at a law firm during his school years and for one year after admission to the bar. In the spring of 1985, respondent opened his own office in Union City, where he shared office space with Frank Leanza, a colleague from his prior law firm. In December, 1987, respondent moved his office to the 48th Street property, where he continues to practice.

Respondent was privately reprimanded in 1993 for allowing the statute of limitations to expire on a client's uninsured motorist claim and for failing to release the client's files to her new attorney. Currently pending before the Court is the DRB's recommendation to discipline respondent for violations of RPC 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation) and RPC 8.4(d) (conduct prejudicial to the administration of Justice) in connection with his alleged ownership of a bar with two individuals who are not permitted by law to have any interest in a business involving a liquor license.


The matter at issue concerns respondent's representation of the grievants in connection with the sale of the 48th Street property. The following facts are undisputed.

In 1984, the grievants sustained substantial damage to their 48th Street property due to a fire. As a result, in 1985, the grievants and Allstate Insurance Company (Allstate), their fire insurance company, became involved in litigation concerning the amount of insurance proceeds due the grievants. The property remained "uninhabitable" and the grievants were unable to make their mortgage payments to the Department of Housing & Urban Development (HUD), which had assumed the grievants' mortgage. Because the grievants continued to live in the "uninhabitable" property, the New Jersey Division of Youth and Family Services (DYFS) was notified and took custody of the Perezes' grandchildren, based on concern about the family's living conditions. The grievants retained respondent to help them suspend their mortgage payments to HUD, work out a new pay-out schedule, and regain custody of their grandchildren. With respondent's assistance, all of those goals were achieved.

On December 24, 1985, respondent prepared a contract of sale for the 48th Street property, initially identifying Frank and Maria Scifo as the purchasers. The contract indicated the sale price as $100,000.00, and the closing date to be March 10, 1986. Respondent "whited out" the names "Frank and Maria" on the contract, replacing them with "Kathleen & John" Scifo. None of the named purchasers signed the Contract of Sale; however, the Perezes signed as the sellers.

In March 1986, John and Kathleen Scifo loaned respondent $30,000.00. That loan is evidenced by a March 1, 1986 promissory note signed by respondent and by a March 13, 1986 cashier's check from the Scifos to respondent. The promissory note provides that upon respondent's repayment of the $30,000.00, the Scifos agree to convey the 48th Street property to respondent or his assigns.

Respondent prepared a deed to the 48th Street property that was dated March 14, 1986 but was not recorded until July 1, 1986. The deed identified the grievants as the grantors and John and Kathleen Scifo as the grantees, with $100,000.00 as consideration. Respondent prepared and grievants signed Affidavits of Title and a closing statement (RESPA). The purchasers did not sign the RESPA. The ...

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