Opinion ID: 2395384
Heading Depth: 1
Heading Rank: 5

Heading: The Leon-Markov Count

Text: This is the most bizarre matter. On July 13, 1992, the OAE conducted an initial random audit of respondent's attorney records. According to the OAE, that audit disclosed serious deficiencies and the OAE warned respondent of those problems. On April 21, 1993, the OAE conducted a second audit, at which time the auditor informed respondent that she believed that he was knowingly misappropriating client funds. Despite that warning, respondent invaded his trust funds by a total of $21,000 over the course of the three months immediately following the second audit. From May 4, 1993 through August 18, 1993, respondent issued a series of eight checks to himself, in amounts ranging from $500 to $9,000. On September 27, 1993, respondent mailed to the OAE a reconciliation of his attorney records that he had had prepared, which showed a trust account deficiency of $21,916.01 as of August 31, 1993. Respondent does not dispute that there was a $21,000 shortage in his trust funds. He presents, however, two different explanations for that shortage. Initially, respondent attributed the shortage to the fact that he was holding $20,000 in cash in a safe at his home for a client named Felipe Leon. According to respondent, some time before August 31, 1993, he withdrew the Leon funds from his trust account and held those funds at home until he opened a new trust account in September 1993, at which time he deposited the funds in that account. In connection with this explanation, he offered the testimony of his wife, who stated that she kept $18,000 in a rice bag at home until respondent opened a new trust account because she was upset that the bank was charging fees. During this period of time, the old account remained open, and the charges continued. Respondent's wife also had a safe deposit box at that time. On October 26, 1993, however, when respondent appeared before the Supreme Court to show cause as to why he should not be temporarily suspended from the practice of law, he told the Court that $18,800 of the $21,916.01 shortage in his trust account was due to two withdrawals made in July 1993 at the request of a client, Eleanor Markov, in the amounts of $9,800 and $9,000. The stated reason for Markov's alleged request to remove the funds from the trust account was her fear that the buyer of real estate she had sold in Croatia would be backing out of the deal. Accordingly, respondent continued, Markov was so concerned about the $50,000 that she had wired into his trust account that she had instructed him to protect it. At the hearing before the special master, Markov confirmed respondent's assertions. The OAE countered, however, that respondent fabricated his claim to cover his knowing misappropriation of trust funds. The OAE pointed out that, if respondent wanted to protect the funds, he would have removed the entire $50,000 sum. Markov ultimately received the $50,000 in two checks, one dated July 7, 1993 for $41,000 and the other dated July 9, 1993 for $9,000. According to the OAE, respondent covered $8,000 of the second check with a $20,000 deposit that he had made to his trust fund on July 7, 1993 for the Leon account. The OAE argued that respondent took $8,000 of Markov's funds and replaced them with Leon's funds. Indeed, respondent admitted this during the oral argument on his temporary suspension before the Court: Basically what this culminated in, there were two withdrawals, 9800 and 9000 in July and, in effect, Mr. Leon's monies were paid out of Miss Markov's monies. Miss Markov's monies were paid out of Mr. Leon's monies and both were in the form of exigency to both clients. Later in the argument, Mr. Freimark was asked: You seemed to imply earlier though that you had knowingly used one client's funds to pay or make up another client's account. Did you say that? MR. FREIMARK: During the course of the summer, yes, because Miss Markov was calling me from Croatia and she was very urgent about this and again, I represented her family in Hoboken for a number of years. And Mr. Leon was likewise urgent, so, yes, I would say yes in that regard. I think, Justices, that you also in making your decision might keep in mind, my practice does not involve a lot of trust account activity. Maybe I botched up the handling of the funds with regard to the disbursements. [Oral Argument, Office of Attorney Ethics v. Freimark, October 26, 1993.] Accepting respondent's explanation, he has clearly admitted the invasion of one client's funds for another client. We do not find, however, respondent's explanations of the Leon-Markov matters to be credible. No financial records substantiate his claims that he withdrew Mrs. Markov's money to protect it. He never offered any explanation as to why the checks were payable to him and were either cashed or deposited in his personal account. We find that the $21,000 shortage in respondent's trust account is attributable to the eight checks respondent issued to himself between May 4, 1993 and April 18, 1993, in amounts ranging from $500 to $9,000. Those funds were used for respondent's own personal benefit. Respondent in the Leon-Markov count violated RPC 1.15, RPC 8.4(c) and R. 1:21-6 (failure to maintain required records).