(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 20, 1997 -- Decided December 5, 1997
PER CURIAM
Lewis B. Freimark was admitted to the bar of New Jersey in 1980. His law office is in West Caldwell.
A random compliance audit of his attorney records conducted by the Office of Attorney Ethics (OAE) disclosed
multiple record-keeping problems. A proctor was appointed to supervise Freimark's practice. The proctor was
given exclusive check-signing authority over Freimark's attorney accounts.
A Special Master heard the ethics complaints filed against Freimark. The Master recommended to the
Disciplinary Review Board (DRB) that Freimark be disciplined for knowing misappropriation of client funds and
for his failure to notify the OAE that he had been disciplined as an attorney in New York. The DRB
recommended to the Court that Freimark be disbarred for knowing misappropriation of client funds.
The ethics complaints against Freimark involved clients Arlene Snyder, Amanda Alongi, George P. Caso,
Felipe Leon, and Eleanor Markov. The Court found repeated instances in which Freimark improperly disbursed
funds to himself from his trust account. Funds from one client were used to replenish funds for another client.
Freimark's explanations for the improper withdrawals included negligent record-keeping, unrecorded
"loans" that were allegedly repaid through use of the client funds, and an attempt to "protect" the funds of one
client by removing some of them from his trust account. All of Freimark's explanations were not found to be
credible by the DRB or the Court.
HELD: In the light of respondent's knowing misappropriation of client funds, he must be disbarred.
1. Because the Court determined that Freimark should be disbarred for knowing misappropriation, it did not
consider the count that dealt with Freimark's failure to notify the OAE of the imposition of discipline on him
by New York. (pp. 15-16)
2. In re Wilson states that a misappropriation of client funds must be "knowing" to warrant disbarment of an
attorney. That standard must be met by clear and convincing evidence. (pp. 16-17)
3. Although respondent is correct that shoddy record-keeping alone will not result in a Wilson disbarment, this
case goes well beyond poor record-keeping. The record discloses a pattern--on depositing settlement proceeds
into his trust account, respondent would advance sums to himself, thereby depleting that client's account.
Subsequently, respondent replenished that client's account by invading trust funds received on behalf of other
clients in unrelated matters. (pp.17-19)
4. Respondent's claim that no client was injured because all of the money was paid back does not exempt him
from the application of Wilson. Even when a lawyer "borrows" trust funds without permission, disbarment must
follow. (pp. 19-20)
It is ORDERED that respondent be DISBARRED from the practice of law.
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-
75 September Term 1997
IN THE MATTER OF
LEWIS B. FREIMARK,
An Attorney at Law.
Argued October 20, 1997 -- Decided December 5, 1997
On an Order to show cause why respondent
should not be disbarred or otherwise
disciplined.
Lee A. Gronikowski, Deputy Ethics Counsel,
argued the cause on behalf of the Office of
Attorney Ethics.
Kimberly A. Hintze argued the cause for
respondent.
PER CURIAM
This disciplinary proceeding results from a random
compliance audit of the trust funds of respondent, Lewis B.
Freimark, by the Office of Attorney Ethics (OAE) pursuant to Rule
1:21-6(c). As a result of the findings of that audit, the OAE
conducted a demand audit. The audits covered the period between
April 30, 1990 through May 31, 1992. The audits disclosed, among
other things, that respondent kept no client ledgers, that there
was no reconciliation of respondent's trust account bank
statements with a schedule of client balances, and that
respondent had been out of trust numerous times.
The OAE moved for respondent's temporary suspension, which
the Court denied. We, however, ordered that a proctor be
appointed to supervise respondent's practice and gave the proctor
exclusive check-signing authority over respondent's attorney
accounts.
A Special Master recommended to the Disciplinary Review
Board (DRB) that respondent be publicly disciplined for four
counts of knowing misappropriation and one count of failure to
notify the OAE of discipline imposed by the New York disciplinary
authorities.
Respondent does not dispute that he misappropriated client
funds, but asserts that the OAE failed to prove by clear and
convincing evidence that he misappropriated those funds
knowingly. Instead, respondent contends that the evidence
establishes only that the misappropriations arose from his
negligence, specifically from his deplorable and shoddy
recordkeeping. The DRB unanimously disagreed and recommended
respondent's disbarment. Our review of the record leads us to
conclude by clear and convincing evidence that respondent
misappropriated clients' funds knowingly.
I can say that this check here was written to
me. There's a reference that it was for Dr.
Viscounti. Beyond that, I don't know. And
this check was deposited into one of my
accounts.
According to respondent, he was not even able to
ascertain the amount of Dr. Viscounti's bill or how it
was paid because of the poor records contained in the
Snyder file. Respondent added that he did not keep a
ledger card for the Snyder file. Respondent denied
that he intentionally issued a check for $1,500 to Dr.
Viscounti only after he had another client's funds
deposited in his trust account, namely the DesReis
funds. Respondent argued that he had made a
mathematical error in the calculation of the amount
payable to Snyder from the property settlement claim.
In short, respondent contended, his actions in the
Snyder matter were unmarked by any knowledge or intent
to misuse trust funds and, therefore, not a knowing
misappropriation.
From a settlement of $8,750, respondent made checks totaling
$10,883.24, of which he deposited 4,800 into his personal
checking account. Those facts, combined with the minimal
activity in respondent's account following his deposit of $200 to
cover the overdraft, and respondent's deposit of another client's
funds just prior to the final withdrawal to pay Dr. Viscounti,
convince us that respondent knowingly misappropriated trust funds
in connection with the Snyder case. His actions constitute
violations of RPC 1.15 (knowing misappropriation of trust funds),
and RPC 8.4(c) (dishonesty, fraud, deceit or misrepresentation).
In its decision, the DRB found knowing misappropriation in
the Alongi matter:
[A]s the special master noted, even if Alongi
had given respondent authority to keep the
entire proceeds of the settlement for his
fees and advanced expenses, there is no
explanation for respondent's invasion of
other client funds to pay for respondent's
fees in Alongi. All in all, respondent kept
$8,100 for himself as fees ($3,500, $800,
$700, $2,000, $300, $400 and $400). He could
not reasonably have expected to be entitled
to $8,100 against a $7,000 settlement. The
only explanation respondent offered was that
he believed that there were enough funds in
the Alongi account to cover the withdrawals
and that he was unaware of the account
balance because of poor records. Such
alleged belief was against reason, however.
Again, basic arithmetic had to make
respondent aware that he was improperly
overdisbursing funds for his personal
benefit. Here, too, the evidence against
respondent is so overwhelming as to support a
finding of knowing misappropriation on his
part by clear and convincing evidence.
Based on our de novo review of the record, we agree and find
that respondent violated RPC 1.15 (knowing misappropriation
of funds), and RPC 8.4(c) (dishonesty, fraud, deceit or
misrepresentation).
The DRB found that respondent's defenses and claims of
innocence in the Caso matter also strained credulity. It
observed:
Respondent received $1,700 on behalf of Caso
on August 14, 1990. On August 22 and 24,
1990, respondent issued two checks to himself
for $500 and $1,400 respectively. These
disbursements totaled $1,900, against a
$1,700 settlement. Respondent had to know
that he was invading other client funds to
the tune of $200, even if his claim that he
was unaware of the balance in his trust
account is to be believed. Regardless of
whether respondent had a sufficient or
insufficient balance in the trust account
before he received the $1,700, he could not
have reasonably believed that he had enough
funds in the Caso account to support a
disbursement of $1,900. That belief could
not have been reasonable because the
settlement amounted to $1,700 and respondent
made the $1,900 withdrawal only ten days
after the $1,700 deposit. Not much time had
elapsed to erase respondent's memory of the
amount of the settlement.
There is another very serious aspect of respondent's
handling of Caso funds. There is no evidence in the record that
Caso authorized respondent to borrow $1,400 from the settlement
proceeds. The letter from Caso that respondent introduced in
evidence to establish such authority is silent about a loan.
We conclude that respondent was not authorized to borrow
$1,400 from the Caso account and that his disbursement to himself
of $1,900 against a $1,700 settlement resulted in a knowing
misappropriation of clients' funds. Again, as in the Snyder and
Alongi matters, respondent violated RPC 1.15 and RPC 8.4(c).
Later in the argument, Mr. Freimark was asked:
You seemed to imply earlier though that you
had knowingly used one client's funds to pay
or make up another client's account. Did you
say that?
MR. FREIMARK: During the course of the
summer, yes, because Miss
Markov was calling me from
Croatia and she was very
urgent about this and again, I
represented her family in
Hoboken for a number of years.
And Mr. Leon was likewise
urgent, so, yes, I would say
yes in that regard. I think,
Justices, that you also in
making your decision might
keep in mind, my practice does
not involve a lot of trust
account activity. Maybe I
botched up the handling of the
funds with regard to the
disbursements.
Accepting respondent's explanation, he has clearly admitted
the invasion of one client's funds for another client. We do not
find, however, respondent's explanations of the Leon-Markov
matters to be credible. No financial records substantiate his
claims that he withdrew Mrs. Markov's money to protect it. He
never offered any explanation as to why the checks were payable
to him and were either cashed or deposited in his personal
account.
We find that the $21,000 shortage in respondent's trust
account is attributable to the eight checks respondent issued to
himself between May 4, 1993 and April 18, 1993, in amounts
ranging from $500 to $9,000. Those funds were used for
respondent's own personal benefit. Respondent in the Leon-Markov
count violated RPC 1.15, RPC 8.4(c) and R. 1:21-6 (failure to
maintain required records).
[In re Noonan,
102 N.J. 157, 160 (1986)
(emphasis added).]
We have insisted, however, that proof of misappropriation, by
itself, is not sufficient to result in disbarment. There must be
clear and convincing evidence that an attorney knowingly
misappropriated his or her client's funds. In re Barlow,
140 N.J. 191, 196 (1995).
Respondent is correct that we have held that shoddy
recordkeeping alone does not suffice for a finding of knowing
misappropriation. In re Konopka,
126 N.J. 225, 228 (1991); In re
Librizzi,
117 N.J. 481, 491-92 (1990); and In re Gallo,
117 N.J. 365, 373 (1989). In In re Fleischer,
102 N.J. 440, 447 (1986),
however, we held that although poor accounting does not establish
a knowing misappropriation, poor accounting is not a Wilson
defense if evidence indicates knowing misappropriation. See
also In re Skevin,
104 N.J. 476, 486 (1986), cert. denied, 481
U.S. 1028,
107 S. Ct. 1954,
95 L. Ed.2d 526 (1987)(holding
that a knowing misappropriation may be established by evidence
[that] clearly and convincingly demonstrates that [respondent]
knew the invasion was a likely result of his conduct and that
`willful blindness satisfies [the] requirement of knowledge')
(citations omitted); In re Irizzary,
141 N.J. 189, 194 (1995)
([W]illfully blind respondent who `is aware of the highly
probable existence of a material fact but does not satisfy
himself that it does not in fact exist,' is as culpable as the
respondent who knowingly misappropriates. At a minimum,
respondent was willfully blind.) (quoting In re Skevin)., supra,
104 N.J. at 486).
This case is similar to In re Warhaftig,
106 N.J. 529
(1987). There the respondent had suffered a decline in business
at the same time he incurred large medical expenses for his wife
and son. He, therefore, began prematurely to withdraw predicted
fees from funds received for pending real estate deals. He kept
meticulous records of all the withdrawn fees and replaced them
prior to discovery. No clients were injured. Although he did
not feel he was stealing, we found that he had knowingly
misappropriated clients' funds. We have consistently held that
a lawyer's subjective intent, whether it be to `borrow' or to
steal, is irrelevant to the determination of the appropriate
discipline in a misappropriation case. Id. at 533 (citations
omitted).
In this case, the evidence discloses a pattern that
respondent, on depositing settlement proceeds into his trust
fund, would advance sums to himself, thereby depleting that
client's account. Subsequently, he replenished that client's
account by invading trust funds received for other clients in
unrelated matters. Reviewing respondent's conduct in the most
favorable light, respondent borrowed from one client's trust
fund, used those funds for his own purpose, and then borrowed
money from another client's trust fund to repay the first client.
In mitigation, respondent asserts that no one was injured by
his actions and that all his clients received the full amount of
money to which they were entitled. In In re Wilson, however,
supra, 81 N.J. at 455, we held that even when the lawyer
borrows without permission rather than steals, we have
invariably imposed disbarment. Misappropriation includ[es] not
only stealing, but also unauthorized temporary use for the
lawyer's own purpose, whether or not he derives any personal gain
benefit or benefit therefrom. Id. at 455 n.1.
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.
Respondent further alleges in mitigation that, due to the illness
of his wife who had maintained his files and books and the
illness of his father, he was unable to maintain the books and
records associated with his practice. He also notes that he
fully cooperated with the OAE. Those factors are insufficient to
warrant any departure from the Wilson rule. In re Noonan, supra,
102 N.J. Super. at 160.
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 this PER CURIAM opinion.
SUPREME COURT OF NEW JERSEY
D-
75 September Term 1997
IN THE MATTER OF :
LEWIS B. FREIMARK, : O R D E R
AN ATTORNEY AT LAW :
It is ORDERED that LEWIS B. FREIMARK of WEST CALDWELL, who
was admitted to the bar of this State in 1980, be disbarred and
that his name be stricken from the roll of attorneys of this
State, effective immediately; and it is further
ORDERED that LEWIS B. FREIMARK 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 LEWIS B. FREIMARK,
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 LEWIS B. FREIMARK comply with Rule 1:20-20
dealing with disbarred attorneys; and it is further
ORDERED that LEWIS B. FREIMARK reimburse the Disciplinary
Oversight Committee for appropriate administrative costs.
WITNESS, the Honorable Deborah T. Poritz, Chief Justice, at
Trenton, this 5th day of December, 1997.
CLERK OF THE SUPREME COURT
NO. D-75 SEPTEMBER TERM 1996
Application for
Disposition Disbar
Decided December 5, 1997
Order returnable
Opinion by PER CURIAM