Court Opinion

ID: 4263678
Source: CourtListenerOpinion
Date Created: 2018-04-13 12:34:16.727938+00
Date Added: 2024-06-11T14:30:18.026171
License: Public Domain

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SJC-12148

               IN THE MATTER OF ARIEL J. STRAUSS.

        Suffolk.       January 24, 2018. - April 12, 2018.

       Present:    Gants, C.J., Lowy, Cypher, & Kafker, JJ.

Attorney at Law, Disciplinary proceeding, Misuse of client
     funds, Suspension.

     Information filed in the Supreme Judicial Court for the
county of Suffolk on January 20, 2016.

    The case was heard by Duffly, J.

    Terrence D. Pricher, Assistant Bar Counsel.
    Jeffrey D. Woolf for Board of Bar Overseers.
    Thomas F. Maffei for the respondent.

    LOWY, J.   We consider in this case the information filed by

the Board of Bar Overseers (board) that an attorney

intentionally misused a client's funds with temporary

deprivation resulting, and its recommendation as to the

appropriate level of discipline to be imposed.   A single justice

of this court suspended Ariel J. Strauss (respondent) from the
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practice of law for six months, and the board and bar counsel

appealed.1   For the reasons that follow, we reverse the order of

term suspension and, accepting the board's recommendation, order

an indefinite suspension.2

     Background.   On August 25, 2014, bar counsel filed a two-

count petition for discipline against the respondent.   Count one

alleged that between June 1, 2012, and September 30, 2013, the

respondent failed to properly maintain a check register for his

client trust account, and failed to perform a reconciliation of

the account periodically.    The respondent did not dispute the

underlying facts as to count one, and a hearing committee of the

board (committee) agreed that the conduct violated Mass. R.

Prof. C. 1.15 (f) (1) (B) and (E), as appearing in 440 Mass.
1338 (2004).

     The second count involved the respondent's conduct in

connection with the settlement of a client's personal injury

claim.   The committee found that the respondent (1) failed to

safeguard the client's funds in a trust account, in violation of

     1 This bar discipline appeal is subject to S.J.C. Rule
2:23 (b), 471 Mass. 1303 (2015). After review of the
preliminary memoranda and record appendix filed pursuant to the
rule, we directed the appeal to proceed in the regular course.

     2 We deny the motion to dismiss the appeal that was filed by
Ariel J. Strauss (respondent). We allow his motion to
supplement the record appendix to include additional materials
before the single justice.
                                                                   3

Mass. R. Prof. C. 1.15 (b) (1), as appearing in 440 Mass. 1338

(2004); (2) failed to pay the client the proceeds of her

settlement promptly, in violation of Mass. R. Prof. C. 1.15 (c),

as appearing in 440 Mass. 1338 (2004); (3) failed to provide the

client with notice of withdrawal of his fee, the amount of the

fee, an itemized bill for services rendered, and a balance of

the client's funds left in the account, in violation of Mass. R.

Prof. C. 1.15 (d), as appearing in 440 Mass. 1338 (2004); (4)

authorized distributions that caused a negative balance in his

client trust account, in violation of Mass. R. Prof. C. 1.15 (f)

(1) (C), as appearing in 440 Mass. 1338 (2004); and (5) engaged

in conduct involving dishonesty, fraud, deceit, or

misrepresentation, in violation of Mass. R. Prof. C. 8.4 (c) and

(h), 426 Mass. 1429 (1998).

    The committee determined that the respondent's misconduct

included a "[k]nowing misuse of one client's funds for the

benefit of another," and recommended the respondent be

indefinitely suspended from the practice of law.     The board

adopted the committee's findings and recommendation, and an

information and record of proceedings was filed in the county

court.   After a hearing, the single justice issued an order

imposing a six-month suspension.

    Discussion.   There is no dispute that the respondent

violated multiple rules of professional conduct relating to the
                                                                      4

appropriate use and maintenance of client trust accounts.       The

disciplinary proceedings therefore focused on the allegation

that was in dispute and carried the most substantial sanction:

whether the respondent intentionally misused client funds, with

temporary deprivation resulting.    Our review of the factual

findings concerning this allegation is limited.    We uphold the

subsidiary facts found by the committee and adopted by the board

"if supported by substantial evidence, upon consideration of the

record, or such portions as may be cited by the parties."

S.J.C. Rule 4:01, § 8 (6), as appearing in 453 Mass. 1310

(2009).   "While we review the entire record and consider

whatever detracts from the weight of the board's conclusion, as

long as there is substantial evidence, we do not disturb the

board's finding, even if we would have come to a different

conclusion if considering the matter do novo."     Matter of Segal,

430 Mass. 359, 364 (1999).    See id., quoting G. L. c. 30A, § 1

("'Substantial evidence' means such evidence as a reasonable

mind might accept as adequate to support a conclusion'").       See

Matter of Slavitt, 449 Mass. 25, 30 (2007).    We give no special

deference to the determination of the single justice.     See

Matter of Tobin, 417 Mass. 81, 88 (1994).     See also Matter of

Karahalis, 429 Mass. 121, 123 (1999).

    1.    Facts as found by the committee and adopted by the

board.    According to the committee's findings, the respondent
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represented a client on a contingency fee basis in connection

with a personal injury claim.    With the client's authorization,

the respondent settled the claim for $5,000, and the client

signed a release in early December, 2012.    At the time, the

client asked the respondent for her share of the settlement in

cash because she would be traveling internationally, and

believed cashing a check would be difficult at her destination.

The respondent agreed.    It was not until about December 20,

2012, after the client had left on her trip, that the respondent

received two settlement checks from the defendant's insurer in

the personal injury claim:    one in the amount of $558.51,

representing the amount of a claimed lien for medical expenses,

payable to the lien claimant; and the other for the lien-free

balance of $4,441.49.    The respondent deposited the lien-free

settlement check into his client trust account and, the next

day, withdrew his fee of $ 1,666.67.    Before the deposit, the

respondent had a zero balance in that account, thus the entire

balance was due to the client.    The respondent failed to notify

the client that he had withdrawn his fee.    He also failed to

provide her a statement of the amount of the withdrawal or the

balance of her funds in the account, any explanatory statement,

or the amount due to her.

    Unrelated to the client, on December 28, 2012, the

respondent deposited an additional $800 in cash into his client
                                                                    6

trust account, raising its balance to $3,574.82.   On January 13,

2013, the respondent wrote a $3,400 check on the account for the

benefit of his father.   According to the respondent's bank

records, the balance of the account fell to $175.82 at a time

when the respondent was required to hold $2,774.82, for his

client.   After a check drawn on the account was dishonored for

insufficient funds, bar counsel was notified.   See Mass. R.

Prof. C. 1.15 (h), as appearing in 440 Mass. 1338 (2004).

     After approximately two weeks abroad, the client returned

to the United States in January, 2013.   The committee found

that, on her return, she "wanted as much of her money as the

respondent could give her lien-free as soon as he could give it;

she did not insist on payment in cash and she did not authorize

the respondent to hold the lien-free portion of the settlement

until the lien was resolved."   The committee did not credit the

respondent's testimony that, after her return, the client wanted

to delay receipt of the settlement funds until issues associated

with the $558.51 were resolved.3   On March 6, 2013, the

     3 We recognize that the single justice took a different view
of the evidence. Neither the single justice nor this court,
however, considers the findings of the Board of Bar Overseers
(board) de novo. See Matter of Segal, 430 Mass. 359, 364
(1999). The scope of our review is limited to ascertaining
whether there is substantial evidence to support the board's
findings. Id. The hearing committee (committee) found, and the
board accepted, that when the client returned to Massachusetts
after her trip, she wanted the proceeds of her settlement. She
                                                                   7

respondent paid the client the entire $2,774.82 due to her in

cash, as well as the $558.51 medical expense lien, also in cash,

and she signed a receipt.4

     The respondent claimed that he neither misused his client's

funds nor deprived her of their use.   Despite the client trust

account bank records to the contrary, he asserted that when he

deposited the settlement check in his trust account in December,

2012, he was holding cash in excess of that amount for the

benefit of another client, his father.5   He testified that, after

depositing the settlement check, he reserved an equivalent

amount in cash in an envelope on his desk that he "earmarked"

for his client based on her pre-trip request that she be paid in

did not insist on cash, which she previously requested because
of her impending trip, and she did not authorize the respondent
to retain all of the settlement funds until the medical lien was
resolved. The client testified that she did not know why she
had had to wait so long for the funds, and that she was
impatient. Although the respondent testified otherwise, the
committee was not required to credit his testimony.

     4 The respondent advised the client of his belief that the
lien was improper. He paid the client the amount of the lien,
$558.51, from his own funds, and the receipt signed by the
client indicated that the respondent was authorized to retain
any of the lien amount he thereafter recovered.

     5 The respondent claimed that the funds were part of a total
of $20,000 in cash that he had received from his father.
However, he deposited only $16,000 of that amount into his
client trust account, and the deposits were listed differently
on two separate sets of records he provided to bar counsel.
Neither of those records was consistent with bank records for
the same account.
                                                                     8

cash.    He explained that he then held the funds in the trust

account for his father's benefit.6   In addition, he claimed that

the client instructed him not to pay her any of the settlement

proceeds, until the question whether the lien was proper had

been resolved.    Not only did the committee decline to credit the

respondent's explanation, it also found that the respondent

provided bar counsel with "reconstructed records" to conceal his

misuse of the client's money for his father's benefit.     There

were also documents and other evidence that undermined the

respondent's version.

     The committee is "the sole judge of the credibility of the

testimony presented at the hearing."    Matter of Saab, 406 Mass.
315, 328 (1989), quoting S.J.C. Rule 4:01, § 8 (3), as appearing

in 381 Mass. 784 (1990).    It may decline to credit a witness's

testimony, provided it explains its reasoning and those reasons

are supported by the record.    See Herridge v. Board of

Registration in Med., 420 Mass. 154, 164-165 (1995), S.C., 424
Mass. 201 (1997).    The committee was not required to credit the

     6 In support of his explanation, the respondent offered
records of cash receipts and disbursements from his client trust
account, his father's testimony, the testimony of his client
concerning her desire to be paid in cash, and the fact that she
ultimately was paid in cash. The committee, however, found that
the respondent fabricated certain of the records to support his
claim. In one example, the committee noted that one record
ostensibly created in September, 2013, included transactions
from November, 2013.
                                                                    9

respondent's assertion that he held thousands of dollars in cash

for the client's benefit for several months.7   "[A]rguments

hinging on [credibility] determinations generally fall outside

the proper scope of our review," Matter of McBride, 449 Mass.
154, 161-162 (2007), and they will not be rejected unless it can

"be said with certainty that [a] finding was wholly inconsistent

with another implicit finding" (quotations and citation

omitted), Matter of Murray, 455 Mass. 872, 880 (2010).    This is

not such a case.   On the contrary, bank records established that

the respondent deposited the settlement check into the trust

account, and then promptly drew a check on those funds for the

benefit of his father.

     Even apart from the committee's credibility determinations,

there is substantial evidence to support the hearing committee's

findings that the respondent deposited settlement funds

belonging to the client into his client trust account, and then

     7 The committee expressly did not credit the respondent's
testimony that he held cash for the client in an envelope in his
office. We do not therefore consider whether a contrary finding
would have warranted a different result. See Matter of Murray,
455 Mass. 872, 873 (2010) (adopting rebuttable presumption of
intentional misuse with permanent deprivation, where respondent
received cash belonging to client, failed to deposit in client
trust account, and could not account for portion of it); Matter
of Gonick, 15 Mass. Att'y Discipline Rep. 230, 237, 239 (1999)
(misuse of client funds occurred when funds removed from trust
account and deposited into personal account). See also Matter
of Levy, Supreme Judicial Court, No. BD-2016-42, 5-6 (Aug. 26,
2016) (misuse of client funds found even though lawyer had
substantial funds in other accounts at same bank).
                                                                     10

intentionally misused them by writing a check on those funds for

the benefit of his father.     The delay in paying the client her

settlement funds, at least after the client returned from her

trip, supports the conclusion that she was temporarily deprived

of her funds.

     2.   Conduct of the hearing.    Before the single justice, the

respondent claimed that the committee improperly considered

evidence of uncharged misconduct without according him a fair

opportunity to defend against it.     After reviewing the record,

we reject the claim.     Proceedings before the board and its

hearing committee need not comply rigidly with the rules of

evidence and procedure that are applicable in court.     See Matter

of Dasent, 446 Mass. 1010, 1012 (2016).     Evidence introduced by

bar counsel for the purpose of impeaching the credibility of the

respondent and the respondent's witness, his father, and

evidence of his father's business practices -- including his

alleged reliance on cash transactions -- was relevant to the

credibility of the respondent's claim that he substituted cash

that he had held for his father for funds deposited in his

client trust account.8    The committee properly could consider

     8 Among other things, the respondent testified that he
received approximately $20,000 in cash from his father, which he
deposited in increments of $4,000 or $8,000 into his client
trust account. As the committee observed, his trust account
                                                                  11

this evidence in making credibility determinations and in

concluding that the respondent's explanation was not credible.9

See Matter of Barrett, 447 Mass. 453, 460 (2006).

     The respondent also claimed that bar counsel impermissibly

shifted the burden of proof to the respondent.   Although bar

counsel argued that the respondent and his father were not

testifying truthfully, there is nothing to the respondent's

claim that the assertions effectively shifted the burden to the

respondent to disprove bar counsel's allegations of professional

misconduct.   See Matter of London, 427 Mass. 477, 482 (1998).

Nor did the respondent object to bar counsel's opening

statement, which directly addressed the respondent's defense.

During closing argument, the respondent repeatedly pointed to

bar counsel's burden of proof, and emphasized that mere

disbelief of the respondent's testimony does not equate to

evidence of misconduct.   There was substantial and substantive

records did not list the cash deposits in a manner consistent
with the bank records.
     9 With respect to the respondent's claim that his due

process rights were violated by the committee's consideration of
certain misconduct not charged in the petition for discipline,
as the board's findings indicate, those matters could be "put to
one side" because "[t]he committee did not mention these matters
until it had announced its amply supported and articulated
findings and conclusions, and after it had determined that it
felt 'constrained' to apply the presumptions under [Matter of
Schoepfer, 426 Mass. 183, 187 (1997)]." In any event, we have
permitted uncharged misconduct to be considered in aggravation
of sanction. See Matter of the Discipline of an Attorney, 448
Mass. 819, 825 n.6 (2007).
                                                                   12

evidence to support the board's conclusions as to each element

of the charged misconduct.   See Matter of Balliro, 453 Mass. 75,

84 (2009).

    3.   Sanction.   Having concluded there was substantial

evidence of the charged misconduct, we turn to the question of

sanction.    As to that, we give deference to the board's

recommendation, and review the discipline imposed by the single

justice de novo, to determine whether it "is markedly disparate

from judgments in comparable cases."    Matter of Slavitt, 449
Mass. at 30, quoting Matter of Finn, 433 Mass. 418, 423 (2001).

See Matter of Greene, 476 Mass. 1006, 1008 (2016).

"Fundamentally, however, '[e]ach case must be decided on its own

merits and every offending attorney must receive the disposition

most appropriate in the circumstances.'"    Matter of Foley, 439
Mass. 324, 333 (2003), quoting Matter of the Discipline of an

Attorney, 392 Mass. 827, 837 (1984).

    Where, as here, an attorney has intentionally misused

client funds with the intent to deprive the client of those

funds, or where the client actually was deprived of the funds,

regardless of the attorney's intent, the presumptive sanction is

indefinite suspension or disbarment.    Matter of Schoepfer, 426
Mass. 183, 187 (1997).    We apply that presumption because "there

is minimal risk that an attorney's misuse of those funds will

arise from any confusion, misunderstanding, or ambiguity as to
                                                                    13

whether the funds belong to the client or the attorney."     Matter

of Sharif, 459 Mass. 558, 567-568 (2011).

    We have no difficulty concluding that the respondent

intentionally misused his client's funds:   the funds were

properly deposited into his client trust account, and then

improperly withdrawn for the benefit of another.    The committee

simply was not required to credit the respondent's assertion

that he kept thousands of dollars in cash in an envelope for

several months.   Although the respondent eventually delivered

the funds to the client, there is also no doubt that she was

temporarily deprived of their use.

    We agree with the single justice's observation that there

may be circumstances where there are "clear and convincing

reasons" to depart from the presumptive sanction.    See Matter of

Sharif, 459 Mass. at 566-567.   This is not, however, such a

case.   The board's findings establish that the respondent

intentionally -- not negligently -- misused client funds.    They

also establish that the client was deprived of the use of the

funds for a relatively short period.   But this is precisely the

circumstance for which Matter of Schoepfer, 426 Mass. at 187,

adopted a presumptive sanction of disbarment or indefinite

suspension.   Although the evidence consisted of misuse of a

single client's funds, and those funds were delivered to the

client within weeks or months of the settlement, attorneys are
                                                                  14

obliged to safeguard client funds regardless of the amount.

They may not treat client funds as fungible commodities, using

funds belonging to one client for the benefit of another, or

even for their own purposes.   We view the circumstances

presented as more egregious than those presented in Matter of

Sharif, 459 Mass. at 571 (three-year suspension for intentional

misuse of funds advanced for fees).   Compare Matter of Pudlo,

460 Mass. 400, 407-408 (2011) (one-year suspension for negligent

expenditure of unearned legal fees owed to client to pay his own

expenses, and related improprieties in record-keeping and

notification); Matter of Murray, 455 Mass. 872, 888 (2010) (six-

month suspension for misuse of client funds);10 Matter of Ryan,

24 Mass. Att'y Discipline Rep. 621, 631 (2008) (nine month

suspension for misconduct including charging excessive fee and

commingling and negligent misuse of client funds).

     10We recognize that bar counsel and respondents have
sometimes submitted stipulations concerning misconduct and
disciplinary recommendations. Those stipulations have sometimes
led to entry of lesser sanctions, generally in deference to the
board's recommendation. See, e.g., Matter of Cedrone, 30 Mass.
Att'y Discipline Rep. 55, 58 (2014) (suspension for term of one
year and one day for depositing client trust funds into
attorney's operating account, intentionally spending portion of
funds on matters unrelated to client, misconduct in three client
matters, and inadequate record-keeping). The fact that a
departure was made from the presumptive sanction in the
circumstances of those cases, however, does not require
imposition of a lesser sanction in this case.
                                                                  15

     We also view as significant the presence of aggravating

factors, and the absence of special factors in mitigation.      The

committee and the board weighed in aggravation that the

respondent engaged in multiple violations of the rules of

professional conduct, and that he used the disciplinary

violations concerning record-keeping to "conceal" his misuse of

client funds.    See Matter of Saab, 406 Mass. at 326-327.   There

also was evidence on which the board could conclude that the

respondent reconstructed records to hide his misuse of client

funds to benefit his father.   See Matter of Rickles, 30 Mass.

Att'y Discipline Rep. 340, 345 (2014) (disbarment where billing

records determined to have been altered to include additional

time entries).   Not only do we accept these factors in

aggravation, but we consider as well that the respondent

provided bar counsel with "falsified evidence," and displayed a

lack of candor by presenting false testimony and fabricated

account documents.   See Matter of Hoicka, 442 Mass. 1004, 1006

(2004).   Finally, we agree with the board that there were no

special factors to be considered in mitigation of sanction.11

See Matter of Alter, 389 Mass. 153, 157-158 (1983).

     11Although the respondent made a reference to a broken
ankle in his testimony, he neither raised the ankle as a
mitigating factor in his answer to the petition for discipline,
see Rules of the Board of Bar Overseers § 3.15, nor claimed that
it caused his delay in paying the settlement funds to the
                                                                   16

    Conclusion.   Considering all of the factors together, we

conclude that the board's recommendation that the respondent be

indefinitely suspended from the practice of law is consistent

with the disposition in similar cases.   Accordingly, we reverse

the order of term suspension and remand the matter to the county

court for entry of an order of indefinite suspension.   The

judgment of reinstatement shall be vacated as of the effective

date of the order of indefinite suspension.   Recognizing that

the respondent already has been suspended from the practice of

law for almost seven months pursuant to the order of term

suspension, the order of indefinite suspension shall permit the

respondent to petition for reinstatement no earlier than three

months prior to four years and five months from the effective

date of the order of indefinite suspension.   See S.J.C. Rule

4:01, § 18 (2) (b), as appearing in 453 Mass. 1315 (2009).

                                   So ordered.

client. He also failed to provide any medical records to
support the claim. See Matter of Patch, 466 Mass. 1016, 1018
(2013). The board properly declined to consider the injury in
mitigation of sanction. Likewise, the respondent's apparent
focus on his work in a yogurt shop is not properly weighed in
mitigation.