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In re Shelton

Supreme Court of New Jersey

September 16, 2019

In the Matter of Fincourt B. Shelton An Attorney at Law

          Argued: April 18, 2019

         District Docket No. XIV-2016-0725E

          Ellen A. Brodsky Chief Counsel.

          Eugene Racz appeared on behalf of the Office of Attorney Ethics.

          Respondent did not appear, despite proper notice.


          Bruce W. Clark, Chair.

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

         This matter was before us on a motion for reciprocal discipline filed by the Office of Attorney Ethics (OAE), following respondent's four-year suspension in Pennsylvania for his violation of the Pennsylvania equivalents of New Jersey RPC 1.1(a) (gross neglect); RPC 1.2(a) (failure to abide by a client's decisions regarding the scope and objectives of representation and failure to consult with a client about the means to pursue them); RPC 1.4(c) (failure to explain the matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation); RPC 1.5(a) (unreasonable fee); RPC 1.7(a)(2) (conflict of interest); RPC 1.8(a) (improper business transaction); RPC 1.16(a)(3) (failure to withdraw after the lawyer is discharged); RPC 3.1 (frivolous claims); RPC 3.3(a)(1) (false statement of material fact or law to a tribunal); RPC 4.1(a)(1) (false statement of material fact or law to a third person); RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation); and RPC 8.4(d) (conduct prejudicial to the administration of justice).

         For the reasons set forth below, we determined to grant the motion for reciprocal discipline and recommend that respondent be disbarred.

         Respondent was admitted to the Pennsylvania bar in 1980, to the New Jersey bar in 1987, to the New York bar in 2000, and to the Georgia bar in 2007.

         Respondent has been ineligible to practice law in New Jersey since September 12, 2016, for his failure to pay the annual assessment to the New Jersey Lawyers' Fund for Client Protection. On September 7, 2018, respondent was temporarily suspended from the practice of law for failing to comply with a fee arbitration decision.

         On May 29, 2015, the Pennsylvania Office of Disciplinary Counsel (ODC) filed a Petition for Discipline arising from respondent's mismanagement of two separate estate matters. Because respondent did not file an answer, the factual allegations were deemed admitted. At an October 16, 2015 disciplinary hearing, respondent appeared pro se. On June 8, 2016, the hearing committee recommended a three-year suspension. On August 23, 2016, the Disciplinary Board for the Supreme Court of Pennsylvania (PDB) issued its Report and Recommendations in which it made the following findings of fact and conclusions of law.

         The Lorenzo Estate

         On February 12, 2007, Geraldine Lorenzo died intestate in Philadelphia, Pennsylvania. On April 17, 2007, Phyllis M. Aristotele renounced her right to administer Lorenzo's estate with the Register of Wills of Philadelphia County in favor of respondent, who then was appointed as administrator, in addition to his role as the attorney for the estate. Thereafter, respondent filed a petition identifying Aristotele as Lorenzo's aunt and a surviving heir. She was neither.

         On June 21, 2007, Lorenzo's real estate sold for $200, 000. Respondent was present at the closing and received a $10, 000 fee for professional services related to the sale of the property. On July 2, 2007, respondent filed an Inventory and Inheritance Tax Return with the Register of Wills in connection with Lorenzo's estate. Under penalty of perjury, respondent listed the value of her estate as $35, 700, despite his awareness that her real estate had sold for $200, 000 merely eleven days earlier, and despite his previous filing of a Petition for Probate on April 17, 2007, listing the value of the property at $180, 000.

         Respondent argued before the PDB that the $37, 500 value he claimed was correct because it was the assessed value determined by the county tax assessment. The PDB rejected this assertion, noting that respondent failed to apply the "common level ratio to the assessment in violation of the procedure stated on the sole exhibit introduced by respondent."[1]

         Subsequently, respondent listed, as beneficiaries on the Inventory and Return, Lorenzo's son, Moustafa A. Baker-Moustafa, and a non-relative named Elizabeth Bonk. On the same return, he listed "Personal Representative Commissions [respondent] $3, 500; Attorney Fees $7, 000." This, too, was a knowingly false statement because, as of July 2, 2007, respondent had issued to himself checks totaling $32, 200 and had received $10, 000 in commission and attorney fees for the sale of the real estate.

         On December 19, 2007, respondent issued a $10, 000 loan to Enhanced Recovery Solutions, LLC (ERS) from Lorenzo's estate. His close relationship with this entity was evidenced by his reference to ERS as "we" in his testimony before the PDB. The loan term was for one year at an annual interest rate of fifteen percent. Respondent, who had invested his own money in ERS, admitted that he previously had loaned monies to ERS from three or four of his clients.

         On January 14, 2008, respondent made another $10, 000 loan from Lorenzo's estate, to Dana and Ervin Asbury, for eighteen months at an annual interest rate of 15%. On March 13, 2007, respondent had filed a medical malpractice suit in the Delaware County Court of Common Pleas on behalf of Dana. The purpose of the loan from the Lorenzo estate was to pay two doctors for their testimony at the malpractice trial.

         Respondent did not advise Dana, in writing, to seek the advice of independent legal counsel or provide her a reasonable opportunity to do so. Dana did not give informed consent to the essential terms of the loan or respondent's role in the transaction, including whether respondent was representing Dana in the transaction. Dana repaid the loan in full, with interest, on February 10, 2009.

         On September 16, 2010, almost three years after the first loan to ERS, respondent issued a second loan for $50, 000 to ERS from Lorenzo's estate, in return for a position on ERS' board and a percentage of the company's net profits. The loan term was for eighteen months at an annual interest rate of 12%. The PDB found this loan to be another breach of respondent's fiduciary duty to Lorenzo's estate. As of the date of the PDB hearing, no interest or principal payments had been made from ERS to Lorenzo's estate on either of its loans, and respondent had made no attempt to collect payments on behalf of the estate.

         On May 31, 2011, Nina Stryker, Esq., on behalf of seven individuals, filed a petition for declaratory judgment, in the Philadelphia County, Orphans' Court Division, to determine the proper heirs of Lorenzo's estate. Respondent filed an answer on June 8, 2011. The court ordered respondent to file an accounting of his administration of the estate. On September 16, 2011, he filed an accounting for the period February 12, 2007 to September 8, 2011.

         In his accounting, respondent listed an August 26, 2008 disbursement of $35, 000 to Elizabeth Bonk, relating to a home repair loan. Respondent made no such disbursement and knew it was false when he included it in the accounting. Additionally, respondent represented in the accounting that $15, 000 had been paid to him for "commission and attorney fees." Respondent also knew this was false because, as of September 16, 2011, he had taken $60, 700 for counsel fees and commissions in connection with Lorenzo's estate. Upon cross examination, respondent claimed that it was "a mistake," "erroneous," and that "I was under pressure. I was just trying to get something to the court. I really was. . . I just didn't pay attention, and I printed it out, and I sent it."

         Over one year later, on January 7, 2013, after several motions by the parties, a hearing was held at which the judge commented "to say the least, the accounting has so many material discrepancies in it that it would be impossible. . . to confirm the account . . . ." The court granted respondent leave to file an amended accounting to conform to the testimony presented. On February 22, 2013, respondent filed an amended accounting in which he misrepresented that he had been paid a total of $54, 200 in fees and commissions, knowing that he had received $60, 700 in fees and commissions. He also continued to omit the Lorenzo Estate loans to ERS and Asbury from any accounting. In the aggregate, respondent's fees and commissions, along with the unpaid loans to ERS, totaled $120, 700, or 51.08% of the value of the estate.

         On July 12, 2013, respondent and the petitioners executed a settlement agreement and mutual release regarding Lorenzo's estate. Respondent agreed to pay the heirs of the estate $131, 000, which included the balance remaining in Lorenzo's bank account, $10, 000 for excessive fees and commissions, $60, 000 as repayment of the two promissory notes issued to ERS, and $1, 505.82 as interest due on the two ERS loans. Respondent promptly paid the remaining bank account balance, but nothing more and thus, $71, 505.82 remains outstanding under the settlement agreement.

         Subsequently, Stryker discovered that, on August 16, 2012, respondent had filed for personal bankruptcy, ten months prior to the execution of the settlement agreement. Respondent had a duty in his bankruptcy proceeding to list Lorenzo's estate and the petitioners as parties entitled to notice of the filing, which he did not do. Respondent also failed to notify the court and the interested parties about his bankruptcy. Therefore, the PDB concluded that "respondent had no authority to undertake personal financial obligations during the bankruptcy proceedings."

         The PDB also found respondent's collection of $60, 700 in counsel fees and commissions in connection with Lorenzo's estate "clearly excessive and/or illegal." Respondent kept no record of his time spent on estate matters, and although he claimed that he usually charged a flat fee for estate matters, he had no fee agreement at all with the estate. At the declaratory judgment hearing, Stryker testified, based on her thirty years of Orphans' Court work, that respondent's fee should have been between $10, 000 and $12, 000, in light of the size and complexity of the estate. She added that, in most cases where an attorney has the dual role of attorney and administrator, compensation tends to be no more than seven percent of the value of the estate. Stryker also objected to respondent's loan of estate monies, as a breach of his fiduciary duty. The PDB found Stryker's testimony credible.

         Respondent testified that, "I felt that I was entitled to whatever fee I got because that was my first time ever being around dead folks, and I didn't realize it smelled so bad."[2] He added that he acted as both attorney and administrator and tried not to exceed ten percent of the gross value of the estate when he calculated his fee. Respondent's fees and commissions before consideration of the ERS loans amounted to 30.26% of the gross estate.

         On March 13, 2014, respondent resigned as Administrator of Lorenzo's estate.

         Robles Matter

         On March 19, 2005, Gabriel Robles died intestate, survived by his mother, Lourdes Sierra, and his eight-year-old child, Aisya. Sierra was appointed Administrator of the Robles Estate by the Register of Wills of Philadelphia County. She retained the law firm of Pelagatti and Pelagatti (Pelagatti) to investigate medical malpractice and wrongful death claims against Temple University Hospital in connection with Robles' death. The applicable statute of limitations expired prior to Pelagatti's initiating suit. Therefore, in June 2008, Sierra hired the Colleran Law Firm to bring a legal malpractice action ...

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