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In re Nazmiyal

Supreme Court of New Jersey

June 27, 2018

IN THE MATTER OF BENJAMIN NAZMIYAL AN ATTORNEY AT LAW

          District Docket Nos. XIV-2015-0372E; XIV-2015-0445E; XIV-2015-0541E; XIV-2015-0574E, XIV-2Q16-0436E, XIV-2015-0068E, XIV-2015-0446E; XIV-2015-0575E? XIV-2016-0308E; XIV-2016-0416E; XIV-2016-0417E; XIV-2G16-0418E, XIV-2016-0520E

          DECISION

         To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.

         These matters were before us on certifications of default filed by the Office of Attorney Ethics (OAE), pursuant to R. 1:20-4(f). Both complaints charged respondent with violations of RPC 1.5(a) (unreasonable fee); RPC 1.15(a) (commingling); RPC 8.1(b) (failure to respond to a lawful demand for information by reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects), and RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation). Additionally, the complaint in DRB 17-351 charged violations of RPC 8.4(d) and R. 1:20-20 (conduct prejudicial to the administration of justice).

         Because the misconduct in DRB 17-351 is similar to the misconduct in DRB 17-445, and occurred during the same period, we determined to consolidate the matters for consideration. For the reasons detailed below, we recommend respondent's disbarment.

         Respondent was admitted to the New Jersey and New York bars in 2010. He has no history of final discipline.

         The Court temporarily suspended respondent in nine separate matters for failing to comply with fee arbitration determinations. Those temporary suspensions became effective June 14, 2016, June 14, 2016, July 27, 2016, March 10, 2017, March 31, 2017, May 10, 2017, May 10, 2017 and October 27, 2017, respectively. In re Nazmival, 226 N.J. 464 (2016); In re Nazmival, 225 N.J. 7 (2016); In re Nazmival, 226 N.J. 19 (2016); In re Nazmiyal, 226 N.J. 17 (2016); In re Nazmival, 228 N.J. 160 (2017); In re Nazmival. 228 N.J. 337 (2017); In re Nazmival, 229 N.J. 18 (2017); In re Nazmival, 229 N.J. 19 (2017); and In re Nazmival, 231 N.J. 1 (2017). Each of those orders is still in effect and respondent has yet to satisfy any of the fee determinations, totaling over $45, 000.

         DRB 17-351

         Service of process was proper in this matter. On April 27, 2017, the OAE sent a copy of the complaint to respondent's attorney at the Bedi Rindosh law firm, in accordance with R. 1:20-7(h), by both regular and certified mail, return receipt requested. The certified mail receipt was returned, indicating delivery on May 1, 2017, and was signed for by "Sarah," but the last name is illegible. The regular mail was not returned.

         On May 22, 2017, the OAE sent a second letter to the Bedi Rindosh firm, by regular and certified mail, return receipt requested, informing respondent that, if he failed to file a verified answer to the complaint within five days of the date of the letter, the allegations of the complaint would be deemed admitted, the entire record would be certified directly to us for the imposition of discipline, and the complaint would be deemed amended to include a violation of RPC 8.1(b). The certified mail receipt was returned, indicating delivery on May 25, 2017, and again was signed for by "Sarah." Again, the last name is illegible. The regular mail was not returned.

         By letter dated July 25, 2017, Prabhkaran S. Bedi, Esq. asked the OAE to delay "entering default on its complaint" because respondent, who was out of the country, would be returning within a week. The OAE sent a confirmation letter on August 24, 2017, memorializing Bedi's confirmation that he was authorized to accept service on behalf of respondent, and giving respondent until September 1, 2017, to file answers in the above-captioned matters. Respondent failed to do so, and on September 25, 2017, the OAE certified the record to us.

         The time within which respondent may have answered has expired. As of the date of the certification of the record, no answer had been filed by or on behalf of respondent.

         * **

         We now turn to the allegations of the complaint. Respondent was charged with unethical conduct in respect of loan modification services he offered and performed in numerous client matters (consumer fraud).

         COUNT ONE

         The Federal Trade Commission (FTC) is an agency of the United States Federal Government whose mission is to prevent business practices that are anticompetitive, deceptive, or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish these objectives without unduly burdening legitimate business activity. The FTC is authorized by law to adopt industry-wide trade regulation rules such as MARS.[1] Respondent was aware, at all relevant times, of the FTC's MARS rule.

         The FTC's rule on advanced fees at section 322.5 prohibits mortgage relief companies from collecting any fees until they have provided consumers with a written offer from their lender, along with a written document from the lender describing the changes to the mortgage that would result if the consumer accepts the offer, and the consumer decides the offer is acceptable. On receipt of the offer, the client may reject it and is under no obligation to pay the mortgage relief company. Section 322.7 of MARS specifically exempts attorneys from the advanced fee rule if they are engaged in the private practice of law? are licensed in the state where the consumer or the dwelling is located; and are complying with state laws and regulations governing attorney conduct related to the rule. Section 322.7 of MARS also exempts attorneys who deposit, in a client trust account, funds received from the consumer prior to performing legal services and who also comply with all state laws and regulations, including licensing regulations, applicable to client trust accounts.

         As a mortgage relief company, as defined by the MARS rule, respondent's firm does not qualify for the exception provided by Section 322.7 of MARS.

         Further, in New Jersey, respondent did not meet the exemption provided by Section 322.7 of MARS because New Jersey's debt adjuster statute, N.J.S.A. 17:16G-1c(2), provides, in relevant part: "[t]he following persons shall not be deemed debt adjusters: (a) an attorney-at-law of the State who is not principally engaged as a debt adjuster..." (emphasis added). Pursuant to N.J.S.A. 17:16G-1(c)(2) a debt adjuster "is a person who acts or offers to act for consideration as an intermediary between a debtor and his creditors for the purposes of settling, compounding, or otherwise altering the terms of payment of any debts of the debtor." The New Jersey debt adjuster statute requires a license to conduct mortgage modifications.

         On November 9, 2016, at an OAE demand interview, respondent stated that sixty to seventy percent of his practice was in the area of mortgage loan modifications, and that the other thirty to forty percent of his practice dealt with addressing other client debt, such as second mortgages, credit card debt, and bankruptcy. Thus, by his own admission, respondent was principally engaged in debt adjustment. Hence, he does not fall into the category of exemption stated in N.J.S.A. 17:16-1(c)(2)(a) and is not exempt from licensure as a debt adjuster.

         The David Sosa Matter (Docket No. XIV-2015-0372E)

         On July 18, 2012, David Sosa retained respondent to modify his existing mortgage for his primary residence in New Jersey because he could no longer afford to pay his mortgage, and his payments were in arrears.

         The fee agreement between Sosa and respondent provided the following:

Hybrid Peer Pursuant to N.J. Court Rule 1:21-7, we will represent you on the basis of the reasonable value of our services. This fee consists of a $4, 700 flat fee, which will constitute as funds received for professional services, plus a 5% charge for the amount by which principal of your 1st mortgage loan balance is forgiven.

         Sosa paid respondent the following fees pursuant to the agreement:

• On July 27, 2012, $2, 000 via check number 2191;
• On [illegible date], $1, 300 via check number 2130; and
• On December 16, 2012, $1, 300 via check number 2131

         Respondent collected fees from Sosa without first having obtained a mortgage modification for him. He then deposited all of Sosa's payments into his attorney business account, in violation of Section 322-7 of the FTC's MARS rule, which, as part of the attorney exception, requires that the fees be deposited into an attorney's trust account.

         On February 5, 2013, respondent consulted Sosa regarding an offer by Sosa's mortgage lender to modify Sosa's mortgage, which Sosa rejected. Respondent's collection of $4, 600 of fees before Sosa accepted a written mortgage modification from his lender violated Section 322.5 of MARS. Additionally, by this conduct, respondent acted as an unlicensed debt adjuster, in violation of N.J.S.A. 17:16G-I(c)(2).

         The Angel Frias Matter (Docket No. XIV-2015-0574E)

         On March 19, 2013, Angel Frias retained respondent to obtain a modification of the first mortgage on his primary residence in New Jersey because Frias could no longer afford to pay his mortgage, and his payments were in arrears. The fee agreement provided the following:

Hybrid Fee; Pursuant to N.J. Court Rule 1:21-7, we will represent you on the basis of the reasonable value of our services. This fee consists of a $5, 600 flat fee, which will constitute as funds received for professional services, plus a 4% charge for the amount by which principal of your 1st mortgage loan balance

         Frias paid respondent the following fees pursuant to the agreement:

• On March 19, 2013, $1, 866 via check number 308; and
• On June 14, 2016, in a statement to the OAE, Frias asserted that he made further payments, each for $1, 866, on April 19 and May 19, 2013, respectively.

         Respondent deposited Frias' payments into his attorney business account, in violation of Section 322.7 of MARS. The collection of approximately $5, 600 of fees before Frias accepted a written mortgage modification from the lender was in violation of Section 322.5 of MARS. Additionally, by this conduct, respondent acted as a debt adjuster without a license, in violation of N.J.S.A. 17:16G-I(c)(2).

         The Diana Diaz and Christian Valenzuela Matter (Docket No. XIV-2015-0445E)

         On May 5, 2014, Diana Diaz and Christian Valenzuela retained respondent because they could no longer afford to pay their mortgage on their primary residence in New Jersey, and their mortgage payments were in arrears. The fee agreement provided the following:

Hybrid Fee: Pursuant to N.J. Court Rule 1:21-7, we will represent you on the basis of the reasonable value of our services. This fee consists of a $4, 900 flat fee, which will constitute as funds received for professional services, plus a 5% charge for the amount by which principal of your 1st mortgage loan balance is forgiven or deferred.

         Diaz paid respondent the following fees pursuant to the agreement:

• On May 16, 2014, $1, 225 via check number 222;
• On June 16, 2014, $1, 225 via check number 223;
• On July 16, 2014, $1, 225 via check number 224; and
• On August 16, 2014, $1, 225 via check number 225

         Respondent deposited all of Diaz' payments into his attorney business account, in violation of Section 322.7 of MARS. On July 31, 2014, Diaz' and Valenzuela's mortgage lender, Central Mortgage Company (Central), informed respondent that Diaz and Valenzuela had been approved for a modification of their loan. Respondent soon thereafter notified them of the temporary repayment plan, which Diaz and Valenzuela rejected.[2] By collecting $4, 900 in fees before Diaz and Valenzuela accepted a written mortgage modification from their lender, respondent violated Section 322.5 of MARS. Additionally, by this conduct, respondent acted as a debt adjuster without a license, in violation of N.J.S.A. 17:16G-I(c)(2).

         The Luz B. Eoche Matter (Docket No. XIV-2015-0541E)

         a. First Mortgage

         On March 17, 2013, Luz B. Roche retained respondent because she could no longer afford to pay her mortgage on her primary residence, and her payments were in arrears.

         The fee agreement provided the following:

Hybrid Fee: Pursuant to N.J. Court Rule 1:21-7, we will represent you on the basis of the reasonable value of our services. This fee consists of a $5, 600 flat fee, which will constitute as funds received for professional services, plus a 5% charge for the amount by which principal of your 1st mortgage loan balance is forgiven or deferred.

         Roche paid respondent the following fees ...


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