Opinion ID: 1991636
Heading Depth: 1
Heading Rank: 3

Heading: The Haupt Matter

Text: This matter arose out of a Michigan judgment obtained by Marv Haupt (grievant) against respondent. By way of background, on November 5, 1976, grievant filed an action in Michigan based upon a financing transaction with a certain corporation, whereby the latter was to obtain financing for a coal mining operation in West Virginia. Grievant paid the corporation the sum of $10,890.00, to be held in escrow by respondent, the corporation's New Jersey attorney. When the corporation failed to secure the financing, grievant requested the return of the monies in escrow. They were not returned. Grievant then filed an action against the corporation and respondent for restitution and damages based on fraud, conspiracy and other related grounds. Upon being served with the summons and complaint, respondent forwarded them to the client corporation without further action because he knew they had nothing to do with [me]. Respondent did not file an answer, thereby causing a default to be entered against him. Respondent then moved to set aside the default, but failed to appear on the return date of the motion. On May 18, 1977, a default judgment was entered in the Michigan action against respondent in the amount of $6,943,102.70, on proofs by expert testimony as to grievant's damages, including interests and costs. The basis for the judgment was fraud, conspiracy to defraud, material misrepresentation and breach of trust agreement. Respondent next filed a motion to vacate the default judgment and to dismiss the matter for lack of jurisdiction. On October 6, 1977, the court granted the motion to set aside the default judgment and scheduled the matter for trial, subject to respondent's payment of $4,000.00 in attorney's fees which, the court found, resulted from respondent's negligence and obtuseness in the case. Respondent never paid the counsel fees. On November 9, 1977, the default judgment was reinstated and grievant sought to enforce the Michigan judgment in New Jersey. By order dated October 10, 1980, the New Jersey court ruled that the Michigan judgment was entitled to full faith and credit and entered a judgment against respondent in the amount of $6,943,102.70, together with interest from May 18, 1977. Respondent did not appeal said order. On August 14, 1980, or less than two months before the entry of the New Jersey order recognizing the Michigan judgment, four mortgages were recorded against his Plainfield house. The first mortgage was given to Dorothy Hammer, believed to be respondent's female companion; the second was given to Donald Frandsen, an old friend of respondent's; the third was given to Theresa and Dominick Giordano, respondent's sister and brother-in-law; and the fourth was given to respondent's brother, Thomas Breen, Jr. Furthermore, a title search revealed a deed from respondent to Dorothy Hammer, dated March 10, 1980 but recorded on September 29, 1980, only 21 days before the New Jersey judgment was docketed. On December 4, 1984, the court ordered respondent to attend a supplementary proceeding and to produce all relevant documentation. Respondent did not appear. On February 1, 1985, the court ordered respondent to appear before it on March 1, 1985, to show cause why he should not be held in contempt. Again, respondent did not appear. Whereupon the court signed a warrant for respondent's arrest. Respondent was arrested on June 17, 1985. He was ordered to testify at the supplementary proceeding and to furnish all requested documents to grievant's attorney. Although he appeared, respondent failed to bring any documents. He testified that he had no office records, other than notes in his checkbook. He was unable to produce proof of any consideration for the mortgages and the deed. At a prior deposition, his sister and brother-in-law testified that they had no knowledge of a mortgage in their name against respondent's house. A further hearing was scheduled for July 2, 1985. Once again, respondent did not appear. Although further warrants for his arrest have been signed, it appears that respondent has successfully evaded them. The district ethics committee hearing was held on May 22, 1986. Respondent did not appear. The panel report found that respondent had violated R.P.C. 8.4 through acts of misconduct of the most egregious nature, by committing fraud and conspiring to commit fraud against grievant in the Michigan matter; by failing to return grievant's deposit; by failing to respond to court orders and to appear at supplementary proceedings; by being arrested for breach of court orders; by failing to provide documents, pursuant to court orders; by illegally placing mortgages against his home in order to defraud a judgment creditor; and by illegally transferring his house, for no consideration, to defraud a judgment creditor. [1] The committee submitted a unanimous presentment and recommended that, on the Haupt matter alone, respondent be disbarred.