Court Opinion

ID: 4257062
Source: CourtListenerOpinion
Date Created: 2018-03-22 15:10:16.799179+00
Date Added: 2024-06-11T07:48:59.809827
License: Public Domain

Supreme Court of Florida
                                   ____________

                                   No. SC15-2004
                                   ____________

                               THE FLORIDA BAR,
                                  Complainant,

                                          vs.

                      RANDALL LAWRENCE GILBERT,
                               Respondent.

                                  [March 22, 2018]

PER CURIAM.

      We have for review a referee’s report recommending that Respondent,

Randall Lawrence Gilbert, be found guilty of professional misconduct and

suspended from the practice of law for a period of two years. We have

jurisdiction. See art. V, § 15, Fla. Const. The egregious facts, as found by the

referee, demonstrate Gilbert’s failure to exercise any supervision over Steven

Sacks, Gilbert’s employee with a known history of wire fraud and embezzlement

of more than $7 million. Even after Gilbert was warned by Sacks’ probation

officer of the risk of financial irresponsibility and his opinion that Sacks should not

be working at a law firm given his criminal past, Gilbert did nothing. In fact,
shortly after hiring Sacks, when Gilbert became aware that Sacks had embezzled

over $20,000 from the law firm’s operating account, Gilbert fired and then rehired

Sacks, eventually delegating to Sacks all matters regarding the administration of

Gilbert’s firm’s trust account. The details are set forth more fully below, but by

the end of 2014 Sacks had embezzled nearly $5 million from the firm’s trust

account.

      Whether Gilbert was aware of or personally involved in the theft is not the

critical inquiry. Indeed, this case gives new meaning to the phrase “turning a blind

eye.” Gilbert, as an attorney and fiduciary, was directly responsible for his firm’s

trust account and for the supervision of employees. As an attorney, he owed a duty

to the public and to his clients to safeguard their money. Instead, he flouted the

system by lying to a federal probation officer and allowing a nonattorney to hold

himself out as a law school graduate and a certified public accountant (CPA).

Sacks was neither and never had been. For the reasons that follow, we approve the

referee’s factual findings and recommendation as to guilt but reject the referee’s

recommended disciplinary sanction and, instead, impose the sanction of

disbarment.

                                      FACTS

      In February 2005, Sacks was referred to Gilbert by a friend/client for a job at

Gilbert’s law office. Gilbert interviewed Sacks and learned that Sacks was then

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living in a halfway house, having been recently released from federal prison after

being convicted of wire fraud. Sacks claimed in this interview to be a CPA and a

disbarred New York attorney. With knowledge of Sacks’ criminal history, Gilbert

hired Sacks. However, Gilbert did not investigate Sacks’ criminal history in any

manner, obtain any further information about Sacks’ crimes, contact the New York

Board of Accountancy to confirm whether Sacks was a CPA, or contact the New

York Bar in regard to the circumstances of Sacks’ disbarment.

      On or about April 8, 2005, Sacks’ federal probation officer, Jeffrey Feldman

(Officer Feldman), met with Gilbert. During the meeting, Gilbert signed a “PROB

32” form, formally acknowledging the risk of hiring Sacks as well as some aspects

of the crimes Sacks had committed. The PROB 32 form indicated that on

“December 23, 2002,” Sacks was convicted of 11 counts of “wire fraud” and was

sentenced to “41 months imprisonment, followed by a total of five (5) years

[probation, and ordered to pay] [r]estitution in the amount of $7,906,332.14.”

Officer Feldman also told Gilbert that he felt it was inappropriate for Sacks to be

working at a law firm given Sacks’ history of fraud and embezzlement.

      The referee found that with respect to Sacks’ past, Gilbert was “curiously

uncurious.” Had Gilbert investigated Sacks further, he would have discovered that

Sacks was never an attorney in New York. Additionally, if Gilbert had contacted

the New York Board of Accountancy, he would have learned that Sacks was not a

                                        -3-
CPA. The referee notes Gilbert’s “failure to exercise even a modicum of due

diligence with respect to Sacks’ ‘resume,’ a resume which came with a number of

bright red flags attached to it.” Additionally, Gilbert permitted Sacks to identify

himself as holding a “J.D.,” which was printed on business cards and included in

his signature on firm emails.

      Five months after Gilbert hired Sacks, Sacks stole and forged Gilbert’s

signature on one of the firm’s operating account checks, writing the check for

$20,950 to pay for Sacks’ girlfriend’s cosmetic surgery. Upon Gilbert’s discovery

of the theft, Sacks returned the check. Gilbert terminated Sacks’ employment, but

did not report the incident to Officer Feldman. When he learned Sacks had been

terminated, Officer Feldman repeatedly reached out to both Sacks and Gilbert in an

attempt to determine why Sacks was no longer employed at the firm. Gilbert

refused to tell Officer Feldman why he terminated Sacks. Officer Feldman was

surprised by Gilbert’s refusal to cooperate, especially since Gilbert was a member

of The Florida Bar.

      On October 11, 2005, Sacks called Officer Feldman and explained that he

and Gilbert had reconciled and that Sacks had returned to working for Gilbert. On

October 19, 2005, Officer Feldman visited Gilbert’s office and expressed surprise

regarding Sacks’ rehiring and disappointment for Gilbert’s failing to respond to his

attempts at communication. When questioned about his lack of communication

                                         -4-
with Officer Feldman, Gilbert apologized but stated that “he did not discuss

employee matters with anyone.” Gilbert went on to tell Officer Feldman that

Sacks’ termination was due to “a misunderstanding.” Additionally, Gilbert

informed Officer Feldman that Sacks would continue working with the firm in the

same capacity as he previously had, as a bookkeeper, but failed to inform Officer

Feldman when he delegated more responsibility to Sacks following his return. In

fact, Gilbert eventually named Sacks as the Chief Financial Officer of Gilbert’s

firm.

        The referee found that Gilbert refused to be truthful with Officer Feldman

regarding Sacks’ termination because he realized that Sacks’ conduct would have

probably violated Sacks’ probation. Indeed, Officer Feldman testified that had

Gilbert informed him of the crimes committed by Sacks, the crimes would have

been reported to the presiding court to initiate revocation of Sacks’ probation,

resulting in Sacks’ return to prison. Ultimately, the referee concluded that “[h]ad

Gilbert been honest, the incidents that led to this proceeding would not have

occurred.”

        According to the referee’s report, Sacks’ thefts likely began at or around the

time Sacks’ federal probation ended. Gilbert’s main focus of his practice before he

met Sacks, and continuing thereafter, was construction litigation. The real estate

closing side of Gilbert’s practice began between 2006 and 2007, but did not

                                          -5-
exponentially grow until the mortgage foreclosure crisis in 2008. Sacks was the

head of Gilbert’s team of closers for the law firm and aggressively established

relationships in the real estate community. Gilbert allowed Sacks full rein over the

real estate closing side of his practice. Gilbert was not aware that Sacks was

paying Gilbert’s employees thousands of dollars from the firm’s trust account in

order to perpetuate his scheme of embezzlement. Sacks would transfer the funds

that were deposited into the firm’s trust account to pay off the remaining

mortgages after the closings of the sales of the firm’s clients’ properties to a shell

company, which he created, and then continue to keep the mortgages “alive” by

making the monthly payments, so that no one would know of his thefts.

      Nothing in the record suggests that Gilbert engaged in any type of

meaningful post-closing supervision or follow-up of Sacks’ actions. Gilbert

testified that he reviewed monthly three-way comparisons prepared by Sacks,

which reconciled the bank account and trust account funds. He also reviewed the

first and last page of the bank account statements. He testified that this review

took no more than two to four minutes per month. There was also testimony

presented that every bank statement, with the exception of two, from February

2010 through March 2014 reflect at least one theft by Sacks.

      The referee found clear and convincing evidence that Gilbert delegated all

matters regarding the administration of the firm’s trust account to Sacks, including

                                         -6-
preparing trust account reconciliations, acting as the firm’s contact person and

intermediary with the trust account reviews by Old Republic, Gilbert’s title

insurance underwriter, and dealing with the firm’s CPA. Gilbert did not review the

information Sacks provided to the CPA. The referee concluded that “[b]undling all

of [the] financial responsibilities in the hands of someone convicted of wire fraud,

and who [Gilbert] knew had attempted to steal $20,950 from him without serious

repercussion, displayed a remarkable lack of proper supervision.”

      Over time, Sacks’ lifestyle improved significantly. Gilbert believed Sacks’

girlfriend financed this lifestyle, as she was the beneficiary of a sizable trust.

Sacks also told Gilbert that he had some real estate investments.

      Sacks’ scheme was first discovered on February 27, 2014, when Gilbert

received a call from an attorney asking why the attorney’s client’s mortgage was

paid and kept alive for three months after it should have been satisfied. While this

event prompted Gilbert to investigate, Gilbert chose not to close the firm’s trust

account. Between February 27, 2014, and March 11, 2014, when Gilbert did

finally close the firm’s trust account, Sacks stole an additional $95,000.

      Sacks’ thefts from Gilbert’s trust account first appear in the trust account

bank statement for the period February 27, 2010, through March 31, 2010. Sacks

created a fake corporation, SQWERTY, to which almost $4 million of the illicit

transfers were made. The record shows that over a 49-month period from February

                                          -7-
2010, through March 2014, Sacks stole $4,750,708.70 from Gilbert’s trust account.

Of that amount, $4,542,410.70 benefited Sacks and other third parties to whom he

gave stolen trust account funds. The difference, according to the Bar, $208,298.03,

benefitted Gilbert’s law firm.

      Old Republic was the single largest victim of Sacks’ thefts, paying out

$3,612,374.10 in title insurance claims. Gilbert himself lost approximately $1

million when Sacks failed to pay off the original mortgage on Gilbert’s home when

he and his wife refinanced it.

      Gilbert took numerous steps to ameliorate the damage caused, which

included meeting with the bank to close the firm’s trust account, hiring a forensic

accountant to complete an accounting, reporting the thefts to appropriate law

enforcement agencies, restricting Sacks’ online access to any aspect of the law

firm, suing his bank to get whatever funds might still be left in Sacks’ accounts,

notifying his malpractice carrier, and self-reporting to The Florida Bar. Gilbert

also declined to receive paychecks from the firm for a significant period of time

and dedicated the net profit to his firm from closings to reimbursing those who had

suffered losses. In all, Gilbert paid off about $1.03 million to individuals suffering

losses as a result of Sacks’ thefts.

      The referee’s report found Gilbert guilty of violating multiple Rules

Regulating the Florida Bar including: Bar Rules 3-4.3 (Misconduct and Minor

                                         -8-
Misconduct), 4-1.3 (Diligence), 4-5.3(b) (Responsibilities Regarding Nonlawyer

Assistants–Supervisor Responsibility), 4-5.3(c) (Responsibilities Regarding

Nonlawyer Assistants–Ultimate Lawyer Responsibility), 4-8.4(c) (Misconduct–

Conduct Involving Dishonesty, Fraud, Deceit, or Misrepresentation), 5-1.1(a)

(Trust Accounts–Nature of Money or Property Entrusted to Attorney), 5-1.1(b)

(Trust Accounts–Application of Trust Funds or Property to Specific Purpose), 5-

1.2(b)(6) (Trust Accounting Records and Procedures–Minimum Trust Accounting

Records), 5-1.2(c)(1) (Trust Accounting Records and Procedures–Responsibility of

Lawyers for Firm Trust Accounts and Reporting) and (2), 5-1.2(d) (Trust

Accounting Records and Procedures–Minimum Trust Accounting Procedures).

However, the referee concluded that disbarment was not the appropriate sanction

in this case and instead, recommended that Gilbert be suspended for two years and

placed on probation for two years after being reinstated, along with paying the

costs of The Florida Bar and other conditions.

      The Florida Bar filed a petition in this Court challenging the referee’s

recommended sanction, arguing that disbarment is appropriate. Gilbert filed a

cross-petition challenging both the referee’s findings as to guilt with respect to Bar

Rules 3-4.3, 4-1.3, 4-8.4(c), 5-1.2(b)(6), and 5-1.2(c)(1) and the referee’s

recommended sanction, arguing that the punishment was excessive and this Court

should instead impose a suspension lasting anywhere from six months to one year.

                                         -9-
      On September 27, 2017, this Court issued an order to show cause directing

Gilbert to show cause why he should not be suspended from the practice of law

pending the final disposition of this case. Both Gilbert and The Florida Bar filed

responses. After considering the responses, this Court suspended Gilbert until the

resolution of this case.

                                    ANALYSIS

      First, we reject without further discussion Gilbert’s arguments that the

referee erred in finding him guilty of violating Bar Rules 3-4.3, 4-1.3, 4-8.4(c), 5-

1.2(b)(6), and 5-1.2(c)(1).

      As for the appropriateness of the recommended sanction, the Bar contends

that Gilbert should be disbarred, while Gilbert conversely contends that a

suspension from six months to one year would be appropriate. The standard of

review for a referee’s recommendation as to discipline is as follows:

             In reviewing a referee’s recommended discipline, this Court’s
      scope of review is broader than that afforded to the referee’s findings
      of fact because, ultimately, it is the Court’s responsibility to order the
      appropriate sanction. See Fla. Bar v. Anderson, 538 So. 2d 852, 854
      (Fla. 1989); see also art. V, §15, Fla. Const. However, generally
      speaking, this Court will not second-guess the referee’s recommended
      discipline as long as it has a reasonable basis in existing caselaw and
      the [Florida] Standards for Imposing Lawyer Sanctions. See Fla. Bar
      v. Temmer, 753 So. 2d 555, 558 (Fla. 1999).

Fla. Bar v. Ratiner, 46 So. 3d 35, 39 (Fla. 2010).

                                        - 10 -
      The referee’s recommended sanction in this case is a two-year suspension.

In making his recommendation, the referee found four aggravating factors: a

pattern of misconduct; multiple offenses; the vulnerability of the victim; and

substantial experience in the practice of law. The most significant of these factors

was that the misconduct spanned over four years, during which time Gilbert failed

to properly supervise an employee whom he knew to have a criminal past. The

referee found eight mitigating factors: absence of a prior disciplinary record;

absence of dishonest or selfish motive; a timely good faith effort to make

restitution or to rectify the consequences of the misconduct; full and free disclosure

to the disciplinary board or a cooperative attitude toward the proceedings; good

character or reputation; interim rehabilitation; the imposition of other penalties or

sanctions; and remorse.

       In relation to Gilbert’s failure to supervise Sacks, the referee found Gilbert

guilty of violating Bar Rules 4-1.3 (Diligence); 4-5.3(b) (Responsibilities

Regarding Non-Lawyer Assistants–Supervisory Responsibility) and (c); 5-1.1(a)

(Nature of Money or Property Entrusted to Attorney) and (b) (Application of Trust

Funds to Specific Purpose); and 5-1.2(a) (Trust Accounting Records and

Procedures–Applicability), (b) (Trust Accounting Records and Procedures–

Minimum Trust Accounting Records), (c) (Trust Accounting Records and

Procedures–Responsibility of Lawyers for Firm Trust Accounts and Reporting),

                                        - 11 -
and (d) (Trust Accounting Records and Procedures–Minimum Trust Accounting

Procedures). With respect to Bar Rules 4-1.3, 4-5.3(b), and 4-5.3(c), the referee

found:

             When learning of the problem with the unsatisfied mortgage on
      February 7, 2014, [Gilbert] failed to act reasonably diligently and
      promptly by confronting Sacks to explain immediately why the
      mortgage had not been satisfied as required. . . . Sacks continued to
      come to work for six days thereafter yet [Gilbert] did little research of
      his own trust account records to determine what might have
      happened. . . .
             ....
             Sacks was a “confidence man,” a “con man,” to whom [Gilbert]
      was too willing to delegate, without properly supervising, the
      financial side of the law firm, especially the real estate closing side of
      the practice. . . .
             ....
             Clearly [Gilbert] did little more each month than have Sacks
      lead [his] eyes from one line on one of the documents to the next line
      on the next document that Sacks wanted [Gilbert] to see, obfuscating
      the entries Sacks did not want him to see, and [Gilbert’s] review was
      done.
             Spending five more minutes each month on any one of the
      months in question, would have been a much more effective use of
      [Gilbert’s] time.

      With respect to Bar Rules 5-1.1(a) and (b), and 5-1.2(a), (b), (c), and (d), the

referee found violations of these rules because the documents prepared by Sacks

were “monuments to fraud,” and accordingly could never comply with the

applicable Bar Rules. Indeed, this is a logical conclusion because fraudulent

documents could never serve the purpose of these rules—safeguarding client

property—as evidenced by this case.

                                        - 12 -
      According to the referee’s report, “The most serious and damaging aspect of

[Gilbert]’s lack of supervision concerns his failure to properly supervise his trust

account.” We agree. From February 2010 through March 2014, Sacks stole

approximately $4.8 million from Gilbert’s firm’s trust account. There were 190

thefts by Sacks, over four years, averaging over $100,000 per month, which

appeared on almost every bank statement which, despite his monthly review, went

unnoticed and unquestioned by Gilbert.

      Gilbert testified that he spent no more than two to four minutes monthly

reviewing the bank statements, the only documents which would have clearly

shown the thefts by Sacks. The referee found that Gilbert “allowed Sacks full rein

over the real estate closing side of the practice.” Instead of dividing financial

responsibility and accountability, Gilbert “allowed Sacks to be solely responsible

for multiple facets of the law firm’s finances,” including balancing books,

preparing QuickBooks and trust account reconciliations, performing the duties of

officer manager, Chief Financial Officer, and comptroller, and acting as the

intermediary between the firm’s CPA, Old Republic, and Gilbert.

      Indeed, Gilbert’s lack of supervision extended to Sacks’ representations to

and interactions with Gilbert’s clients. As previously stated, instead of

investigating Sacks’ claims that he was a CPA and disbarred New York attorney,

Gilbert allowed Sacks to display both “J.D.” and “CPA” on his business cards with

                                        - 13 -
the firm and in his signature line in firm emails. Testimony presented at the

disciplinary hearing indicated that these representations misled some of Gilbert’s

clients into thinking that Sacks was actually an attorney working for Gilbert’s firm.

      The referee found this lack of supervision to be an aggravating factor.

Standard 4.41(c) states, “Disbarment is appropriate when . . . a lawyer engages in a

pattern of neglect with respect to client matters and causes serious or potentially

serious injury to a client.” Gilbert’s conduct over the four-year period displays a

pattern of extreme neglect.

      Equally as serious are Gilbert’s acts of dishonesty in this case. With respect

to Gilbert’s dishonesty, the referee found Gilbert guilty of violating Bar Rules 3-

4.3 (Misconduct and Minor Misconduct) and 4-8.4(c) (Misconduct–Conduct

Involving Dishonesty, Fraud, Deceit, or Misrepresentation). With respect to these

rule violations, the referee stated:

             [Gilbert], although the intended victim of theft and forgery,
      failed to be honest with Probation Officer Feldman when asked why
      Sacks had been terminated . . . . [Gilbert] knew that had he answered
      the probation officer’s inquiries honestly Sacks would have been
      charged with violating supervised release and re-incarcerated. . . .
      Instead, [Gilbert] intentionally thwarted the probation officer from
      fulling his lawful function . . . .
             The argument that [Gilbert] had no legal obligation to be honest
      with the probation officer might be true for the “average citizen.”
      However, the average citizen has not accepted the responsibility of
      being in a formal fiduciary relationship concerning the safeguarding
      of others’ property.

                                        - 14 -
      The referee found that Gilbert fired Sacks after discovering his initial

$20,000 theft from Gilbert’s trust account. However, after sending Sacks to

therapy, for which Gilbert paid, and determining that Sacks had been

“rehabilitated,” Gilbert rehired Sacks and proceeded to give him more control over

the financial aspects of his firm. Incredibly, Gilbert testified during the

disciplinary hearing that he lied to Sacks’ probation officer, who attempted

multiple times to ascertain the reason for Sacks’ firing and rehiring, because he

knew if he told the truth Sacks would be reincarcerated. Indeed, the referee found,

and Officer Feldman testified that had Gilbert been honest with him regarding the

incident, Officer Feldman would have revoked Sacks’ probation, and the entire

incident could have been avoided.

      “This Court does not view violations of rule 4-8.4(c) as minor. . . . ‘[B]asic,

fundamental dishonesty . . . is a serious flaw, which cannot be tolerated.’ ” Fla.

Bar v. Rousso, 117 So. 3d 756, 767 (Fla. 2013) (quoting Fla. Bar v. Rotstein, 835
So. 2d 241, 246 (Fla. 2002)). The referee found Gilbert’s dishonesty to the

probation officer to be an aggravating factor. Standard 6.11(b) of the Florida

Standards for Imposing Lawyer Sanctions is applicable and states: “Disbarment is

appropriate when a lawyer . . . improperly withholds material information, and

causes serious or potentially serious injury to a party, or causes a significant or

potentially significant adverse effect on the legal proceeding.” Standard 5.11(f) is

                                         - 15 -
also applicable, and it instructs that “[d]isbarment is appropriate when . . . a lawyer

engages in any other intentional conduct involving dishonesty, fraud, deceit, or

misrepresentation that seriously adversely reflects on the lawyer’s fitness to

practice.”

      While the referee found that Rousso was not controlling, we consider Rousso

to provide guidance in this case. In Rousso, a bookkeeper embezzled $4.38 million

of the “100s of millions of dollars passed through” the respondents’ trust account.

Id. at 759. The evidence did not establish that the respondents misappropriated the

funds, and the respondents “endeavored to honor every known client liability for

trust account funds.” Id. at 760. This Court ultimately found that disbarment, and

not permanent disbarment, was the appropriate sanction. Id. at 769.

      Gilbert’s conduct was equally, if not more, egregious than that in Rousso.

Gilbert hired and rehired a felon convicted of wire fraud, who had embezzled

nearly $8 million. Gilbert never investigated the circumstances of Sacks’ prior

criminal conviction and never verified Sacks’ assertions of his prior experience.

He ignored the probation officer’s warnings that Sacks should not be trusted in a

position of financial responsibility. Then, shortly after his employment, Sacks

stole from Gilbert and was rewarded by being reemployed and given more

responsibility. Additionally, Gilbert lied to Officer Feldman, intentionally

preventing Officer Feldman from, as the referee found, “fulfilling his lawful

                                        - 16 -
function with the eventual harm to dozens of individuals and entities and the loss

of approximately $4.8 million.”

        For these same reasons, we also find unpersuasive Gilbert’s contention that

a suspension ranging from six months to one year is appropriate. Gilbert relies

upon The Florida Bar v. Hines, 39 So. 3d 1196 (Fla. 2010). However, Hines is not

applicable here. Hines involved a one-time misappropriation of $128,802.68 that

was immediately caught, and the person affected by the misappropriation was

made whole. Id. at 1198. Here, there were more than 190 thefts, which took place

over a four-year period, that totaled almost $5 million, and the largest creditor has

yet to be made whole.

       On the balance, although we do not ignore the mitigation found by the

referee, we conclude that it does not outweigh the egregiousness of Gilbert’s

conduct. Given all of these circumstances, we conclude that the disciplinary

sanction of disbarment is warranted and appropriately serves the three-pronged

purpose of attorney discipline: (1) it is fair to society; (2) it is fair to the

Respondent; and (3) it is severe enough to deter other attorneys from similar

misconduct. See Fla. Bar v. Lawless, 640 So. 2d 1098, 1100 (Fla. 1994).

                                     CONCLUSION

       Accordingly, Randall Lawrence Gilbert is hereby disbarred from the practice

of law in the State of Florida. Because Gilbert is currently suspended, the

                                           - 17 -
disbarment is effective immediately. Gilbert shall fully comply with Rule

Regulating the Florida Bar 3-5.1(g).

      Judgment is entered for The Florida Bar, 651 East Jefferson Street,

Tallahassee, Florida 32399-2300, for recovery of costs from Randall Lawrence

Gilbert in the amount of $32,884.03, for which sum let execution issue.

      It is so ordered.

LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, CANADY, POLSTON,
and LAWSON, JJ., concur.

THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER THE
EFFECTIVE DATE OF THIS DISBARMENT.

Original Proceeding – The Florida Bar

Joshua E. Doyle, Executive Director, Tallahassee, Florida, Adria E. Quintela, Staff
Counsel, and Randi Klayman Lazarus, Bar Counsel, The Florida Bar, Sunrise,
Florida,

      for Complainant

David B. Rothman and Jeanne T. Melendez of Rothman & Associates, P.A.,
Miami, Florida,

      for Respondent

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