Opinion ID: 1982987
Heading Depth: 1
Heading Rank: 4

Heading: Rich matter

Text: In 1979, respondent assisted Sam Rich in forming a corporation known as Concology. Respondent was to be compensated for his services with a stock participation in the company; he was also to be named a director and officer of the firm. In January 1980, respondent deposited an investor's check for $11,250 in his trust account, with instructions from Concology to draw various checks against this sum. All of the checks drawn were returned for insufficient funds. Respondent explained that the overdrafts occurred because a check from Equities payable to Repsco Inc., and deposited into his trust account, was not paid. Apparently, respondent had already drawn on the Equities deposit. In a second matter, respondent issued a $30,000 check on Concology's behalf against his trust account to complete a closing. Respondent asked his adversary to wait to deposit this check until he had an opportunity to deposit a second $30,000 check, payable to Concology, into his trust account. Because respondent waited several days to deposit this item, the check drawn on his trust account was returned. Respondent subsequently replaced the check with a wire transfer. The Ethics Committee found that respondent violated DR 9-102(B)(4) and (C) by commingling Concology funds with those of Equities, by failing to maintain adequate records, and by invading trust funds. Upon reviewing these findings, the DRB reached the following conclusions: This record clearly demonstrates that respondent, who was admitted to the bar in 1974, accepted substantial sums of money from clients for investment. Respondent failed to fully explain the nature of the investments, nor did he disclose his interests in the companies involved. He did not keep his clients informed of the nature of the investments. Respondent provided his clients with no documentation so they could protect their investments. He also failed to segregate the funds of his clients which resulted, at times, in invasion of clients' funds. The record indicates that respondent and Equities were not dealing in an arms-length fashion. Respondent was an active agent on behalf of this company. His conduct was more solicitous of the company than of his clients. When an attorney has a personal stake in a business dealing with a client, he must see to it that the client understands that his objectivity and ability to give the client undivided loyalty may be affected. He has a duty to explain carefully, clearly and cogently why independent legal advice is required. In re Miller, 100 N.J. 537, 544 (1985); In re Wolk, 82 N.J. 326, 333 (1980). A client will entrust an attorney with his funds because he trusts the attorney. It is a trust built on centuries of honesty and faithfulness. In re Wilson, 81 N.J. 451, 455 (1979). This trust must be preserved. Id. at 456. The Board concludes that respondent's conduct fell far short of the high standards of his profession. In re Ryan, 66 N.J. 147, 150 (1974). The Board also found that because respondent commingled personal monies and trust funds, the overdrafts in his trust account constituted knowing misappropriation. Noting that the Clients' Security Fund had already paid claims in excess of $91,000 as a result of respondent's misconduct, the Board unanimously recommended his disbarment. [5]