(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that,
in the interests of brevity, portions of any opinion may not have been summarized).
Argued October 6, 1997 -- Decided December 12, 1997
PER CURIAM
Larry Blumenstyk is an attorney with a law office in Morristown. He was admitted to the bar in 1977.
In September 1995, he was the subject of a random compliance audit by the Office of Attorney Ethics (OAE).
The preliminary report indicated that Blumenstyk had knowingly misappropriated client funds between December
1994 and June 1995. A demand audit confirmed the first findings and a formal ethics complaint issued. The
District Ethics Committee and the Disciplinary Review Board concluded that Blumenstyk had knowingly
misappropriated client funds and recommended disbarment.
Blumenstyk was charged with improperly removing money from the trust accounts of clients Donald
Cresitello and Edith Messler. The Cresitello matter was a real estate transaction; the Messler matter was a
personal injury action. A total of $85,412.55 was involved.
Blumenstyk cites the fact that he borrowed the funds only temporarily and his restitution of the funds
as mitigating factors. He explained that he had made financial commitments with the expectation that he would
receive, in March 1994, approximately $100,000 from a family trust fund established by his parents. The
commitments related to personal expenses, including a family vacation to Israel in December 1994 (approximately
$15,000), his son's Bar Mitzvah in April 1995 (approximately $30,000), and tax payments to the IRS in April 1995
($21,199). The anticipated distribution did not occur until June 1995. On June 9, 1995, approximately three
months before he was notified that he would the subject of a random compliance audit, Blumenstyk deposited
$100,046.99 of his personal funds into his attorney trust account, thereby fully restoring the amounts that he had
improperly withdrawn.
The Supreme Court Ordered Blumenstyk to show cause why he should not be disbarred or otherwise
disciplined.
HELD: Respondent's knowing misappropriation of client funds requires his disbarment. Neither respondent's
prior unblemished record as an attorney nor the fact that he replaced the funds taken before he was the subject
of a random compliance audit can serve as a mitigating factor that would preclude the imposition of disbarment.
1. Although Blumenstyk's restitution of the client funds prior to being notified that he was the subject of a
random compliance audit indicates that he did intend only to "borrow" the funds temporarily, restitution does
not alter the character of a knowing misappropriation of client funds. (pp. 5-6)
2. Prior cases of the Court have made it clear that an attorney's intent or motives are irrelevant when client
funds are knowingly misused. Similarly, an attorney's unblemished prior record cannot serve as a mitigating
factor to lessen the enormity of a knowing misappropriation. (pp. 6-7)
It is ORDERED that respondent be disbarred from the practice of law, effective immediately.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN,
and COLEMAN join in the Court's opinion.
SUPREME COURT OF NEW JERSEY
D-
68 September Term 1997
IN THE MATTER OF
LARRY BLUMENSTYK,
An Attorney at Law.
Argued October 6, 1997 -- Decided December 12, 1997
On an Order to show cause why respondent
should not be disbarred or otherwise
disciplined.
Thomas J. McCormick, Assistant Ethics
Counsel, argued the cause on behalf of the
Office of Attorney Ethics.
Donald R. Belsole argued the cause for
respondent (Belsole and Kurnos, attorneys;
Mr. Belsole and Janemary S. Belsole, on the
brief).
PER CURIAM
This attorney-disciplinary case is before the Court based on
the decision of the Disciplinary Review Board (DRB or Board)
recommending the disbarment of respondent, Larry Blumenstyk. In
1995, the Office of Attorney Ethics (OAE) notified respondent
that he would be the subject of a random compliance audit of his
attorney books and records. The OAE's preliminary report based
on that audit concluded that respondent had knowingly
misappropriated trust funds belonging to two clients. The
results of a later demand audit confirmed that conclusion. The
complaint brought by the OAE and filed with the District X Ethics
Committee (DEC) charged respondent with knowing misappropriation
of client funds, in violation of RPC 1.15 (failure to safeguard
client funds) and RPC 8.4(c) (conduct involving dishonesty,
deceit or misrepresentation). The DRB and the DEC both
determined that between December 1994 and June 1995 respondent
knowingly misappropriated a total of $85,412.55See footnote 1 of trust funds
belonging to two clients. The DRB found that respondent used
the misappropriated funds primarily for personal expenses.
Upon a de novo review of the record, the Court is satisfied by clear and convincing evidence that respondent was guilty of unethical conduct involving the knowing misappropriation of clients' funds in violation of RPC 1.15 and RPC 8.4(c).
The facts, as recapitulated by the DRB, disclose that respondent, who was admitted to the New Jersey bar in 1977 and is engaged in the practice of law in Morristown, Morris County, misappropriated from the trust account of a client Donald Cresitello, viz:
Respondent represented Donald Cresitello in a real estate matter. On December 2, 1994, respondent deposited into his trust account $65,000 received from Cresitello. The entire
$65,000 should have been held intact from the
date of deposit until January 27, 1995, when
respondent paid the funds over to the proper
recipient. However, on December 19, 1994 and
January 16, 1995, respondent invaded client
trust funds held in behalf of Cresitello, in
the amounts of $10,000 and $5,412.55,
respectively. Respondent did not have his
client's authorization to withdraw the funds.
The facts further reveal knowing misappropriation of trust
funds belonging to another client, Edith Messler, viz:
Respondent represented Edith Messler in a
personal injury matter. The case settled for
$115,000. On November 1, 1994, January 17,
1995 and March 3, 1995, deposits totaling
that amount were made to respondent's trust
account. Messler was entitled to receive
$76,237.65 of the total deposited.
Accordingly, the $76,237.65 should have
remained on deposit in respondent's trust
account until respondent released the funds
on June 15, 1995. (The delay in disbursing
the funds to Messler was not respondent's
fault). However, between November 3, 1994
and May 3, 1995, respondent drew ten checks
payable to himself, totaling $95,412.55.
Respondent was entitled to a legal fee of
$25,412.55 for the Messler matter.
Therefore, he utilized $70,000 ($95,412.55
minus $25,412.55) of the Messler funds for
his own purposes. Respondent did not have
his client's authorization to withdraw the
funds. Respondent misappropriated the
following amounts from Messler on the
following days:
January 27,1995 $ 4,587.45
February 7, 1995 $ 5,412.55
March 20, 1995 $ 5,000.00
April 24, 1995 $30,000.00
April 28, 1995 $10,000.00
May 3, 1995 $15,000.00
Noting that respondent was well aware of the state of his attorney trust and business accounts during the time period in question, the DRB found that respondent's misappropriations were
knowing. Thus, as respondent stated, "I knew what I was doing
when I was taking the Messler money. It is hard to think back on
what a bizarre thing I did. But I certainly -- I wrote the check
with my hand and I knew. I hated it and I did it all the same
time." The DRB further concluded that on several occasions
respondent transferred misappropriated funds from his trust
account to his business account to avoid overdrafts in the
business account and that respondent's records revealed that he
had taken loans from family members.
Respondent cites the fact that he borrowed the funds only
temporarily and his restitution of the funds as mitigating
factors.
We are fully cognizant, as was the DRB, of respondent's
explanation for his misconduct. He stated that he had made
financial commitments with the expectation that he would receive,
in March 1994, a distribution from personal trust funds
established by his parents in the amount of approximately
$100,000. He used the funds to defray personal expenses solely
for his own convenience, including a family vacation to Israel in
December 1994 (approximately $15,000), his son's Bar Mitzvah in
April 1995 (approximately $30,000), and tax payments to the
Internal Revenue Service in April 1995 ($21,199). Because of his
parents' physical and marital difficulties, the anticipated
distribution was not made until June 1995. On June 9, 1995,
almost three months before he was notified that he would be the
subject of a random audit, respondent deposited $100,046.99 of
his personal funds into the trust account, and thereby fully
restored the amounts that had been improperly withdrawn from the
respective accounts. Respondent stated that although he could
have borrowed the money he needed from other sources, he chose
not to do so because he could not bring himself to discuss his
finances with his wife or parents. Respondent acknowledges that
he now realizes that not telling his wife about his finances was
"absolutely stupid."
Respondent relies on In re Noonan,
102 N.J. 157 (1986), and
In re Gallo,
117 N.J. 365 (1989), as a basis for more lenient
discipline. In both Noonan and Gallo, however, the Court
determined that the misappropriations were negligent, rather than
knowing. Clearly, that is not the case here, where respondent
admitted that he knowingly misappropriated his clients' funds.
Respondent's restitution of the funds prior to notification
of the random audit of his records indicates that he did intend
only to "borrow" funds in the sense that he planned to use the
funds for his own purposes only temporarily before restoring
them. Nevertheless, restitution does not alter the character of
knowing misappropriation and misuse of clients' funds.
Intent to deprive permanently a client of
[his or her] funds . . . is not an element of
knowing misappropriation. Nor is the intent
to repay funds or otherwise make restitution
a defense to the charge of knowing
misappropriation. A lawyer who uses funds,
knowing that the funds belong to a client and
that the client has not given permission to
invade them, is guilty of knowing
misappropriation. The sanction is disbarment.
[In re Barlow,
140 N.J. 191, 198-99
(1995).]
See also In re Freimark, __ N.J. __, __ (1997) (slip op. at 19-20) (disbarring attorney for knowingly "borrowing" client funds).
The restitution of misappropriated funds does not alter or
obscure the fact that
[w]hen restitution is used to support the
contention that the lawyer intended to
"borrow" rather than steal, it simply cloaks
the mistaken premise that the unauthorized
use of clients' funds is excusable when
accompanied by an intent to return them. The
act is no less a crime. Lawyers who "borrow"
may, it is true, be less culpable than those
who had no intent to repay, but the
difference is negligible in this connection.
[In re Wilson,
81 N.J. 451, 458
(1979) (citation omitted).]
Respondent apparently contends that his motives in using the
funds were not nefarious because he sought merely to use these
funds only temporarily for his own convenience. He maintains
that his motives should militate against the gravity of the
misappropriation. But in Noonan, supra, the Court underscored
the irrelevance of an attorney's intent and motives:
It makes no difference whether the money is
used for a good purpose or a bad purpose, for
the benefit of the lawyer or for the benefit
of others, or whether the lawyer intended to
return the money when he took it, or whether
in fact he ultimately did reimburse the
client; nor does it matter that the pressures
on the lawyer to take the money were great or
minimal. The essence of Wilson is that the
relative moral quality of the act, measured
by these many circumstances that may surround
both it and the attorney's state of mind, is
irrelevant: it is the mere act of taking
your client's money knowing that you have no
authority to do so that requires disbarment.
The misuse of clients' money as a matter of convenience to
defray personal expenses, such as for a vacation and a party,
does not ameliorate the ethical misconduct. Family financial
pressures cannot excuse an attorney's ethical dereliction. See
In re Warhaftig,
106 N.J. 529, 534-36 (1987); In re Lennan,
102 N.J. 518, 524-25 (1986).
Respondent also cites his unblemished record as a mitigating
factor. The Court has made it clear that a satisfactory or
distinguished career does not lessen the enormity of the knowing
misappropriation of a client's funds:
The inexperience or, conversely, the prior
outstanding career, of the lawyer, often
considered a mitigating factor in
disciplinary matters, seems less important to
us where misappropriation is involved. This
offense against common honesty should be
clear even to the youngest; and to
distinguished practitioners, its grievousness
should be even clearer.
Respondent also asserts generally that he was
psychologically disabled. We note, however, he offered neither
expert testimony nor documentary evidence indicating or
supporting a psychological or mental disability sufficient to
overcome the knowing and voluntary nature of the
misappropriation. See In re Jacob,
95 N.J. 132, 137 (1984).
We determine that respondent's knowing misappropriation
violated RPC 1.15 and RPC 8.4(c). We conclude, as we stated in
Wilson, supra, 81 N.J. at 453, that "disbarment is the only
appropriate discipline" for knowing misappropriation of client
funds. We, therefore, disbar respondent. Respondent shall
reimburse the Disciplinary Oversight Committee for the
appropriate administrative costs.
So ordered.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN,
GARIBALDI, STEIN, and COLEMAN join in the Court's opinion.
SUPREME COURT OF NEW JERSEY
D-
68 September Term 1997
IN THE MATTER OF :
LARRY BLUMENSTYK, : O R D E R
AN ATTORNEY AT LAW :
It is ORDERED that LARRY BLUMENSTYK of MORRISTOWN, who was
admitted to the bar of this State in 1977, be disbarred and that
his name be stricken from the roll of attorneys of this State,
effective immediately; and it is further
ORDERED that LARRY BLUMENSTYK be and hereby is permanently
restrained and enjoined from practicing law; and it is further
ORDERED that all funds, if any, currently existing in any
New Jersey financial institution maintained by LARRY BLUMENSTYK,
pursuant to Rule 1:21-6, be restrained from disbursement except
upon application to this Court, for good cause shown, and shall
be transferred by the financial institution to the Clerk of the
Superior Court who is directed to deposit the funds in the
Superior Court Trust Fund, pending further Order of this Court;
and it is further
ORDERED that LARRY BLUMENSTYK comply with Rule 1:20-20
dealing with disbarred attorneys; and it is further
ORDERED that LARRY BLUMENSTYK reimburse the Disciplinary
Oversight Committee for appropriate administrative costs.
WITNESS, the Honorable Deborah T. Poritz, Chief Justice, at
Trenton, this 12th day of December, 1997.
/s/ Stephen W. Townsend
CLERK OF THE SUPREME COURT
Footnote: 1 Respondent disputed the total amount of the misappropriation to the extent that it counts twice the funds taken on January 27, 1995, and February 7, 1995, from the account of one client to reimburse the account of the other client.