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In re Silverman

Supreme Court of New Jersey

May 29, 2019

In the Matter of A. Jared Silverman An Attorney At Law

          Argued: January 17, 2019

          District Docket No. XIV-2016-0142E

          Christina Blunda appeared on behalf of the Office of Attorney Ethics.

          Respondent appeared pro se.

          Ellen A. Brodsky " Chief Counsel



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

         This matter was before us on a recommendation for disbarment filed by Special Ethics Master Harold W. Fullilove, J.S.C. (ret.). The Office of Attorney Ethics (OAE) charged respondent with knowing misappropriation of client and trust funds, a violation of RPC 1.15(a) (failure to safeguard funds), the principles set forth in In re Wilson, 81 N.J. 451 (1979), and In re Hollendonner, 102 N.J. 21 (1985), and RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation); RPC 1.8(a)(2) (improper business transaction with a client); and RPC 1.15(d) (failure to comply with the recordkeeping requirements of R. 1:21-6). For the reasons set forth below, we also recommend that respondent be disbarred.

         Respondent was admitted to the New York bar in 1971, the District of Columbia bar in 1981, and the New Jersey bar in 1988. At the relevant times, he maintained an office for the practice of law in West Orange. Respondent has no disciplinary history in New Jersey.

         Respondent represented Kent Lessman from 2008 until Lessman's death in December 2016. Lessman brokered sales of petroleum and petroleum products and arranged the financing of "various petroleum related projects, such as sales/purchases and refining capacity."

         Respondent functioned as Lessman's "paymaster," by depositing in his trust account funds from Lessman's business associates and, pursuant to Lessman's instructions, disbursing the monies to third party service providers in payment of fees, commissions, and expenses incurred in respect of particular projects. According to respondent, he accounted for Lessman's trust account funds on a project-by-project basis.

         On April 15, 2015, respondent wired $7, 500 to Ghassan Mahmoud Kamal Sajim for the "Impact Executive" matter. Prior to the transfer, the Lessman client ledger reflected a $108, 848 balance. When the disbursement was entered on the ledger, however, the running balance remained the same, when it should have been $101, 348.

         Respondent attributed the incorrect balance to a "computer glitch." The OAE referred to it as "an innocent recordkeeping violation." The parties agreed that, due to this error, respondent subsequently over-disbursed $7, 414 in Lessman funds.

         Respondent learned of the error on May 26, 2015, when he performed a three-way reconciliation for the month of April 2015. He sent an e-mail to Lessman, informed him of the $7, 414 "overdraw," and explained why it had happened. Respondent attached a copy of the ledger to the e-mail, and requested Lessman to replace the funds "immediately." Lessman replied: "There is a new deposit coming."

         According to respondent, Lessman stated that he would "make up the shortfall from the proceeds from a completed transaction." Because Lessman had at least two projects in progress, respondent relied on his representation. Thereafter, market volatility required the cancellation or postponement of various Lessman projects and, thus, Lessman did not replenish the funds.

         Respondent admitted that, after May 26, 2015, he was aware that the Lessman ledger continued to have a $7, 414 shortage. Despite respondent's knowledge of the shortage, he continued to disburse funds from that account.

         In early 2016, the OAE conducted a random audit of respondent's attorney books and records, which uncovered the trust account shortage. By letter dated February 1, 2016, Robert J. Prihoda, then Chief of the Random Audit Compliance Program, listed the deficiencies that had been discussed with respondent on the conclusion of the audit. In addition to the negative balance on the Lessman ledger card, respondent's business account was not properly designated; he had made electronic transfers from the trust account without signed written instructions; and he had failed to perform the three-way reconciliations properly.

         In respect of the $7, 414 trust account shortage, Prihoda instructed respondent to replenish the trust account and submit proof of doing so within two weeks. Respondent did not comply with the request.

         By letter dated March 21, 2016, OAE Director Charles Centinaro set a ten-day deadline for respondent to comply with the February 1, 2016 letter. Because respondent ignored this letter as well, the matter was docketed on March 31, 2016.

         On April 6, 2016, OAE Auditor Arthur Garibaldi requested respondent to replenish the trust account and to certify that he had corrected the recordkeeping deficiencies. Garibaldi also informed respondent that a demand audit would take place on April 26, 2016, at which time respondent was to produce all attorney trust and business account records from April 2015 forward. As seen below, respondent did not fully replenish the shortage until December 6, 2018.

         On April 15, 2016, respondent informed the OAE that he "reasonably" expected that, "within the next week, funds will be available to replenish [his] attorney trust fund." Specifically, a Lessman transaction would be completed within a week, and respondent expected to receive funds from another transaction within two weeks. The trust account funds were not replenished.

         Garibaldi testified about respondent's trust account activity, based on respondent's own 2015 accounting records, which included the original Lessman ledger reflecting the error, a corrected ledger, and the monthly three-way trust account reconciliations. According to Garibaldi, respondent claimed that, between May 26, 2015, when he discovered the shortage, and December 31, 2015, neither he nor Lessman had personal funds sufficient to replenish the trust account. Yet, respondent's 2015 receipts journal showed that, after respondent had discovered the $7, 414 shortage, he received $9, 090 in total fees through the end of the year in non-Lessman matters. Respondent used none of the monies to replenish the trust account. Instead, he used the funds to pay bills and make purchases.

         In addition to the legal fees, on July 31, 2015, respondent received a $10, 000 loan from his client, Richard Yahya. Respondent used none of the loan proceeds to replenish the trust ...

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