complaint answer New Jersey Bartender

Document Sample
complaint answer New Jersey Bartender Powered By Docstoc
					Office of Attorney Ethics
840 Bear Tavern Road
West Trenton, NJ 08628
(609) 530-4008
Trial Counsel: Tangerla Mitchell Thomas, Esq.


                                    :    SUPREME COURT OF NEW JERSEY
OFFICE OF ATTORNEY ETHICS           :    DISTRICT XIV ETHICS COMMITTEE
                                    :
           Complainant,             :    DOCKET NO:   XIV-98-193E
                                    :
     vs.                            :    DISCIPLINARY ACTION
                                    :
ALEXANDER DRANOV, ESQ.              :    COMPLAINT
                                    :    COMPLEX MISCONDUCT
           Respondent,              :



     Complainant, Office of Attorney Ethics of the Supreme Court of

New Jersey, P.0. Box 963, Trenton, New Jersey 08625, by way of

complaint against respondent, Alexander B. Dranov, Esq., states that:

                            GENERAL ALLEGATIONS

     1.    Alexander B. Dranov, Esq., hereinafter “respondent,” was

admitted to the practice of law in this state in 1986. Respondent is

also admitted to the New York and Pennsylvania bars.

     2.    At all relevant times, respondent maintained an office for

the practice of law at 2125 Center Avenue, Suite 301A, Fort Lee, New

Jersey. Respondent has a general practice serving primarily Russian

immigrant clients.

     3.    In connection with his law practice, respondent maintained

the following accounts:
     Attorney Business Account    Attorney Trust Account
     Account No. 0235109584       Account No. 0235110469
     Summit Bank                  Summit Bank
     New Milford                  New Milford


     4.   The Supreme Court of New Jersey issued Orders dated August

11, 1998 and September 25, 1998, requiring that all checks drawn on

respondent’s attorney trust account be signed by a co-signatory

approved by the OAE. Exhibits 1 and 2. Thereafter, at the OAE’s

request, the Court continued the requirement of a co-signatory for

respondent’s attorney trust account by Orders dated December 9, 1998

and June 7, 1999. Exhibits 3 and 4. This restriction remains in

effect.

                             FIRST COUNT
      (Conflict of Interest in violation of RPC 1.8(a) and Negligent
 Misappropriation of Client Trust Funds in violation of RPC 1.15(a))

     1.   By letter dated May 5, 1998, Summit Bank notified the OAE of

two overdrafts in respondent’s attorney trust account. Exhibit 5.

     2.   Respondent was requested to provide an explanation for the

overdrafts. Respondent maintained that the overdrafts were caused by

his entering a deposit twice in his check register, which caused him

to draw on an erroneously inflated balance. Exhibit 6.   Respondent

attached to his response two photocopied pages from his trust account

check register. One of the pages showed that a combined deposit of

$16,538.71 was made on March 24, 1998, and a deposit of $16,539 was

made on March 31, 1998. The $16,539 deposit had the word “WRONG!”
written to the left of the entry and the amount had a line drawn

through it. Exhibit 7.

      3.    Prior to the double-recorded deposit was a notation on the

preceding page, in respondent’s handwriting, “I still owe TA: 4,742 (&

4,700 Shelmin’s)”1. On the next page, a $9,230 deposit titled

“Robbery/Prudential” was listed. Following the $9,230 deposit was an

entry which had been partially erased with correction fluid. The entry

read, “less (space) 4,742 = (4,488 robbery)”.2

      4.    On July 14, 1998, the OAE performed a demand audit of

respondent’s attorney trust and business accounts. Said audit occurred

as a result of the inadequate explanation provided by respondent for

the overdrafts in his trust account and the above-mentioned entries in

respondent’s check register.

      5.    The audit disclosed that respondent failed to maintain

individual client ledgers, trust receipts and disbursements journals,

quarterly reconciliations and that he commingled his personal funds

with funds of his clients in his attorney trust account. In addition,

an analysis of respondent’s trust account bank statements, deposit

tickets, canceled checks and check register, which were provided by

respondent at the audit, revealed several instances between October 1,




      1
       TA is respondent’s shorthand for trust account.
      2
       A review of respondent’s check register at a subsequent demand audit revealed
that the original page had not been erased. The portion of the photocopied page which
had been erased, read “debt of”. The complete writing read “Robbery/Prudential less
debt of 4,742 = (4,488 robbery)”.
1997 and May 4, 1998 in which respondent appeared to be out of trust

as a result of personal disbursements from the trust account.

    6.   By certification to the Supreme Court dated August 5, 1998,

respondent maintained that various clients authorized the use of their

funds in his attorney trust account.   Respondent provided the OAE with

written authorizations from clients, giving him consent to borrow

funds held in his trust account. However, respondent borrowed funds

from his clients without giving any security for the loans and in

several instances failed to advise his clients to consult with

independent counsel.

    7.   On October 20, 1997, respondent received written

authorization from clients Alexander Polyak and Alma Ostrovskaya to

utilize $8,000 of their settlement proceeds until November 20, 1997,

as a personal loan. Polyak and Ostrovskaya were never advised by

respondent to consult with independent counsel prior to lending him

the funds. Exhibit 8.

    8.   On October 30, 1997, respondent received written

authorization from client Elizaveta Petrovskaya to utilize $4,076 of

her settlement proceeds until December 31, 1997, as a personal loan.

Petrovskaya was also not advised by respondent to consult with

independent counsel prior to lending him the funds. Exhibit 9.

    9.   In addition, on January 23, 1998, respondent received

written authorization from clients Irna Braude, Vlad Virovtsev and

Khasya Virovtsev (Braude and Virovtsev) to utilize $15,000 of their
settlement proceeds for respondent’s personal use, until advised by

the clients to make certain disbursements from the funds. This

authorization referenced that the clients had been advised by

respondent to consult with an attorney. Exhibit 10.

     10.   The above referenced loans were not placed in a separate

account, but were maintained in respondent’s attorney trust account

with his client funds.

     11.   Respondent, on several occasions between October 1, 1997 and

May 4, 1998, withdrew funds for himself against the loans from his

clients.

     12.   Subsequently, on April 21, 1998, Braude and Virovtsev

directed respondent to issue checks from their total settlement of

$21,224 as follows: (Exhibit 11)

           Ella Shuster              $4,474
           Esfir Riskal               4,475
           Alexander Kushnirchuk      4,475
           Igor Braude                7,800
                                    $21,224

     13.   However, on April 21, 1998, respondent did not have

sufficient funds in his attorney trust account to disburse the full

$21,224 settlement on behalf of Braude and Virovtsev as shown by the

following table:
   Date     Trust Funds              Amount Required for Client                Trust
             on Deposit                                                      Shortage

                          Yahobash       Gemel     Virovtsev       Merker

4/21/98      15,730.30        0.00     5,178.00   21,224.00       1,107.87   11,779.57

4/27/98      20,430.30    8,020.00     5,178.00   13,424.00       1,107.87    7,299.57

4/30/98      (6,059.70)       0.00     5,178.00    4,474.00       1,107.87   16,819.57

5/01/98       2,890.30        0.00     5,178.00   13,424.00       1,107.87   16,819.57

5/04/98      (3,139.70)       0.00     5,178.00    8,950.00       1,107.87   18,375.57




      14.   As set forth above, respondent should have been holding

$27,509.87 in his trust account on April 21, 1998 for three clients

($5,178 for Gemel; $21,224 for Braude and Virovtsev; and $1,107.87 for

Merker3). However, respondent’s trust account balance on April 21, 1998

was only $15,730.30, representing a shortage of $11,779.57 for his

clients. Exhibit 12, page 3.

      15.   The first disbursement respondent made from his trust

account on behalf of Braude and Virovtsev was posted on April 27,

1998; check number 1524 made payable to Braude in the amount of

$7,800. After respondent issued check number 1524 to Braude, he should

have been holding $27,729.87 on behalf of his clients as shown by the

table in paragraph 13 ($8,020 for Yakobash; $5,178 for Gemel; $13,424

for Braude and Virovtsev; and $1,107.87 for Merker). However, after

the disbursement to Braude, respondent’s trust account had a balance


      3
       Although the $5,178 for Gemel represents respondent’s fee, the funds had not
been disbursed and should have remained in respondent’s attorney trust account.
of only $20,430.30. The Braude disbursement on April 27, 1998 caused

respondent to be out-of-trust for his clients by $7,299.57. Exhibit

12, page 3.

     16.   On April 30, 1998, respondent issued trust check number 1621

in the amount of $8,000 payable to himself. The check did not

reference any client matter. Exhibit 13. On that date respondent also

issued trust check number 1622 in the amount of $1,520 payable to

Summit Bank. The check contained a notation “Probation” and was

endorsed by respondent. Exhibit 14. Respondent acknowledged in his

Certification to the Court that both of these disbursements were for

personal obligations.

     17.   At the time respondent issued trust check numbers 1621 and

1622, he should have been holding $19,709.87 in his trust account on

behalf of clients as follows: $5,178 for Gemel; $13,424 for Braude and

Virovtsev; and $1,107.87 for Merker. After the disbursements on April

30, 1998, respondent’s trust account had an actual balance of

$2,890.30. Respondent therefore increased the shortage in his trust

account to $16,819.57 and further invaded client trust funds. Exhibit

12, page 3.

     18.   Also on April 30, 1998, trust check numbers 1601 and 1602,

in the amount of $4,475 each, were posted to respondent’s trust

account on behalf of Braude and Virovtsev for Riskal and Kushnirchuk,

respectively. After respondent issued the two checks, he should have

been holding $10,759.87 on behalf of his clients as demonstrated by
the table in paragraph 13 ($5,178 for Gemel; $4,474 for Braude and

Virovtsev; and $1,107.87 for Merker). However, the disbursements to

Riskal and Kushnirchuk on April 30, 1998, caused respondent’s trust

account to be overdrawn in the amount of $6,059.70. Exhibit 12, page

3.

     19.   On May 1, 1998, respondent’s trust check numbers 1601 and

1602 payable to Riskal and Kushnirchuk were returned for nonsufficient

funds. Therefore, the amount he should have been holding in trust on

behalf of clients Braude and Virovtsev increased to $13,424.

     20.   Thereafter, on May 4, 1998, respondent issued a “counter”

check in the amount of $1,500 payable to himself. The check did not

reference any client matter. Exhibit 15. At the time respondent issued

the “counter” check he should have been holding $19,709.87 in his

trust account for clients as follows: $5,178 for Gemel; $13,424 for

Braude and Virovtsev; and $1,107.87 for Merker. After the $1,500

disbursement respondent’s trust account had a balance of $1,334.30,

representing a shortage in his trust account of $18,375.57 for Gemel,

Braude and Virovtsev and Merker. Exhibit 12, page 4.

     21.   Also on May 4, 1998, trust check number 1525 in the amount

of $4,474 was posted to respondent’s trust account for Shuster on

behalf of Braude and Virovtsev for payment. After the check cleared

respondent’s trust account, he should have been holding $15,235.87 on

behalf of his clients as shown by the table in paragraph 13 ($5,178

for Gemel; $8,950 for Braude and Virovtsev; and $1,107.87 for Merker).
However, the disbursement to Shuster caused respondent’s trust account

to be overdrawn in the amount of $3,139.70, representing a shortage of

$18,375.57 for his clients. Exhibit 12, page 4.

     22.   On May 5, 1998, after being notified of the overdrafts in

his trust account, respondent deposited $10,700 in personal funds to

replace the client trust funds which had been invaded.

     23.   Respondent’s commingling of client funds and personal funds

in his attorney. trust account and his failure to properly reconcile

the account in accordance with R. 1:21-6, as stated in Count Two,

contributed to the creation of a shortage in respondent’s attorney

trust account and an invasion of client funds, a violation of RPC

1.15(a), a failure to safeguard funds held in the attorney trust

account.

     24.   Respondent’s failure to advise his clients of the need for

independent legal advice prior to extending him the loans constitutes

a violation of RPC 1.8(a), which prohibits an attorney from entering

into a business transaction with a client unless the client consents

in writing after full disclosure and is advised of the need for

independent legal advice.

                             SECOND COUNT
 (Failure to Comply with Recordkeeping Requirements under R. 1:21-6)

     1.    The OAE’ s audit review of respondent’s attorney trust

records revealed numerous recordkeeping deficiencies. Specifically,

the following deficiencies were found: commingling, as respondent

retained earned fees in his attorney trust account rather than
transferring those fees to his business account; he did not prepare

three-way quarterly reconciliations; no receipts and disbursements

journals were maintained, as well as individual client ledger cards.

     2.   Respondent’s conduct as described above constitutes a

failure to safeguard trust funds in violation of RPC 1.15(a) and a

failure to maintain proper records in violation of RPC 1.15(d) and R.

1:21-6.

     WHEREFORE, respondent should be disciplined.

                                   OFFICE OF ATTORNEY ETHICS

DATED: November 2, 2003            By:   /s/ David E. Johnson, Jr.
                                         Director
MARGULIES, WIND, HERRINGTON & KNOPF
A Professional Corporation
15 Exchange Place
Jersey City, New Jersey 07302-3912
(201) 333-0400
Attorneys for Respondent

                                      :    SUPREME COURT OF NEW JERSEY
OFFICE OF ATTORNEY ETHICS             :    DISTRICT XIV ETHICS COMMITTEE
                                      :
             Complainant,             :    DOCKET NO:   XIV-98-193E
                                      :
     vs.                              :    DISCIPLINARY ACTION
                                      :
ALEXANDER DRANOV, ESQ.                :    VERIFIED ANSWER TO
                                      :    COMPLAINT FOR MISCONDUCT
             Respondent,              :


     ALEXANDER B. DRANOV, Esq. by way of Verified Answer to the

Complaint for Misconduct-R. 1:20-4(b) says:

                            GENERAL ALLEGATIONS

     1.      Respondent admits the general allegation set forth in

paragraph 1.

     2.      Respondent admits the general allegation set forth in

paragraph 2.

     3.      Respondent admits that the bank accounts referenced in

paragraph 2 were at one time maintained at Summit Bank. Since 1998,

Respondent’s business and trust accounts have been maintained at

Oritani Bank in New Milford, New Jersey and the Summit Bank accounts

have been closed. A separate trust account has also been established

at a New York bank for Respondent’s New York clients.

     4.      Respondent admits that the Supreme Court and OAE required

that since     August 11, 1998 a co-signatory sign on all his New Jersey
trust account checks. Annexed hereto as Exhibit A is a letter from

Barry Knopf, Esq. stating that as co-signatory he has monitored the

trust account activities since August 1998, that all transactions

since that time have been properly handled, and that appropriate

safeguards have been put in place regarding the utilization and

accounting for trust funds. The co-signatory requirement has been in

place for 2.5 years and is no longer warranted. Respondent’s

accountant, Alan Noel, is of the same opinion. His letter is annexed

hereto as Exhibit B.

                             FIRST COUNT

     1.   Respondent admits the allegations in Paragraph 1.

     2.   Respondent admits the allegations of Paragraph 2.

     3.   Respondent admits the allegations of Paragraph 3 but denies

the allegations referenced at footnote 2.

     4.   Respondent admits that a demand audit was performed, however

respondent denies that the explanations he provided regarding

overdrafts and specific entries in the check register were inadequate.

     5.   Respondent denies that individual client ledgers were not

maintained but admits failing to do quarterly reconciliations and co-

mingling funds on several occasions in 1998. With regard to “being out

of trust” on several occasions, all of the shortages identified by the

OAE correspond to client-authorized withdrawals from the trust

account. Any irregularities in the trust accounting have been

corrected by bookkeeping safeguards put into place since August 1998.
     6.    Respondent admits the allegations of paragraph 6 but denies

failing to advise clients authorizing the use of their funds to

consult with independent counsel.   All clients were so advised.

“Security” was not required.

     7.    Respondent denies the allegations of paragraph 7. He did

advise Polyak and Ostrovoskaya to consult with independent counsel

prior to their authorizing the use of their funds.

     8.    Respondent denies the allegations of paragraph 8. He did

advise Petrovkaya to consult with independent counsel prior to her

authorizing the use of her funds.

     9.    Respondent admits the allegations of paragraph 9.

     10.   Respondent denies that he is required to place authorized

funds in a separate account. He states further that records were

maintained as to all such funds in the trust ledger. All these funds

were returned to clients when required.

     11.   Respondent admits the allegations of paragraph 11 and states

that all such withdrawals were properly authorized by the clients.

     12.   Respondent admits the allegations of paragraph 12.

     13-21.    Respondent admits the allegations in paragraphs 13

through 21 but states that the facts alleged were all limited to a two

week period: April 21 to May 4, 1998. The deficiencies in question

were all the result of a single bookkeeping mistake on Respondent’s

part where he mistakenly recorded the same $16,539.00 deposit twice

(on 3/24/98 and on 3/31/98). Respondent therefore believed that he had
$16,539.00 more in the account than he actually did. Based on that

mistaken belief Respondent made personal withdrawals of $8000.00 and

$1,520.00, both on April 30, 1998, and $1,500.00 on May 4, 1998. Those

three withdrawals totaled $11,020.00 and caused an unintended

overdraft on or about May 4, 1998. The bank notified Respondent and

the OAE on May 5, 1998. Respondent corrected the shortage immediately

by transferring $10,700.00 back into the account, as indicated in

paragraph 22 of the complaint. That transfer rectified the deficiency.

     22.   Respondent admits the allegations of paragraph 22.

     23.   Respondent admits that co-mingling occurred when personal

funds were mistakenly deposited into the trust account on three

occasions in 1998. The withdrawals to Respondent, however, were, with

a single exception described above, always proper: they were all

authorized by the clients or were Respondent’s personal funds.

Respondent admits that co-mingling did contribute to the accounting

mistake he made in April 1998.

     24.   During his 8 years of solo practice since 1992, Respondent

has always kept client funds completely separate from his own. It was

only on three occasions in 1998 that personal funds were mistakenly

deposited into the trust account. Despite that, Respondent’s

withdrawals from the trust account never involved improper use of the

client’s funds - save for the withdrawal on April 30, 1998 which was

due to the bookkeeping mistake described in Paragraph 13 above. As
explained, that mistaken withdrawal was immediately corrected. At no

time did any of Respondent’s clients lose any funds.

     25.   The deficiency in the trust accounting resulting from that

one mistake was limited to four days, April 30 to May 4, 1998. The

funds in question were in the same bank, albeit in a different

account, and were immediately returned to the trust account upon

notification from the bank on May 5, 1998.

     26.   Learning from that mistake, Respondent has made sure that

there would be no further co-mingling. There has been none whatsoever

since 1998. Respondent has retained a professional accountant, and his

trust account record-keeping has been maintained in an exemplary

fashion since.

     27.   Respondent denies that he failed to advise any of his

clients to consult independent counsel before authorizing him to use

their funds.

                              SECOND COUNT

     1.    Respondent admits some record-keeping deficiencies in 1998,

co-mingling funds on three occasions in 1998, and failing to do

quarterly reconciliations as set forth in more detail in response to

the First Count.

     2.    Respondent denies that he failed to safeguard his clients’

funds and to maintain records to account for those funds.
                  AFFIRMATIVE DEFENSES AND MITIGATION

     1.   With regard to the failure to reconcile the trust account,

Respondent complied with all the other requirements of R. 1:21-6.

     2.   Respondent did not have accounting expertise. He was a solo

practitioner without an accountant and his record keeping was not

perfect. Since the 1998 audit, Respondent has taken the following

steps to prevent any errors and comply with the appropriate

bookkeeping standards:

          a.    Improved client ledger cards and record keeping

     generally.

          b.    Utilized a one-write check journal for the trust

     account.

          c.    Retained a professional accountant to do quarterly

     reconciliations.

          d.    Made sure that no personal funds are deposited in the

     trust account and all legal fees and other authorized funds do

     not remain in the trust account longer than necessary.

     3.   With regard to the commingling of funds, that was limited to

a very short period of time in 1998 where Respondent inadvertently

deposited personal funds into the trust account. Those were caused in

part by personal problems; (divorce) and resulting transition

difficulties with bookkeeping/management functions that had been

handled by Respondent’s ex-wife.
    4.   None of Respondent’s clients suffered any loss whatsoever as

a result of the alleged commingling and withdrawals.

    5.   There has been no errors or co-mingling since.

    WHEREFORE, Respondent requests that the Complaint be withdrawn or

alternatively dismissed.

                           REQUEST FOR HEARING

    Respondent hereby requests a hearing on the charges and in

mitigation.

                                    MARGULIES, WIND, HERRINGTON & KNOPF
                                    A Professional Corporation


                                    By: /s/ ROBERT E. MARGULIES
                                    Attorney for Respondent

                           DEMAND FOR DISCOVERY

    Respondent hereby demands that he be provided with any and all

discovery as required by R. 1 :20-5(a)(2), including but not limited

to any evidence the OAE intends to introduce at the hearing.

                                    By:   /s/ ROBERT E. MARGULIES


                               VERIFICATION

    The undersigned, Alexander B. Dranov, Esq., an Attorney at Law of

the State of New Jersey, hereby verifies, under penalty of perjury

that I have read the foregoing ANSWER and that the responses set forth

therein and the documents submitted therewith are accurate and true to

the best of my knowledge, information and belief/

Dated: April 10, 2001               /s/ Alexander B. Dranov
Office of Attorney Ethics
840 Bear Tavern Road
West Trenton, NJ 08628
(609) 530-4008
Trial Counsel: Tangerla Mitchell Thomas, Esq.


                                       :    SUPREME COURT OF NEW JERSEY
OFFICE OF ATTORNEY ETHICS              :    DISTRICT XIV ETHICS COMMITTEE
                                       :
             Complainant,              :    DOCKET NO:   XIV-98-193E
                                       :
       vs.                             :
                                       :
ALEXANDER DRANOV, ESQ.                 :    STIPULATION OF FACTS
                                       :
             Respondent,               :


       THIS STIPULATION is made and entered into between Alexander

Dranov, Esq. (hereinafter respondent), his counsel, Robert E.

Margulies, Esq., and Janice L. Richter, Esq., (hereinafter Ethics

Counsel).

       1.    Respondent is an attorney licensed to practice law in New

Jersey in 1986, and maintains an office for the practice of law at

2125 Center Avenue, Suite 110, Fort Lee, New Jersey.

       2.    On November 2, 2000, the Office of Attorney Ethics signed a

Complaint, Exhibit A, against Respondent, alleging that Respondent

had:

             (a)   negligently misappropriated client trust funds by

       commingling personal funds with client funds, and, due to

       bookkeeping deficiencies, invaded client trust funds in violation

       of RPC 1.15(a).
         (b)   failed to maintain proper records in violation of RPC

    1.15(d) and R. 1:21-6; and

         (c)   borrowed funds from clients without obtaining their

    written consent following full disclosure and without advising

    them to seek independent legal advice, in violation of RPC

    1.8(a).

    3.   In his verified answer to the Complaint, Exhibit B,

Respondent denied charge (a) with respect to misappropriation, and

charge (c) with respect to failure to obtain consent and to advise,

but admitted charges (a) and (b) to the extent that (i) prior to July

1998 he failed to maintain his financial records in accordance with R.

1:2l-6(b)(l); (ii) commingled personal funds with client funds by

making two personal deposits into his trust account in March 1998; and

(iii) this commingling contributed to a bookkeeping error on March 31,

1998 which led to a negligent invasion of client funds in April 1998.

    4.   None of Respondent’s clients suffered any loss as a result

of his bookkeeping error or record-keeping deficiencies.

    5.   Respondent admits that he borrowed client funds in 1998, but

has provided the Office of Attorney Ethics with documentation showing

that his clients had consented in writing to his use of their funds,

after being advised of their right to seek independent counsel. See

Exhibit C. Further, a number of these clients, including Alma

Ostrovskaya, Yefim Blank, and Simon Genel confirmed to the Office of

Attorney Ethics in interviews that they did authorize Respondent’s use
of their funds. See Exhibit D. Given these statements, the Office of

Attorney Ethics is unable to prove, by clear and convincing evidence,

that Respondent’s clients did not consent to the loans to Respondent,

or that Respondent failed to advise them of their right to seek

independent counsel. Accordingly, the Office of Attorney Ethics moves

to dismiss its allegation in Paragraph 2c above and in the Complaint,

that Respondent violated RPC 1.8 (a).

     6.     The parties stipulate to the following facts:

     A.     Before July 1998, Respondent failed to perform quarterly

reconciliations and to maintain trust receipts and disbursement

journals;

     B.     Respondent commingled personal funds with client trust funds

by mistakenly depositing personal funds into the trust account on two

occasions in March 1998;

     C.     On March 31, 1998 Respondent mistakenly re-entered a $16,539

deposit representing settlement proceeds for client Rosenberg in his

trust account ledger. On or about April 30, 1998, believing that he

had $16,539.00 more funds in his trust account that were actually

there, Respondent proceeded to withdraw $9,520. resulting in an

overdraft. With only $12,410.30 in his trust account, Respondent

issued four checks totaling $18,470.00, resulting in an accounting

shortage of $16,819.57.    Two of these checks, #l60l and #1602, were in

the amounts of $4,475 each, issued on behalf of clients Braude and
Virovtsev. The two other checks, #1621 for $8,000 and #1622 for

$1,500, were for deposit into Respondent’s personal account.

     D.   On April 2, 1998, Respondent’s clients Irma Braude, and

Vladislav and Kasya Virovtsev, who had allowed Respondent to use their

settlement proceeds, directed Respondent to issue four checks totaling

$21,224.00. The checks were issued, were presented to the bank by the

clients on April 27, 1998, and paid. As of April 21, 1998, however,

there were insufficient funds in Respondent’s trust account.

     E.   On April 24,1998 Respondent made a deposit of $12,500.00 on

behalf of another client. The Braude check for $7,800.00 cleared the

account on April 27, 1998. This left a balance in Respondent’s trust

account of $20,430.30, when he should have been holding $27,729.87 on

behalf of all his clients, leaving an accounting shortage of

$7,299.57.

     F.   On May 1, 1998, client checks #1601 and #1602 were returned

by the bank for insufficient funds. An overdraft notice to the

Respondent was issued by the bank on May 5, 1998. On May 4, 1998,

Respondent issued two trust account checks. One was a counter check

for $1,500.00, payable to Respondent without reference to a client

matter. The other check, #1525, represented a $4,474.00 payment on

behalf of Braude and Virovtsev. These two checks totaling $5,974.00

with only a $2,834.30 accounting balance in the trust account, cleared

the bank but created an account deficit of $18,375.57.
     G.    On May 5, 1998, immediately upon receiving an overdraft

notice from the bank, Respondent placed $10,700.00 of his personal

funds into the trust account to correct the overdraft. Although this

deposit brought the trust account balance to $7,532.30 after a $28.00

bank charge for the overdrafts, an accounting deficit of $7,703.57

still remained since Respondent should have been holding $15,235.87 on

behalf of all his clients. This shortage was corrected.

     H.    Since his accounting errors in 1998, Respondent has:

     (1)   Retained an accountant to perform quarterly reconciliations

of his trust account and to maintain proper trust receipts and

disbursement journals;

     (2)   Utilized a one-write check-writing journal for his trust

account;

     (3)   No longer deposited personal funds into his trust account;

     (4)   Withdrawn legal fees and other authorized funds from his

trust account as soon as appropriate.

     7.    Contributing to Respondent’s bookkeeping error in 1998 were

his divorce and transition problems as his bookkeeping/management

functions had been handled by his ex-wife.

     8.    As a result of the audit of the Office of Attorney Ethics

and action by the New Jersey Supreme Court, Respondent’s New Jersey

trust account has been monitored since August 11, 1998, with a

cosignatory required on all trust account checks. This function has

been performed by Barry Knopf, Esq. of Saddle Brook, New Jersey. Mr.
Dranov has been in compliance with record-keeping requirements since.

This supervision continues to date. In addition, since July 1, 1998,

Alan Noel, CPA, has reviewed and reconciled Mr. Dranov’s trust account

quarterly.

     9.    By entering into this stipulation, Respondent agrees that

this matter will proceed to the District IIB Ethics Committee for a

hearing based upon this factual stipulation. Testimony regarding

mitigation may be presented to the Panel by Respondent and the Office

of Attorney Ethics. Respondent and the Office of Attorney Ethics

acknowledge that there has been no recommendation made or agreement

reached concerning the appropriate discipline, if any, that should be

imposed should ethics violations be determined by the Hearing Panel.

     10.   Respondent has consulted with counsel prior to executing

this Stipulation.

     11.   Respondent’s consent is freely and voluntarily given and no

person in the disciplinary system has subjected him to coercion or

duress.

     12.   The implications of submitting this Stipulation are fully

known to Respondent.


/s/ Alexander Dranov, Esq.              March 3, 2003

/s/ Robert E. Margulies, Esq.           March 3, 2003
Respondent’s Counsel

/s/ Janice L. Richter, Esq.             March 7, 2003
Deputy Ethics Counsel
                                    :    SUPREME COURT OF NEW JERSEY
OFFICE OF ATTORNEY ETHICS           :    DISTRICT IIA ETHICS COMMITTEE
                                    :
            Complainant,            :    DOCKET NO: XIV-98-193
                                    :
     vs.                            :
                                    :    HEARING REPORT
ALEXANDER DRANOV, ESQ.              :    RECOMMENDING SUSPENSION
                                    :
            Respondent,             :    DISMISSAL


     TO THE HONORABLE CHAIR AND MEMBERS OF THE DISCIPLINARY REVIEW

BOARD

     The District IIB Ethics Committee Hearing Panel respectfully

shows: I.

                            PROCEDURAL HISTORY

     1. Respondent (hereinafter "Respondent" or "Dranov"), admitted as

a member of the Bar of New Jersey in 1986, has been engaged in the

practice of law, as a sole practitioner, at 21-25 Center Avenue, Fort

Lee, Bergen County, New Jersey.1 Respondent is also licensed as an

attorney in the State of New York since 1986 and the Commonwealth of

Pennsylvania since 1984.

     2. On November 2, 2000, a two-count formal complaint was filed by

the Office of Attorney Ethics (OAE), with the District IIB Ethics

Committee and a copy was served on Respondent.


1
 This Panel has been advised that subsequent to the conclusion of
testimony in this proceeding, the Respondent has been suspended from
the practice of law in the State of New Jersey for a period of six
months, which suspension arises from the matter, Office of Attorney
Ethics v. Alexander Dranov, Docket No. DRB 03-249, where it was
     3. Respondent's Answer thereto was filed on April 12, 2001.

     4. A Stipulation of Facts was entered into between the parties on

March 7, 2003 and has been marked as Exhibit J-1 in evidence.

     5. A formal hearing to make recommendations for discipline and

consider mitigating factors was held before this Hearing Panel

consisting of Lorraine Teleky-Petrella, Esq., Chair; Celine Y.

November, Esq., Attorney Member; and Tiberio Fabricante, Public

Member; on September 23, 2003, which Respondent attended, with his

counsel, Robert E. Margulies, Esq. The matter was presented by Janet

L. Richter, Esq., Office of Attorney Ethics.

     6. During the formal hearing, the Presenter moved to amend the

Complaint to add charges for additional ethical violations based on

testimony elicited at the hearing. The hearing was continued and on

December 8, 2003, a formal Amended Complaint was filed by the OAE and

served upon Respondent. This Amended Complaint added a third count to

the original two-count Complaint.

     7. Respondent's Answer to the Amended Complaint was filed on

January 14, 2004.

     8. The formal hearing resumed on January 29, 2004.

     9. OAE made post-hearing submission of documents on March 29,

2004, followed by opposition submitted on behalf of Respondent on

April 14, 2004.




determined Respondent violated RPC 1.5(b); Opinion 635, RPC 1.15(c);
RPC 1.5(b); RPC 1.5(a); and RPC 8.4(c).
    All exhibits in connection with the hearing are herewith

submitted.

                      II. SYNOPSIS OF ALLEGATIONS

    The Amended Formal Complaint charged Respondent with the

following allegations of ethical misconduct:

    A. First Count: Respondent negligently misappropriated client

trust funds when he failed to safeguard funds in his attorney trust

account in violation of RPC 1.15(a) and was    involved in a conflict of

interest when he failed to advise his clients to seek the advice of

independent legal counsel prior to their extending loans to Respondent

in violation of RPC   1.8(a). During the relevant times, Respondent

maintained his attorney business and trust accounts with Summit Bank.

By letter dated May 5, 1998, Summit Bank advised the OAE that on April

30, 1998 and May 5, 1998, insufficient funds in Respondent's attorney

trust account, caused overdrafts of $6,059.70 on April 30, 1998 and

$3,139.70 on May 5, 1998. (Exhibit A5 of J-1) Subsequent thereto, the

OAE performed a demand audit of Respondent's attorney trust and

business accounts as a result of his inadequate explanation for the

overdrafts in his trust account. Respondent claimed a deposit had been

recorded twice. (Exhibits A6 and A7, J-1) This audit disclosed that

Respondent failed to maintain individual client ledgers, trust

receipts and disbursement journals, failed to perform quarterly

reconciliations and co-mingled personal funds with funds of his

clients in his attorney trust account. Further, an analysis by the OAE

of Respondent's trust account bank statements, deposit slips, canceled
checks and check register revealed several instances between October

1, 1997 and May 4, 1998 (the period in which the analysis was

conducted) in which Respondent was "out of trust." (Exhibit Al2, J-1)

In defending against the allegations in the two-count formal

complaint, Respondent maintained that various clients authorized him

to use their funds in his attorney trust account. Respondent borrowed

these funds without giving any security to the various clients for the

loans, and in several instances, Respondent failed to advise his

clients of the desirability to consult with independent counsel on the

transactions. Subsequent to the audit, Respondent provided written

authorizations from the following clients:

     (1) Alexander Polyak and Alina Ostrovskaya. Respondent provided

an October 20, 1997 written authorization for him to utilize $8,000 of

their settlement proceeds until November 20, 1997. (Exhibit A8, J-1).

     (2) Elizaveta Petrovskaya. Respondent provided an October 30,

1997 received written authorization for him to utilize $4,076 of her

settlement proceeds until November 31, 1997 as a personal loan.

(Exhibit A9, J-1).

     (3) Irina Braude, Viad Virovtsev and Khasya Virovtsev. Respondent

provided a January 23, 1998 written authorization for him to utilize

$15,000 of their settlement proceeds until advised by clients to make

certain disbursements from the funds. (Exhibit A10, J-1).

     The audit disclosed that Respondent did not place the above-

referenced loans in a separate account. Instead, he maintained the

proceeds in his attorney trust account, and on several occasions
between October 1, 1997 and May 4, 1998, withdrew funds for himself

against the loans from these clients.

     On April 21, 1998, Irina Braude and Vlad and Khasya Virovtsev

directed Respondent to issue four checks totaling $21,224 from their

settlement proceeds from a personal injury claim; however, on that

date, Respondent did not have sufficient funds in his attorney trust

account to disburse the full $21,224, as there was a shortage of

$11,779.57. (Exhibit Al2, Page 3, J-1)

     On April 27, 1998, the Braude/Virovtsev disbursement of $7,800

caused a trust shortage in Respondent's attorney trust account of

$7,299.57. (Exhibit Al2, Page 3, J-1)

     On April 30, 1998, Respondent issued two trust account checks

totaling $9,520 which he acknowledged were for his personal

obligations; however, neither of these checks contained any reference

as a disbursement against any client matter. These disbursements from

the trust account increased the trust shortage in Respondent's trust

account to $16,819.57, thereby causing a further invasion of client

trust funds. (Exhibit Al2, Page 3, J-1).

     On May 4, 1998, Respondent issued a "counter" check to himself in

the amount of $1,500, again, without any reference to any client

matter, thereby increasing the shortage in his trust account to

$18,375.57 and causing a further invasion of client trust funds.

(Exhibit Al2, Page 4, J-1)

     On May 5, 1998, after being notified of the overdrafts in his

attorney trust account, Respondent deposited $10,700 of his personal
funds into the trust account to replace the deficiency of client trust

funds therein. This deposit, after a $28.00 bank charge, brought the

shortage in Respondent's trust account, to $7,703.57, which continued

through July 28, 1998. On July 29, 1998, Respondent deposited $855.00

into the trust account and reduced the trust shortfall to $6,848.57.

(Exhibit Al2, Page 5, J-1)

     B. Second Count: Respondent failed to safeguard trust funds in

violation of RPC   1.15(a) and failed to maintain proper records in

violation of RPC 1.15(d) and R. 1:21-6. The OAE audit review of

Respondent's attorney trust records reviewed the following

recordkeeping deficiencies:

     (1) Co-mingling of clients' fund and personal funds in

Respondent's attorney trust account;

     (2) Failure to prepare three-way quarterly reconciliations as

required under R. 1:21-6* (*as of September 23, 2002, the rule was

amended to require monthly reconciliations); and

     (3) Failure to maintain receipts and disbursement journals and

individual client ledger cards.

     C. Third Count: Respondent assisted his clients in conduct that

he knew was illegal,   criminal or fraudulent in violation of RPC

1.2(d) and engaged in conduct involving fraud or deceit in violation

of RPC 8.4(c). The Third Count of the Amended Complaint (which

allegations arose from testimony given by Respondent at formal hearing

to address mitigation) alleges that Respondent delayed disbursing

settlement proceeds from personal injury claims to unnamed clients,
"mostly because of tax purposes and Social Security" (TI, p.59) and

because of those clients receiving Social Security did not want the

government to realize that they had additional funds coming to them.

(TI, p.59) According to Respondent, many of his clients were on SSI

and they did not want receipt of these funds to jeopardize their

continued receipt of government funds. (TI, p.60, 64) Respondent's

delay in disbursing funds to his clients was done solely to

accommodate his clients so that the United States government would not

be aware that they would be receiving such funds. (TI, p.63)

Respondent had knowledge that his clients wanted their settlement

funds withheld to enable them to continue to receive government funds.

                 III. FINDINGS OF FACT AND CONCLUSIONS

     This Hearing Panel is constrained from accepting all of the

factual findings set forth in the Stipulation (Exhibit J-1) where the

testimony and proofs contradict same. The basis for not accepting

certain stipulations will be addressed hereinafter. As a result of

reviewing the testimony2 and exhibits, including the Stipulation of

Facts (Exhibit J-1) in which the parties agreed to be bound, the

Hearing Panel makes the following, factual findings and conclusions:

     1. Before July 1998, Respondent failed to perform quarterly

reconciliation and to maintain trust receipts and disbursement

journals. (Stipulation 6A, Exhibit J-1)



     2
      The testimony on the initial day of the formal hearing was
intended to present "very brief information with respect to
mitigation." (T1, p. 7,1. 11-12 and I. 19-22)
     2. Respondent commingled personal funds with client trust funds

by depositing personal funds into the trust account on two occasions

in March 1998. The Hearing Panel does not accept the characterization

that these deposits were mistakenly made on these two occasions. A

review of the "reconstructed ledger cards" prepared by OAE (Exhibit

Al2, J-1) in connection with its audit reveals that on March 24, 1998,

a deposit of $9,241.03 was made into the trust account, which deposit

is designated as "Respondent's Robbery Proceeds;" and on March 27,

1998, Respondent wrote Check No. 1610 for "Cash-Respondent" in the

amount of $3,500, which he posted against the "Robbery Account." It is

noteworthy that on March 24, 1998, Respondent's attorney trust account

was $7,740.60 "Out-of-Trust," as shown on the OAE "reconstructed

ledger cards" (Exhibit Al2, J-1) and that the account had been

consistently "Out-of-Trust" since at least October 30, 1997 when

Respondent wrote Check No. 1484 to "Cash-Respondent" for $3,5003,

without any designation as to the client matter for this disbursement.

(Stipulation 6B, Exhibit J-1)

     3. On March 31, 1998, Respondent mistakenly reentered a $16,539

deposit representing settlement proceeds for client Rosenberg in his

trust account ledger. On or about April 30, 1998, believing that he

had $16,539 more funds in his trust account that were actually there,

Respondent proceeded to withdraw $9,520, resulting in an overdraft.


     3
       A review of the "reconstructed ledger cards" shows that the
checks, as written, are not consecutively numbered, with some checks
from more recent dates having lower check numbers. Also, several check
numbers were noticeably absent.
With only $12,410.30 in his trust account, Respondent issued four

checks totaling $18,470, resulting in an accounting shortage of

$16,819.57. Two of these checks (No. 1601 and No. 1602) were in the

amount of $4,475 each, issued on behalf of clients Braude and

Virovstev. The two other checks (Check No. 1621 for $8,000 and Check

No. 1622 for $1,500) were for deposit into Respondent's personal

account. (Stipulation 6C, Exhibit J-1)

     4. On April 2, 1998, Respondent's clients, Irina Braude and

Vladislav and Khasya Virovstev, who had allowed Respondent to use

their settlement proceeds, directed Respondent to issue four checks

totaling $21,224. The checks were issued, were presented to the bank

by the clients on April 27, 1998, and paid. As of April 21, 1998,

however, there were insufficient funds in Respondent's trust account.

(Stipulation 6D, Exhibit J-1)

     5. On April 24, 1998, Respondent made a deposit of $12,500 on

behalf of another client. The Braude check for $7,800 cleared the

account on April 27, 1998. This left a balance in Respondent's trust

account of $20,430.30, when he should have been holding $27,729.87 on

behalf of all of his clients, leaving an accounting shortage of

$7,299.57. (Stipulation 6E, Exhibit J-1)

     6. On May 1, 1998, Client Check Nos. 1601 and 1602 were returned

by the bank for insufficient funds. An overdraft notice to the

Respondent was issued by the bank on May 5, 1998. On May 4, 1998,

Respondent issued two trust account checks. On was a counter check for
$1,500 payable to Respondent without reference to a client matter. The

other check, No. 1525, represented a $4,474 payment on behalf of

Braude and Virovstev. These two checks totaling $5,974 with only a

$2,834.30 accounting balance in the trust account, cleared the bank,

but created an account deficit of $18,375.57. (Stipulation 6F, Exhibit

J-1)

       7. On May 5, 1998, immediately upon receiving an overdraft notice

from the bank, Respondent placed $10,700 of his personal funds into

the trust account to correct the overdraft. Although this deposit

brought the trust account balance to $7,532.30, after a $28 bank

charge for the overdrafts, an accounting deficit of $7,703.57 still

remained since Respondent should have been holding $15,235.87 on

behalf of all his clients. This shortage was corrected. (Stipulation

6G, Exhibit J-1)

       8. Since his accounting errors in 1998, Respondent has:

       (1) Retained an accountant to perform quarterly reconciliations

of his trust account and to maintain proper trust receipts and

disbursement journals;

       (2) Utilized a one-write check-writing journal for his trust

account;

       (3) No longer deposited personal funds into his trust account;

and

       (4) Withdrawn legal fees and other authorized funds from his

trust account as soon as appropriate. (Paragraph 6H, Exhibit J-1)
     9. Respondent maintains that contributing to his bookkeeping

error in 1998 were his divorce and transition problems as his

bookkeeping/management functions had been handled by his ex-wife.

(Paragraph 7, Exhibit J-1)

     10. As a result of the audit of the OAE and action by the New

Jersey Supreme Court, Respondent's New Jersey trust account has been

monitored since August 11, 1998, with a cosignatory required on all

trust account checks. This function has been performed by Barry Knopf,

Esq. of Saddle Brook, New Jersey. Mr. Dranov has been in compliance

with record keeping requirements since. This supervision continues to

date. In addition, since July 1, 1998, Alan Noel, CPA, has reviewed

and reconciled Mr. Dranov's trust account quarterly. (Paragraph 8,

Exhibit J-1)

     11. Respondent admits that he borrowed clients' funds in 1998 and

provided to the OAE documentation that his clients had consented in

writing to his use of their funds after being advised of their right

to seek independent counsel. These documents included: letters of

authorization signed by Clients Alexander Polyak and Alinas Ostrovskay

(Exhibit A8, J-1); Client Elizaveta Petrovskaya (Exhibit A9, J-1); and

Clients Irina Braude and Vlad Virovtsev and Khasya Virovtsev (Exhibit

A10, J-1) The OAE interviewed a number of Respondent's clients

identified in Exhibit C, J-1, including clients Alina Ostrovskaya,

Yefim Blank and Simon Genel, who confirmed to the OAE in interviews

that they authorized Respondent's use of their funds. Based on these

statements, the OAE determined it would be unable to prove by clear
and convincing evidence that Respondent's clients did not consent to

the loans to Respondent or that Respondent failed to advise them of

their right to seek independent counsel as alleged in the First Count

of the Complaint (Exhibit J-1, Paragraph 5) Based on the foregoing,

the OAE moved to dismiss the allegation that Respondent violated RPC

1.8(a) and neither party presented any one of Respondent's clients

identified in Exhibits C and D, J-1. Although in defending against

this allegation, Respondent submitted written authorizations which

purportedly allowed him to "use" his clients' settlement proceeds,

this Panel is constrained to grant the application of OAE to dismiss

the allegation that Respondent violated RPC 1.8(a). However, we would

be remiss if we did not bring to the attention of the Disciplinary

Review Board concerns we have regarding Respondent's lack of candor

during his cross-examination to several of the documents (Exhibits C

and D, J-1) he produced to defend against the allegations that he

violated RPC 1.8(a).

     12. The Panel finds that Respondent entered into business

transactions with his clients when he borrowed money from them.

Respondent showed that Aline Ostrovskaya, Yefim Blan and Simon Genel

authorized Respondent to use their funds. (Exhibits C and D, J-1)

However, it was also shown that Respondent also lent money to his

clients as shown on Exhibit D [C-2]; J-1; OAE-1; OAE-2; OAE-3; and

OAE-4. On the loans Respondent made to his clients, he testified that

he never charged interest on any loans he gave to his clients, even if

the promissory note indicates interest would be charged. (TI I, 33-
34.) OAE-2 conflicts with this testimony, where a review of the

document shows that Respondent did collect interest where he

acknowledges receipt of $4,623.00 on November 20, 1997 from S. Gemel

as repayment of a $4,200 loan given by Respondent on October 12, 1996

at 10% interest. The Panel finds Respondent's explanation fell short

of the ring of truth. At the hearing on September 23, 2003, the Panel

questioned Respondent regarding the use of his clients' funds and he

testified that some of his clients were reluctant to receive their

[settlement] funds from personal injury cases he was handling for

them. He stated that the clients did not want to receive the funds

"because of tax purposes, tax implications and Social Security

implications." (TI, p. 59, I. 6-8) When questioned further by the

Panel as to the basis for deferred receipt of settlement proceeds,

Respondent testified that "many [of his clients] were on...SSI and

they did not want to receive their funds because they thought that

they might jeopardize their continued receipt of the government

funds." (TI, p. 59, I. 25; p. 60, I. 1-4; and p. 64,1. 14-17)

    13. Based on Respondent's testimony on September 23, 2003 that

related to his clients not receiving their settlement proceeds because

it might jeopardize their receipt of governmental funds, the OAE moved

to amend the Complaint to include a violation of RPC 8.4(c). (T1, 86)

The formal hearing was continued and on December 8, 2003, the OAE

filed an Amended Complaint, where a third count was added, alleging

that Respondent violated RPC 1.2(d) by assisting a client in conduct
that the lawyer knows is illegal, criminal or fraudulent and RPC

8.4(c) by engaging in conduct involving fraud or deceit.

    After filing an Amended Answer, the formal hearing resumed on

January 29, 2004 and Respondent defended against these charges

claiming he "did not specialize in Social Security and [did] not give

advice in that area. (TII, p. 19., I. 7-8, I. 21-23) and that none of

the individuals from whom he was authorized to "use" their money had

requested a forbearance from receipt of the settlement funds because

of SSI, etc. When questioned at the hearing, Respondent did not reveal

the identity of those individuals who did not want to jeopardize the

benefits they were receiving (TII, p. 29,1. 10-12) Notwithstanding the

lack of identity of Respondent's clients who wanted to defer receipt

of personal injury settlement monies, his testimony on September 23,

2003 regarding his actions in his clients' deferral of their receipt

of settlement proceeds so that their government benefits are not

jeopardized must be considered based on the applicable law and more

particularly, whether personal injury awards are considered unearned

income for purposes for determining eligibility for SSI.

    42 U.S.C.A. Subsection 1382(a)(2)(C) defines unearned income as

income consisting of "prizes and awards." In LaBeaux v. Sullivan, 760

F. Supp. 761 (E.D.N.Y., 1991), Gerome LaBeaux was born on January 2,

1982, suffering severe brachial plexus and neurological and cerebral

injuries. In February 1984, the Secretary of Health and Human Services

(HHS) determined Gerome LaBeaux was eligible for supplement security

income (SSI) benefits because of his severe mental retardation.
LaBeaux, Supra. In December 1985, Gerome's parents, as co-

conservators, settled a negligence action for their son against Dr.

Thomas F. Thornton and St. Francis Hospital which included, inter

alia, an immediate cash payment and monthly payments through an

annuity to Plaintiff Gerome LeBeaux. In March 1997, HHS notified

Plaintiff that he had been overpaid in SSI benefits since his receipt

of settlement proceeds from the negligence action are deemed to be

unearned income. The LeBeaux court noted that Congress did not exclude

personal injury awards from the definition of income under the Social

Security Act and found that under Lukhard v. Reed, 481 U.S. 368

(1987), the inclusion of personal injury awards as income is

reasonable and consistent with 42 U.S.C. Subsection 1382a(a)(2)C and

20 CFRS 416.1121(f) which specifically included awards from a court as

unearned income. In Ahrens v. Bowen, 646 F. Supp. 1041, 1049-50

(E.D.N.D., 1986) an award of punitive damages was held to be income

under the Social Security Act, rev'd on other grounds, 852, F.2d 49

(2d Cir. 1988).

     Since the case law is clear that personal injury awards are

considered income for purposes of determination of amount of SSI

benefits, the Panel finds that Respondent assisted his clients in

conduct that the lawyer knew, or should have known, was illegal,

criminal or fraudulent, in violation of RPC 1.2(d). See In Re Blatt,

65 N.J. 539 (1974). Respondent had a duty to satisfy himself that his

clients' deferral of receipt of personal injury proceeds was

legitimate before he followed their directions. Respondents' claim
that he has no knowledge of Social Security law (TII, p. 19, I. 7-9;

I. 21-22) does not absolve him of this duty. Respondent contrite

defense falls short of any acknowledgment of wrongdoing.

     A lawyer has violated RPC 8.4(c) and committed professional

misconduct if he engages in conduct involving dishonesty, fraud,

deceit or misrepresentation. Based on Respondent's testimony, the

Panel finds that he knew, or should have known, that he was

participating in an attempt to perpetuate a fraud upon the United

States Department of Health and Human Services by aiding his clients

in defrauding the federal government. The testimony shows by clear and

convincing evidence that Respondent violated RPC 1.2(d) and RPC

8.4(c). The fact that the identities of those individuals involved in

this deferral of personal injury award is unknown to this panel does

not minimize or limit Respondent's responsibility for his ethical

aberrations which do not require a criminal conviction for the panel

to have jurisdiction over these issues.

     14. Under the Stipulation (Exhibit J-1), Respondent stipulated

that he violated RPC 1.15(a); 1:15(d) and R. 1:21-6, as alleged in the

First and Second Counts of the Formal Complaint.

                          IV. DETERMINATION

     The Panel has carefully considered and reviewed the testimony and

evidence and has concluded that Respondent's conduct constituted

ethical misconduct, in that he violated RPC 1.2(d); 1:15(d); 1.15(a);

R. 1:21-6 and 8.4(c) for the reasons set forth above.
     The Panel notes that Respondent's attempts to mitigate the

sanctions to be imposed against him for his stipulated violations of

RPC 1.15(a), 1.15(d) and R. 1:21-6 fall short of the mark of showing

any genuine remorse or having an understanding of his obligations as

required in managing and administering trust funds. Instead, he

proffered the testimony of Alan Noel, CPA, the accountant he retained

to assist him in complying with record keeping requirements, however,

he did not provide sufficient evidence to assure that without the

assistance of an accountant, he could comply with the recordkeeping

requirements. Although Barry A. Knopf, Esq., a respected Member of the

Bar, has been a co-signatory on Respondent's trust account and has

advised the Supreme Court and this Panel in written communications (R-

3) that through his monitoring of the Respondent's trust account, the

account is in order, nothing has been presented to show that

Respondent has participated in any training to avoid engaging in poor

accounting practices in the future. Mere statements by Respondent that

his trust account is sacred (TI, p. 72, I. 11) are not persuasive to

this Panel as the Respondent shows no remorse for his conduct.

Instead, he relies on written statements from his clients that they

authorized him to use their settlement proceeds (Exhibit D, J-1). Had

Respondent produced these clients at hearing, it would have given the

Panel a better opportunity to determine the circumstances surrounding

the execution of these documents, including the defense raised by

Respondent that none of Respondent's clients have been financially

injured. This does not minimize his breach of his ethical
responsibilities. For the violations of RPC 1.15(a); 1.15(d) and R.

1:21-6, the Panel recommends that Respondent be suspended for a period

of two years. See In Re Orlando, 104 N.J. 344 (1986). His admission of

wrongdoing has been considered a mitigating factor.

     The Panel finds no mitigating circumstances for Respondent's

violations of RPC 1.2(d) and 8.4(c). Instead, his conduct which, at

times, suggest acts of self-dealing, warrants a suspension for a

period of one year.

     This Panel is troubled by the inconsistencies in Respondent's

testimony (which is also at variance with the Stipulation, where

Respondent claims he borrowed money from his clients (Exhibit J-1,

Paragraph 5), where he denied that he removed the money from his

attorney trust account (TI, p. 63, I. 9-20), yet he also testified

that he borrowed clients' funds in 1998 (TI, p. 58, I. 11-25) It

appears that the clients who had authorized Respondent to "use" their

money (as specifically identified in the Stipulation as providing

authorizations) were not the clients for whom Respondent deferred

paying the settlement proceeds because of their fear that it would

jeopardize the benefits (i.e., SSI) they were receiving from the

government.

     Given the totality of the circumstances, including the absence of

remorse, the failure of Respondent to produce the clients in

mitigation which would have enabled the Panel to ascertain the

circumstances surrounding their execution of these authorizations, the

Panel recommends that Respondent be suspended from the practice for a
total of three years. Further, he should be required to attend

appropriate, continuing legal education courses regarding record

keeping of trust accounts and be monitored for a period upon his

return to the practice of law.

                        DISTRICT IIB ETHICS COMMITTEE

                        /s/ Lorraine Teleky-Petrella, Esq.
                        Hearing Panel Chair


DATED: September 21, 2004

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:58
posted:4/22/2012
language:English
pages:42