Title: Matter of Gold
Citation: 115 N.J. 239, 557 A.2d 1378
Docket Number: N/A
State: new-jersey
Issuer: new-jersey Supreme Court
Date: May 26, 1989

115 N.J. 239 (1989) 557 A.2d 1378 IN THE MATTER OF STEPHEN GOLD, AN ATTORNEY AT LAW. The Supreme Court of New Jersey. Argued October 11, 1988. Decided May 26, 1989. *240 Robyn M. Hill, Deputy Ethics Counsel, argued the cause on behalf of Office of Attorney Ethics. Thomas J. Beetel argued the cause for respondent. PER CURIAM. The Disciplinary Review Board (DRB), with four members dissenting, stated that it was unable to conclude that respondent had committed a knowing misappropriation. We agree to the extent that the evidence was insufficient to establish that respondent knowingly misappropriated trust funds after December 19, 1979, the date of publication of In re Wilson, 81 N.J. 451. Although we find that respondent committed unethical conduct meriting public discipline, we agree with the DRB that respondent's suspension since 1984 is sufficient discipline. The underlying facts are accurately summarized in the DRB decision and recommendation: *244 Based on its review of the record, the DRB found respondent guilty of unethical conduct, but concluded that respondent's suspension since 1984 was sufficient discipline. The DRB's conclusion and recommendation was: Writing for the dissent, one board member wrote: At the crux of the conflict between the majority and dissenting DRB opinions is the interplay between our decisions in In re Wilson, supra, 81 N.J. 451, and In re Fleischer, 102 N.J. 440 (1986). In brief, Wilson holds that disbarment will invariably follow from a knowing misappropriation. As the rule has evolved, such a misappropriation "consists simply of a lawyer taking a client's money entrusted to him, knowing that it is the client's money and knowing that the client has not authorized the taking." Matter of Noonan, 102 N.J. 157, 160 (1986). We *247 have relaxed the rule for misappropriations that occurred prior to the publication of Wilson. In re Smock, 86 N.J. 426 (1981). In a case such as the present one, Wilson must be read in conjunction with Fleischer, in which we disbarred three law partners who commingled their trust account and their operating account into a combined account from which they paid their client and personal obligations. 102 N.J. 440. On several occasions checks on the account were returned unpaid for "insufficient funds." Id. at 444, 448. Although one of the three partners in Fleischer "was primarily responsible for the firm's disbursements, all three respondents knew of and participated in the misappropriation." Id. at 441-42. Fleischer admitted that a bounced trust-account check demonstrated his awareness that there were insufficient funds in the trust account. Id. at 448. We found that the unauthorized use of their clients' funds constituted a knowing misappropriation, stating: Here, the DRB majority was mindful of those requirements, but found that respondent "did not knowingly create a system designed to blind him from the misuse of trust funds." In reaching that conclusion, the DRB majority was moved by the facts that respondent's partner was his older brother, that the commingling of the trust and operating accounts antedated Wilson, that respondent "pauperized himself" to see that his clients were repaid, and that in the past he has performed various forms of public service. *248 Although the dissenters also viewed the record with compassion, they believed that they were compelled to vote for disbarment. The dissenters felt so compelled because the single account into which respondent had combined the firm's business and trust accounts in January 1978 frequently contained insufficient funds to meet the firm's trust obligations. The deficiency continued until June 1980, when an audit by the Office of Attorney Ethics uncovered the misappropriations. At the outset, we are confronted with the findings of the Special Master, who found: Both the DRB majority and the respondent rely on that part of the Special Master's findings in support of the argument that he did not commit any knowing misappropriation. The difficulty with that argument is that the Special Master made those findings two months before the publication of our decision in Fleischer, in which we held that lawyers could not design a bookkeeping system to permit invasion of their trust funds and then assert that because of that system, it was impossible for them to know whether they were invading those funds when they drew checks on the account. Matter of Fleischer, supra, 102 N.J. at 447. In that context, we declined to distinguish between the partners who actually drew the checks on the trust *249 funds and those who knew of the system and the existence of bounced checks. We concluded that "[i]n the absence of any explanation by respondents, the overdrafts of the trust account establish misappropriation of those clients' funds." Id. at 449. The record before us establishes that respondent combined the trust and business accounts in 1978 as a means of monitoring his brother's practice of overdrawing the business account. Both before and after the date of the Wilson decision, the combined account was out of trust. Respondent, however, was unaware of any misappropriation until he returned from a Florida vacation in July 1980. Our review, moreover, leads us to conclude that the record fails to establish by clear and convincing evidence that respondent knowingly misappropriated funds after the publication of Wilson. His guilty plea does not establish that fact. Respondent pled guilty to "aiding and abetting my brother, Michael, knowing that Michael was misappropriating money from the trust account" for the period January 30, 1978, to August 31, 1979. Because of the prospective application of Wilson, this plea is not sufficient to subject defendant to disbarment. We recognize that under Fleischer once respondent combined the trust and business accounts, he had a duty to assure that the account contained sufficient funds to meet the firm's trust obligations. Even if we impute to respondent knowledge that the account was out-of-trust, the evidence does not establish that respondent knew that checks drawn after Wilson were not covered by sufficient funds. Absent such a showing, we are not clearly convinced that respondent, as distinguished from his brother, should be held responsible for any deficiencies in the trust account. Indeed, the record does not contain any checks drawn by the firm in 1980. We are disinclined to disbar respondent without more persuasive evidence that after Wilson checks resulting in misappropriations were drawn by him or with his knowledge. *250 We are impressed, as was the entire DRB, with respondent's good works, with his substantial efforts to assure that no client suffered any loss, and with his courage in facing the community. After working at a series of menial jobs to support his family, he has worked his way into a position of responsibility with a mortgage company. It was eleven years ago that respondent undertook his misguided efforts to monitor his brother's propensity to write bad checks. For five years, respondent has been suspended from the practice of law. We conclude that the public interest does not require that respondent be disbarred. Under the circumstances, we conclude that the public interest will be better served by limiting respondent's public discipline to the period of suspension that he has already served. Respondent shall reimburse the Ethics Financial Committee for appropriate administrative costs, including the costs of transcripts. So ordered. For suspension Chief Justice WILENTZ and Justices CLIFFORD, POLLOCK, O'HERN, GARIBALDI, and STEIN 6. Opposed None. STEPHEN GOLD of FLEMINGTON, who was admitted to the bar of this State in 1966, having been ordered to show cause why he should not be disbarred or otherwise disciplined, and the Disciplinary Review Board having filed a report with the Supreme Court recommending that the suspension of STEPHEN GOLD from the practice of law since June 14, 1984, be deemed sufficient discipline for his conduct; And the Court having carefully considered the record, and good cause appearing; *251 It is ORDERED that the suspension of STEPHEN GOLD from the practice of law since June 14, 1984, be deemed sufficient discipline; and it is further ORDERED that STEPHEN GOLD is now eligible to make application for restoration to the practice of law pursuant to Rule 1:20-11(h); and it is further ORDERED that respondent shall continue to comply with the regulations governing suspended attorneys pending Supreme Court action on an appropriate restoration request; and it is further ORDERED that STEPHEN GOLD reimburse the Ethics Financial Committee for appropriate administrative costs.