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In re Mininsohn

December 03, 1999

IN THE MATTER OF SETH MININSOHN, AN ATTORNEY AT LAW.


The opinion of the court was delivered by: Per Curiam

Argued September 13, 1999

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

This attorney discipline proceeding arose when the Office of Attorney Ethics (OAE) was notified of an overdraft in respondent Seth Mininsohn's attorney trust account. After an investigation by the OAE, a formal complaint was filed against respondent. The complaint was based on fifteen real estate transactions in which respondent withdrew his legal fee from his trust account before it had been earned, and on six occasions on which respondent disbursed trust account funds to himself when he had insufficient funds on deposit. The complaint charged respondent with violating the following Rules of Professional Conduct (RPC): RPC 1.15(a) (knowing misappropriation of client funds); RPC 8.4(c) (conduct involving dishonesty, fraud, deceit and misrepresentation); RPC 1.15(c) (failure to safeguard client funds); RPC 1.15(d) (failure to comply with the provisions of R. 1:21-6).

The Special Master found clear and convincing evidence that respondent violated RPC 1.15(a), RPC 8.4(c), RPC 1.15(c), and RPC 1.15(d) because he engaged in knowing misappropriation of escrow and trust account funds in thirteen of the fifteen real estate transactions. The Disciplinary Review Board (DRB) sustained the Special Master's finding that Respondent knowingly misappropriated clients' funds and failed to properly maintain records as required by R. 1:21-6. Additionally, the DRB found clear and convincing evidence in the record demonstrating that respondent disbursed trust account funds to himself when he had insufficient funds on deposit. Pending before the Court is the DRB's recommendation to disbar respondent because of those violations.

In response to an Order to show cause why he should not be disbarred or otherwise disciplined, respondent contended that his inexperience and lack of training in managing a trust account led him mistakenly to conclude that he had an equity "cushion" in his trust account. Respondent believed that his trust account had a "cushion" because he did not always withdraw the fees that he had earned from other transactions. Respondent insisted that his ignorance of trust account bookkeeping was the reason for the negative balance found in his trust account. Accordingly, respondent contended that he acted negligently, not knowingly, in invading client or escrow funds.

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 Di Martini, 158 N.J. 439, 441 (1999). We note that both the Special Master and DRB found by clear and convincing evidence that respondent had knowingly misappropriated client funds, and that the DRB found by clear and convincing evidence that respondent had disbursed trust account funds to himself and in the process had invaded client funds. Based on our independent review of the record, we agree with those Conclusions.

I.

Respondent was admitted to the New Jersey bar in 1985. On graduation from Hofstra Law School, respondent worked as a junior associate to the in-house counsel of Schiavone Construction Company. While employed by Schiavone, respondent's responsibilities were limited to contract negotiations and resolution of contractor-subcontractor disputes.

In 1990, respondent left Schiavone and opened a law office in Hoboken, New Jersey. Initially, his law practice was limited to small commercial matters. As his practice developed, he handled a large number of real estate transactions. Respondent instituted his own accounting system, using a checkbook and post-it notes to manage the financial affairs of his law practice. Respondent never employed an accountant or another attorney in his practice, but he occasionally hired part-time non-legal support personnel to assist him.

A.

On March 29, 1994, Hudson United Bank notified the OAE of an overdraft in respondent's attorney trust account. The OAE informed respondent of the trust account overdraft notice and requested an explanation. In response, respondent wrote four letters to the OAE that tried to explain the overdraft. Dissatisfied with respondent's explanations, the OAE informed him that it would conduct an audit of respondent's books and records for the period from January 1, 1991 to July 1994.

On the basis of that audit, the OAE filed a four-count complaint charging respondent with the knowing misappropriation of escrow and trust funds as well as with recordkeeping violations. The charges stemmed from nine real estate transactions in which respondent represented sellers and withdrew his legal fees from escrow funds before closing; six real estate transactions in which respondent, usually representing buyers, advanced himself legal fees from other clients' funds; and six instances in which respondent disbursed funds to himself from his trust account when that account had insufficient funds on deposit.

1.

Respondent represented the seller and was the escrowee for the buyer's deposit on nine occasions. Those real estate transactions required respondent to hold in escrow the buyer's deposit until the closing of title, at which time those funds would be paid to the seller. The facts pertinent to the nine occasions on which respondent represented the seller and was the escrowee for the buyer's deposit are as follows:

In the Schulte matter, the closing took place on December 31, 1990. The client ledger sheet showed receipt of $1,000 and $17,500 during October 1990. Respondent's bill for the closing was $4,051. The ledger sheet showed a $1,600 disbursement to respondent for fees and disbursements on December 21, 1990. The check was signed by respondent, and included a notation "Schulte" that was made at the time the check was written. The ledger sheet also showed a $2,451 disbursement for the balance of respondent's fee on December 31, 1990, the date of the closing. The check was signed by respondent and also included the notation "Schulte." Respondent testified that he believed he was entitled to take a partial fee when his client signed the deed on December 21, 1990.

In the Alongi matter, the closing never occurred. The client ledger sheet showed the receipt of $1,000 and $6,500 during November 1990. The ledger sheet showed an $800 disbursement to respondent for fees and disbursements on March 18, 1991. The check was signed by respondent, and included a notation "Alongi fees/costs" that was made at the time the check was written.

In the Merrill Lynch matter, the closing took place on April 26, 1991. The client ledger sheet showed the receipt of $24,000 on April 17, 1991 and $96,000 on April 26, 1991. The ledger sheet showed a $150 trust account check and a $1,450 wire transfer to respondent on April 17, 1991. The wire transfer actually occurred on April 15, 1991. Respondent testified that he thought he was entitled to a fee on April 17, 1991 because the closing documentation was signed on that date.

In the Tax matter, the closing took place on September 16, 1991. The client ledger sheet showed the receipt of $1,000 on May 23, 1991 and $14,100 on June 11, 1991. The ledger sheet showed a $750 disbursement to respondent for fees and disbursements on June 17, 1991. The check was signed by respondent, and included a notation "Rice/Tax" that was made at the time the check was written. The ledger sheet showed an additional $100 disbursement on September 16, 1991, the date of the closing. The $100 represented the balance of respondent's fee.

In the Fleet Funding matter, the closing took place on May 29, 1992. The client ledger sheet showed receipt of $1,000 and $5,000 in April 1992. Respondent's bill for the closing was $1,000. The ledger sheet showed a $750 disbursement to respondent for fees and disbursements on April 21, 1992. The check was signed by respondent. The ledger sheet also showed a ...


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