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In re Johnson

Supreme Court of New Jersey

August 1, 2018

IN THE MATTER OF EDWARD GLEN JOHNSON AN ATTORNEY AT LAW

          Argued: April 19, 2018

          Ellen A. Brodsky, Chief Counsel

          District Docket No. XIV-2014-0698E

          DECISION

          Bonnie C. Frost, Chair

         HoeChin Kim appeared on behalf of the Office of Attorney Ethics. Scott B. Piekarsky appeared on behalf of respondent.

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

         This matter was before us on, a recommendation for a reprimand, filed by the District I IB Ethics Committee (DEC). The nine-count complaint charged respondent with violations of RPC 1.15(a) (six counts) (negligent misappropriation); RPC 1.15(d) and R. 1:21-6 (five counts) (recordkeeping); and RPC 1.7(a)(1) and (2) (three counts) (conflict of interest). For the reasons stated below, we determine to impose a reprimand.

         Respondent was admitted to the New Jersey bar in 1989. On August 4, 2009, he was admonished for failure to safeguard funds. Respondent allowed one of two clients he represented in a real estate transaction to invest all of the closing proceeds without the knowledge or consent of the other. In the Matter of Edward Glen Johnson, DRB 09-049 (August 4, 2009).

         The record and the evidence in this matter are neither clear nor cogent. The Office of Attorney Ethics (OAE), however, clarified various issues in its post-hearing submission to the panel. Subsequently, in his submission to us, respondent agreed with the DEC'S findings of fact and recommendation that he receive a reprimand. The OAE also urged the imposition of a reprimand.

         In connection with an ongoing investigation, respondent met with OAE investigators, on March 23, 2015, and was required to produce the necessary documents to show compliance with the recordkeeping rules. Respondent was unable to do so, explaining that he had lost his records due to a computer crash. With the help of an accountant, respondent prepared reconstructed ledger sheets. After a review of the re-created records, the OAE filed a complaint.

         Count One: The Dacres-Wilson Matter

         In 2007, respondent represented Barlow Dacres in the sale of real estate in Irvington to Delworth K. Wilson and Mona Murphy (the irvington transaction). Purusant to an escrow agreement that the parties entered into, Dacres issued an escrow check for $2, 500, which was deposited into respondent's trust account, to be held pending receipt of necessary documents. Respondent failed to keep the escrow money intact on two separate occasions during the approximately eight-year period he held the money in his account.

         Specifically, on July 17, 2013, respondent made a $55, 000 wire transfer that reduced the Dacres sub-account balance to $2, 350, $150 less than the $2, 500 escrow amount he was required to hold. The next day, July 18, 2013, respondent deposited $61, 000 into the Dacres sub-account, curing the deficit.[1]

         Then, on September 19, 2013, after respondent made several other deposits, check number 8047 for $140, 603 cleared his trust account, leaving a balance of $2, 350, $150 less than the $2, 500 escrow amount that he was required to hold in respect of the Irvington transaction. That shortage was not cured until after March 8, 2016.

         Respondent testified that, at the relevant times, he maintained legal fees of $200 in connection with an unrelated matter (the Lane/Robinson matter), covering the inadvertent shortage in the Dacres sub-account.

         In its post-hearing written summation to the hearing panel, the OAE conceded that respondent's $2 00 fee from the Lane/Robinson matter was sufficient to cover the Dacres shortage of $150, and, therefore, no negligent misappropriation occurred.

         Count Twos Failure to Maintain Three-Way Reconciliations

         Respondent admitted, in his amended verified answer to the complaint, that he did not prepare monthly three-way-reconciliations prior to the OAE's investigation. The OAE investigator also testified that, during his interview, respondent conceded that he did not keep those reports or records.

         Count Three; The Varona Matter

         On June 5, 2014, respondent issued check number 8182 for $2, 762.77 in connection with the Varona matter.[2] Prior to respondent's issuance of the check, the Varona ledger showed an account balance of $1, 804.26. The check cleared on June 9, 2014, leaving a balance of ($958.51). The ledger cards for the Varona matter show no further entries.

         In its post-hearing written summation, the OAE asserted that, as respondent admitted in his testimony, he did not promptly deposit checks for his legal fees into his attorney business account. Those fees remained in his trust account. Respondent claimed that he had sufficient legal fees in his trust account to cover the Varona shortage.

         The OAE conducted a review of respondent's client ledgers, and found the following attorney's fees in his trust account, during the June 9 to August 1, 2014 period:

• Check number 8179, issued on June 4, 2014, for $1, 200 in the Arias matter. This check cleared on July 8, 2014;
• Check number 8233, issued on July 30, 2014, for $1, 300 in the Silva matter. This check cleared on November 5, 2014; and
• Check number 8234, issued on July 30, 2014, for $435 also in the Silva matter. This check cleared on August 1, 2014.

[OAESp.4].[3]

         Thus, according to the OAE, respondent's fees covered the shortage from June 9 to July 8, 2014, and from July 30 to August 1, 2014. A shortage existed, however, from July 9 to July 29, 2014.

         Count Four; The Rosario Matter

         On January 1, 2011, respondent's ledger card for the Rosario matter indicated a balance of $13, 106.84, On January 11, 2011, respondent initiated a wire transfer from the Rosario subaccount for $19, 306.84, leaving a balance of ($6, 200). That negative balance remained until September 14, 2011, when respondent transferred $4, 700 from PRO REO, another client for whom he was holding funds, to Rosario. This transfer left a negative balance in the Rosario sub-account of $1, 500, which remained until October 31, 2011, when a deposit for $1, 500 cleared respondent's trust account, leaving a zero balance in the Rosario sub-account.

         In its review of respondent's client ledgers, the OAE found the following attorney's fees in his trust account from January 31 to March 29, 2011 and March 30 to October 31, 2011:

• Check number 7482, issued on January 8, 2011, for $1, 293, in the Rosario matter. This check cleared on March 30, 2011;
• Check number 7551, issued on August 19, 2011, for $3, 379.35, in the PRO REO matter. This check cleared September 6, 2011;
• Check number 7567, issued on September 12, 2011, for $1, 500, in the Whitening matter. This check cleared on November 21, 2011; and
• Check number 7568, issued on September 12, 2011, for $325, also in the Whitening matter. This check cleared on October 7, 2011.

[OAESp.4-5].

         According to the OAE, check number 7482 covered a shortage of $378.46 from January 31 to March 29, 2011. In respect of the $6, 200 shortage, the OAE stated in its summation brief:

However, the shortage of $6, 200 was never fully covered by respondent's remaining fees in his trust account from March 30, 2011, to October 30, 2011. Rather, the shortage was reduced to $2, 820.65 from August 19, 2011, to September 6, 2011. It was reduced to $4375 from September 12, 2011, to October 7, 2011. Then the shortage was reduced to $4700 from October 8, 2011, to October 31, 2011.

[OAESp.5].

         Count Five; The BMP/Burse Matter

         On April 29, 2012, a $5, 000 deposit was made into respondent's trust account under the BMP sub-account. On May 14, 2012, respondent issued check number 7630, for $6, 000, from the BMP account, which cleared the account on May 22, 2012, leaving a negative $1, 000 balance. On May 15, 2012, a deposit for $1, 000 had been made, thereby eliminating any negative balance noted on the client ledger. Respondent maintained that, because check number 7630 cleared the account on May 22, 2012, after the additional $1, 000 deposit was made, there was never an actual shortage.

         On June 27, 2012, respondent initiated a $55, 340.99 wire transfer from the BMO sub-account, resulting in a $51, 270.99 deficit on the BMO client ledger. The following day, June 28, 2012, respondent transferred $63, 000 to the BMO sub-account from another client, Lawrence, for whom he was holding money, curing the deficit.

         On April 26, 2013, respondent initiated a $50, 000.91 wire transfer, resulting in, a ($35, 918.73) balance on the client ledger. Four days later, on April 30, 2013, respondent made a $38, 500 deposit, curing the deficit.

         On January 10, 2014, respondent withdrew $18, 363.83 from the BMO sub-account, leaving a balance of ($15, 984.58) on the client ledger. On March 13, 2014, he deposited $1, 000, reducing the deficit to ($14, 984.58). On April 10, 2014, respondent initiated an internal transfer for $3, 000 from Frazier, another client for whom he held funds, further reducing the deficit to ($11, 984.58). On June 3 and June 6, 2014, respondent made deposits of $5, 000 and $21, 000 respectively, eliminating the deficit.

         Finally, on May 7, 2015, respondent initiated a $70, 000 wire transfer that left a deficit of ($5, 115.28) in the BMP sub- account. On May 29, 2015, respondent initiated an internal transfer for $5, 200 from Greene, another client for whom he was holding funds, curing the deficit and leaving a balance of $84.72 in the BMP sub-account.

         In its post-hearing review of respondent's client ledger cards regarding the BMP matter, the OAE found the following attorney's fee still in his ...


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