In The Matters of Gregory Karl Mueller and Vincent Chirico Attorneys At Law
Argued: September 20, 2018
District Docket Nos. XIV-2014-065 IE and XIV-2014-0653E
A. Racz appeared on behalf of the Office of Attorney Ethics.
D. Poplar appeared on behalf of respondent Mueller. Joseph P.
LaSala appeared on behalf of respondent Chirico.
A. Brodsky, Chief Counsel
C. FROST, CHAIR
Honorable Chief Justice and Associate Justices of the Supreme
Court of New Jersey.
matters arise from the same set of facts and were
consolidated for hearing before a District IIA Ethics
Committee (DEC) hearing panel. The matters were referred to
the Office of Attorney Ethics (OAE) by the Honorable Craig L.
Wellerson, P.J.Cv., Ocean County, and stem from
respondents' conduct in connection with the case In
the Matter of Patriot Settlement Resources and Richard
Heckel OCN-L-1925-14 (Patriot matter). The
respondents' offices represented opposing parties in the
Mueller was charged with having violated RPC
1.7(a)(1) and (2) (concurrent conflict of interest) and
RPC 5.1(a), (b), and (c) (failure to supervise
another lawyer). Respondent Chirico was charged with having
violated RPC 1.7(a)(2) (concurrent conflict of
interest), RPC 1.15(d) (recordkeeping - failure to
maintain New Jersey trust and business accounts),
RPC 3.3(a)(1) and (5) (false statement of material
fact or law to a tribunal and failure to disclose to the
tribunal material facts, knowing the omission is reasonably
certain to mislead the tribunal), RPC 8.4(c)
(conduct involving dishonesty, fraud, deceit or
misrepresentation), and RPC 8.4(d) (conduct
prejudicial to the administration of justice).
hearing panel recommended a reprimand for respondent Mueller
and a three-month suspension for respondent Chirico. For the
reasons expressed below, we agree with the DEC's
Mueller was admitted to the New Jersey and New York bars in
1993. He maintains a law office in Tenafly, New Jersey. He
has no history of discipline in New Jersey.
Chirico was admitted to the New Jersey bar in 1993 and the
New York bar in 1994. At the relevant time, he maintained law
offices in Brooklyn, New York and Tenafly, New Jersey. He,
too, has no history of discipline in New Jersey.
Wellerson, who presided over the Patriot matter,
denied Patriot's application seeking approval of the sale
and transfer of structured settlement proceeds under the
Structured Settlement Protection Act, N.J.S.A. 2A: 16-63 to
69. This act was adopted to
protect recipients of long-term structured settlements from
aggressive marketing by factoring companies seeking to
persuade these people to cash out future payments at sharp
Structured settlements provide strong public policy benefits.
They provide long-term financial protection for injury
victims and their families. They provide against the loss or
dissipation of lump sum recoveries. Factoring companies . . .
using high-pressure sales to "buy" these
settlements for a small lump-sum payment, undermine these
benefits and may exploit an injured person at a time when
they need cash.
[Sponsers' Statement to A-2146.]
Wellerson referred the matter to the OAE for investigation.
The proposed sale to Patriot was for a lump sum payment of
$300, 000 to Richard Heckel, despite calculations that the
present day value, as of September 19, 2014, was $1, 744,
501.17. According to the judge's letter,
Heckel, the seller of the structured settlement payment
rights, was a resident of Atlantic County, and had previously
appeared in the Superior Court of New Jersey, Atlantic
County, seeking similar relief. Heckel had been injured at
birth due to medical malpractice and apparently suffered from
cerebral palsy. He was awarded a settlement/annuity for his
injuries and was seeking to sell a portion of it. Heckel had
sold portions of the settlement prior to this attempted sale.
to Judge Wellerson, the Patriot application was
filed as "a show-cause order," which is typical for
such an application. Although the parties requested to have
the application approved on the papers, the judge determined
to hold a hearing because, he explained, it was his
obligation to determine whether the seller of the annuity
understood the transaction.
Wellerson, who presided over approximately fifty such
hearings, remarked that, typically, the sellers are p_ro se.
The judge added that case law requires the court, when
conducting its analysis of the propriety of a sale, to ensure
that the sellers of the payments fully understand the
repercussions of their actions. He cited several cases
setting forth the standard of review, including In re
Transfer of Structured Settlement Rights by Joseph W.
Spinelli, 353 N.J.Super. 459 (2002) and In re
Keena, 442 N.J.Super. 393 (2015).
reviewing the parties' submissions, the judge was
concerned by the size of the sale. After an initial hearing,
he became concerned about the fact that Patriot's and
Heckel's attorneys shared the same address.
Mueller's associate, and Heckel were present at the
September 19, 2014 Patriot hearing. Judge Wellerson
testified that, at the hearing before him, Heckel was in a
wheelchair, and had difficulty speaking, enunciating his
words, and raising his hand to be sworn in as a witness. The
judge, thus, was concerned about Heckel's ability to
"navigate this complex sale of life-contingent
payments." At the time of the proposed sale, Heckel was
receiving $1, 000 per month; was entitled to receive $3, 000
per month, as of the date of the DEC hearing; and, in the
early 2020s, would be entitled to receive $10, 000 per month.
Because of Heckel's difficulties, the judge wanted to
ensure that he was capable of communicating with his
attorneys, and that he have a frank and complete discussion
about the impact that the sale would have on his life. The
judge emphasized a court's responsibility to ensure that
such a sale is in the payee's best interests, and that a
discounted future payment would "augment the payee's
life circumstances in a manner that waiting for the money
could never do."
Wellerson was concerned about Heckel's ability to lead a
more comfortable or better life than he would otherwise, once
the money from the annuity was dissipated. Heckel's
submission to the court included his attorney's
certification, which indicated that Heckel would use the sale
of the settlement funds to pay off an existing mortgage and,
thus, stave off a foreclosure on the property; finance the
down payment on a home in Florida; and use the balance for
improvements to the home and to pay off credit card debts and
loans. At the hearing, the judge did not know whether Heckel
would have sufficient funds to accomplish his goals as set
forth in his attorney's certification, and Heckel's
attorney did not know the exact amount of the mortgage
payoff. Although the application had been filed in Ocean
County, Judge Wellerson learned that Heckel's house was
located in Atlantic County. A certification in the
parties' petition stated that Heckel lived at an address
in Brick; however, that property was owned by someone other
than Heckel. The judge noted that proceedings for the sale of
settlements must be filed in the county where the seller
judge inquired how Heckel came to be represented by the
Mueller Law Group (MLG), which was located in Bergen County.
Heckel replied, "through the phonebook." When the
judge asked Chirico whether he had referred the matter to
MLG, Chirico denied having done so, and at no time corrected
his statement. The judge asked him, "[j]ust a
coincidence that the two of you [Chirico and Mueller] have
worked on all of these dealings together and Mr. Heckel calls
Mr. Mueller and then somehow we get to you? That's just
out of the blue?" Chirico replied, "[t]hat's my
understanding, Your Honor." The judge had difficulty
accepting the veracity of Chirico's denial, given that a
certification in the matter averred that Heckel was living in
Ocean County, but he purportedly used a Bergen County
phonebook to find MLG's number.
DEC hearing, "in hindsight," Chirico admitted that,
his denial that he had referred the matter to MLG was not
an OAE interview, Chirico indicated that he had had an
"off-the-record discussion" with the judge in which
he corrected his statement about the referral to Mueller. He
maintained that, at the time he conveyed that to the OAE, he
believed it to be true. At the DEC hearing, when asked
"as you sit here today, is . . . that [a] true and
accurate statement?" Chirico replied, "As I sit
here today I don't recall." During that OAE
interview, Chirico stated that he was "taken aback"
by Heckel's response about the phone book "and
thought that there may have been some other means that he
communicated that he found the Mueller Law Group."
the presenter asked Judge Wellerson whether Chirico had ever
corrected the record about not referring the matter to MLG,
the judge replied:
my response now, as it was at the time, was had that
disclosure been made, I would not have gone to the internet
to learn more about this address location and the
relationship between the attorneys. And I recall being
shocked when I saw that he was listed "of counsel."
And then I understand that it was brought out that when you
look at Mr. Chirico's letterhead, it does have Mr.
Mueller as one of the attorneys underneath. But in all candor
in reviewing the file on the sale of the structured
settlement, I didn't review it to that extent. And the
attorney who appeared before me had a different last name and
I didn't put those pieces together.
[2T66-18 to 67-6.]
Wellerson called the parties into chambers to give them an
opportunity to withdraw the application, asking whether the
agreement was in Heckel's best interests. The attorneys,
nevertheless, wanted to proceed. The judge's reasons for
denying the application were (1) Heckel was to receive $300,
000, while the mortgage payoff amount at the time of the
hearing was $205, 000; (2) Heckel intended to finance the
down payment for a house in Florida costing between $200, 000
and $250, 000; (3) improvements to a new house would cost
between $65, 000 and $70, 000; and (4) Heckel would be left
with $20, 000 to $30, 000 to pay off a credit card debt. The
judge concluded that Heckel would be left penniless.
Judge Wellerson's view, Heckel's attorney had not
discussed with Heckel the problems with the sale - that
"[t]he numbers didn't work." At the time of the
Patriot hearing, the judge was "satisfied . . .
that there was no credible information to make a decision on
something so monumentally important to this man to just leave
it to happenstance." The judge's obligation was to
consider the risk to Heckel, not to Patriot. He was
well-satisfied that the agreement was not in Heckel's
the hearing, the judge researched the law firms representing
the parties and discovered that Chirico was listed as of
counsel to Mueller's law firm. Through a website
advertisement, the judge found that the law firm representing
Patriot was the same firm representing Heckel. Judge
Wellerson then issued an order to show cause for the
attorneys to appear to explain their circumstances. The
attorneys each appeared with separate counsel, who questioned
Judge Wellerson's jurisdiction to proceed with the
show-cause hearing. The judge had hoped that there was some
explanation, such as there was a mistake. However, the
attorneys had no explanation for what occurred. The judge
then referred the matter to the OAE.
respondents' relationships to each other are somewhat
confusing. According to Mueller, he has known Chirico since
the mid-2000s, when Mueller was of counsel to the firm
Silverman, Sclar, Shin and Byrne (Silverman Sclar) and
Chirico became a partner at that firm several years later. In
2012, Chirico left the firm to start his own solo practice,
Chirico Law PLLC, in Brooklyn.
the Silverman Sclar firm dissolved, Silverman and Sclar each
started their own firms. Mueller became of counsel to both
firms. Chirico was also of counsel to the Sclar firm.
Mueller, too, was of counsel to Chirico's firm prior to
the transaction at issue.
is the sole shareholder of MLG in Tenafly, New Jersey, which
at the time of the DEC hearing had seven employees, two of
whom were full-time associates. In 2012 or 2013, Mueller and
Chirico became of counsel to each other's firms, and
Mueller was listed on Chirico's letterhead as such.
According to Mueller, he had forgotten that his name was on
Chirico's letterhead. He maintained that their "of
counsel" relationship was never formalized. Mueller
permitted Chirico to use his law firm's office address in
Tenafly, but did not recall when he had done so.
Chirico's picture and biography appeared on the MLG
website as of counsel to the firm. Mueller maintained that
Chirico's name was not added to the website until after
the papers had been filed in the Patriot matter. He
admitted that permitting Chirico to use his office address
implied a relationship between them. Mueller claimed that
Chirico's name was removed from the website following the
OAE's interview in this matter.
asserted that he and Mueller have an "affiliation"
to date. Chirico used Mueller's Tenafly, New Jersey
address and had added Mueller and Mueller's law partner
to his errors and omissions insurance policy, as of counsel,
in September 2012. Mueller, too, added Chirico to his
malpractice insurance, as "of counsel," after he
accepted Heckel as a client.
represented Patriot in the transaction. At the hearing before
us, Chirico's counsel noted that Chirico was
Patriot's "long-time representative" and had
represented Patriot in approximately twenty such cases.
According to Chirico, Patriot insisted that Heckel have
representation in the application to the court, as Patriot
was concerned that, because of Heckel's disability,
"it would provide for bad optics in ... a courtroom and,
therefore, it would be best to have someone there
independently to - - indicate that there was some support for
his position." Chirico's counsel maintained that
Chirico recommended MLG to Patriot. In turn, Patriot
recommended MLG to Heckel. Chirico asserted that MLG was more
than qualified to handle the representation, despite the
denied any involvement in negotiating the transaction,
asserting that Patriot and Heckel had done so. Chirico explained
that life contingent purchases bear higher risks than
non-life contingent purchases. In a
"non-life-contingent" transaction, the payments
under the annuity are guaranteed and are sold for a lump sum.
Payments under a "life-contingent" deal are not
guaranteed. There is an inherently higher risk in purchasing
those payments, which may not be available after the
transaction is finalized. The purchaser in a life-contingent
transaction may bear an additional cost of purchasing life
insurance to hedge the risk and guarantee future payments.
The cost of life insurance can be "astronomical."
Chirico reviewed and agreed with Patriot's expert's
report, which concluded that the discounted rate to which
Heckel agreed, 16.38%, was fair and reasonable.
the court action, Chirico's name appeared on the
complaint, listing MLG's address as his own. According to
Mueller, he had not noticed that Chirico had used his address
on the pleadings. Chirico claimed that he did not attempt to
hide his affiliation with Mueller. At the time Chirico
referred the matter to MLG, he did not realize that a
conflict existed, but as of the date of the DEC hearing,
recognized that there was "an appearance of a potential
to Chirico's statement to Judge Wellerson, Mueller
testified that it was Chirico who referred Heckel to MLG
during the summer of 2014. MLG was retained to ensure that
Heckel's sale to Patriot was handled correctly and
lawfully, and that Heckel understood the terms of the
likened the court proceeding to a "friendly
hearing" wherein a judge ensures that the proposed
structured settlement is fair and reasonable. Here, too, the
deal that had been struck required court approval.
proposed September 11, 2014 fee agreement between Heckel and
MLG was for a flat $750 fee and provided that MLG would
protect Heckel's legal rights and "do all necessary
legal work" to properly represent him. It added that
Heckel was seeking to sell the "remaining portion"
of his structured settlement to Patriot in exchange for a
lump-sum payment of $300, 000. The agreement excluded
representation on the defense of, or filing of an appeal, but
included services for the firm's attempt to adjourn the
foreclosure sale of Heckel's home. Mueller noted that
Heckel did not pay MLG for any of the services it rendered.
assigned the matter to XX, an associate,  whom he had known
for years, as he had coached him in soccer during his youth
and knew XX's father, who was also a lawyer. XX had
roughly two years of legal experience at the time, but not in
these types of cases. Mueller, therefore, claimed that XX
worked under his supervision. Although Mueller, too, had
never "directly put through" this type of
settlement, he was aware of Chirico's experience in these
to Mueller, he supervised XX by relaying the facts of the
matter, the "procedural posture," and the
client's expectations. He established XX's
responsibilities in his day-to-day handling of the file and
reviewed documents. Mueller understood that Heckel needed
funds from the sale of the annuity to forestall a pending
sheriffs sale of his property. Mueller reviewed XX's
research, and testified that "it was a collaborative
effort." XX conducted research on Westlaw and various
internet sites to determine whether the "deal" was
within industry standards and fair to Heckel, and then
reported his findings to Mueller. Mueller did not, however,
participate in telephone calls between XX and Heckel, request
copies of e-mails or other correspondence, discuss obtaining
a conflicts waiver with XX, or discuss with XX his own
relationship with Chirico.
maintained that he had forgotten that he was listed as
"of counsel" on Chirico's letterhead, which
Chirico used to file the documents in the Patriot
matter, and that Chirico's stationery listed
Mueller's address as one of Chirico's addresses.
Mueller claimed that, initially, he did not realize that
there was a conflict, that he needed to review the ethics
Rules, or that a waiver was needed. He did not
conduct a conflicts analysis until after the hearing before
Judge Wellerson. He stated that, when he analyzed the
[t]he conclusions that I came to was [sic] that there was an
apparent conflict of interest which if I had known of at an
earlier time, I would have carefully reviewed the ethics
rules and either gotten a waiver from the client or withdrawn
as counsel and had a new attorney substitute in.
preparation for the hearing before Judge Wellerson, Chirico
sent draft copies of documents to MLG, including a
certification for XX's signature. Mueller was not
concerned about getting the documents from opposing counsel
because the documents were not being "rubber
stamped;" rather, they were reviewed, evaluated, and
adjusted as necessary. He stated, "[t]here's not
much sense in reinventing the wheel." Similarly, Mueller
was not concerned about XX's communications with Chirico
about the case, because XX "was working hard at this
file. He was researching. He was coming in to talk to me
about it frequently." XX was eager to do a good job.
Because of Heckel's disabilities, XX "paid a little
extra attention" to ensure that Heckel was
the proposed amount of the sale of the annuity, XX e-mailed
Mueller, inquiring whether $300, 000 was standard, when his
calculations showed a present value of $691, 761. Mueller
replied "No. What does Vince say?" Mueller did not
view the seeking of advice from Chirico, opposing counsel, as
a problem, because he did not consider them as being in a
"particularly adversarial position." Moreover, MLG
would research the matter further. Mueller did not believe
that it was within the scope of their representation to shop
around for a better deal for Heckel, as Heckel had already
done so and was in a better position than MLG to know what
the market would bear. MLG was retained simply to determine
whether the Patriot deal was fair and reasonable for Heckel,
and to finalize the documents for submission to the court.
Mueller admitted, however, that he never had any direct
conversations with Heckel.
did not find it "odd" that XX questioned him about
the amounts listed in the certification. He did not
characterize Patriot's and Heckel's positions as
adversarial, but acknowledged that they had their "own
interests which, in some ways, may have been adverse."
acknowledged sending to XX both a draft
certification and a "cheat sheet" (questions
to ask the client during the court proceeding). The cheat
sheet was to help XX get a sense of the types of questions to
ask, to address the court's concerns under the Structured
Settlement Protection Act. Chirico admitted, however, that
the forms he sent to XX already had incorporated information
specific to Heckel. Mueller did not view this as a problem,
as long as XX independently analyzed and evaluated the
documents and determined that it was in Heckel's best
day of the hearing, a couple of "off-the-record"
discussions took place, which apparently became heated. On
the record, Judge Wellerson cautioned Heckel "to be
careful in selling his money" and inquired whether he
had a family member or anyone else to protect his interests.
Heckel replied that he did not.
judge admitted that Heckel did not have an opportunity to
testify about whether he had conducted his own independent
research into the available rates. The judge did not find it
germane because, even if he had obtained the best rate
available, it was of little consequence if the transaction
left him penniless - in a far worse position than prior to
the sale. The judge opined that Heckel suffered a
"horrible" injustice. It was "readily apparent
to any right-thinking person that to deprive this man of his
only source of income was just . . . inhumane." In the
judge's view, the respondents' excuses for their
actions were specious and only "inflamed the
Wellerson conceded a lack of meaningful exchange with Heckel,
stating, "I can assure you that it was out of compassion
that I did not exchange a long dialogue with Mr. Heckel. It
was difficult for him to speak. It . . . was arduous for him
to go through these steps."
the judge did not reach the merits of the application, the
basis for his referral to the OAE was Chirico's lack of
candor and the relationship between counsel, not the merits
of the sale. Chirico's counsel, nevertheless, tried to
cloud the record with the issue of whether the judge had
given ample opportunity to Chirico and XX to establish the
merits of the transaction. As the DEC Chair pointed out, that
issue was not "remotely relevant" to the ethics
charges. He, thus, tried to limit the testimony to the ethics
Chair permitted Mueller's attorney to present testimony
from respondents' expert, Andrew S. Hillman, an attorney
and consultant to the financial services industry. Hillman
testified about the methodology used to determine the present
day amount "originators" like Patriot pay to
sellers, based on a discounted rate of future annuity
installments. According to Hillman, the court proceedings to
approve such sales are not adversarial, they are
collaborative - "a seller of payments and a buyer of
payments enter into a business transaction;" the matter
is submitted to the court by way of a petition, not a
complaint; there is no discovery; and there are no adverse
parties. He testified, "what it is is a court hearing; a
judge hears the matter and after considering all of the
circumstances, must find that it is in the best interests of
the seller of the payments."
denied that the buyers' and sellers' interests are
adverse, asserting that, because they enter into a contract,
there is a "meeting of the minds." He conceded,
however, that Patriot entered into the transaction to make a
profit, and that Patriot's interest in the transaction
was to "get the most money from Mr. Heckel and pay off
the least money to him." He added that Heckel also
benefitted by bargaining for as much money as he could get
Hillman's opinion, after reading the transcript of the
proceedings, the judge did little to determine whether the
transaction would be in Heckel's best interests. Although
Hillman did not know how much money Heckel would have had to
live on after the sale, he maintained that Heckel was not
selling all of the remaining payments under his annuity.
Hillman conceded that the pleadings failed to show whether
Heckel would have money left or the value of any remainder of
the annuity, after the ...