(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 September 9, 1997 -- Decided January 9, 1998
PER CURIAM
This is an attorney disciplinary case. Peter B. Silvia is an attorney who was admitted to practice in
1977. Following an investigation prompted by a grievance filed by attorney Warren Wilbur, III, the OAE
filed a complaint charging Silvia with violations of RPC 1.15(b) (failure to safeguard client funds) and RPC
8.4(c) (conduct involving dishonesty, fraud, deceit, and misrepresentation).
The complaint charged Silvia with misappropriating trust fund disbursements made for the benefit
and support of his wife's cousin, Allen C. Graveley. The charges included an allegation that Graveley was
incompetent and, therefore, unable to handle the trust funds on his own. Silvia denied throughout the
proceedings that Graveley was incompetent. Moreover, he claimed that he did not have an attorney-client
relationship with Graveley.
The trust accounts created for Graveley's support were administered by out-of-state banks. As early
as l983, the trust fund income was sent to Silvia for Graveley's benefit. Around the same time, and
purportedly at Graveley's request, Silvia established a joint checking account in both their names into which
Graveley's trust fund checks were deposited. Between June 1990 and February 1992 alone, the banks had
sent Graveley checks in excess of $90,000.
Graveley required a great deal of assistance in his day-to-day life, which was initially provided by his
uncle. However, when his uncle became too old, Silvia began caring for Graveley. According to Silvia, he
and Graveley had a verbal agreement that Silvia was to pay himself $500 per week for services to Graveley
and that, if he needed additional funds, he could take them with Graveley's permission.
Graveley was admitted to Briarleaf Nursing and Convalescent Home (“Briarleaf”) in December
1990. At the time, he was in the end stage of renal disease and had a history of psychiatric disorders from
alcohol abuse. The records also indicated that he had been committed to psychiatric hospitals as a teen.
When Gravely was admitted to Briarleaf, Silvia signed the agreement of admission form as the “responsible
party” for Graveley, thus requiring him to promptly pay Briarleaf for any services incurred by Graveley that
were not otherwise covered by insurance. During his stay at Briarleaf, which ended on Graveley's death in
February 1992, Silvia's payments for Graveley's care were always in arrears. Briarleaf's attorney, Wilbur,
contacted Silvia on several occasions attempting to recover payment for Graveley's outstanding bills. During
their conversations, Silvia repeatedly represented himself to Wilbur as Graveley's attorney and further
advised that Graveley had insufficient funds to pay the bills.
Finally, Wilbur notified Silvia that he intended to sue him personally on the arrearages, prompting Silvia to again insist that he merely represented Graveley and had no personal liability for the outstanding bills. When Wilbur requested information from Silvia regarding Graveley's estate, Silvia wrote to him indicating that Graveley had a balance of only $7 in his checking account, attaching only the last page of the joint checking account statement. On receiving that information, Wilbur obtained copies of statements from July l990 to July 1992, showing that deposits in the amount of $117,747.64 had been made. During that same time, Silvia had written checks to himself in the amount of $58,350; had written and endorsed a number of checks to cash, totaling $15,560; and had written checks to his father-in-law (Graveley's uncle) amounting to $2,000. Two of the checks had been written on the date of Graveley's death -- one to Silvia in the amount
of $10,000, which he claimed was a gift Graveley had wished to make to Silvia's wife, and one to Silvia's
father-in-law in the amount of $1,100. Silvia deposited the $10,000 check in an account other than the one
he shared jointly with his wife.
In respect of the checks made out to cash, Silvia testified that he had cashed them and turned the
funds over to Graveley, a fact disputed by Briarleaf staff. He further maintained that he had disbursed some
of the cash to Graveley's mother and some to himself to reimburse himself for expenditures made in
Graveley's behalf.
The banks had not learned of Graveley's death until six months after the fact and then from a
relative other than Silvia. A stop payment order was placed on the checks sent to Silvia during that period
and those amounts credited back to the trusts. Silvia conceded that the remainder of the funds in the trust
would pass to the other side of the family and not to his wife and her relatives.
The Special Master found that Silvia did not have the authority to withdraw funds from an account
containing Graveley's trust fund income and found that Silvia had thus knowingly misappropriated those
funds. The DRB sustained the Special Master's findings and voted to disbar him.
The Supreme Court issued an order to show cause why Silvia should not be disbarred or otherwise
disciplined .
HELD: Silvia's knowing misappropriation of funds from a family member incapable of self care by a
lawyer-relative entrusted with the safekeeping of those funds for the family member's benefit constitutes a
flagrant abdication of the lawyer's professional responsibilities, and warrants nothing short of disbarment.
1. Misappropriation is the “unauthorized use by the lawyer of client's funds entrusted to him, including not
only stealing, but also unauthorized temporary use for the lawyer's own purpose, whether or not he derives
any personal gain or benefit therefrom.” (p. 10)
2. The evidence clearly and convincingly establishes that Silvia held himself out to others as Graveley's
attorney and that there was an attorney-client relationship between Silvia and Graveley. (p. 11)
3. The evidence demonstrated that Graveley lacked the capacity to make a binding oral agreement, and that
Silvia knew that Graveley lacked that capacity. (pp. 11-12)
4. There is no persuasive evidence that Graveley authorized Silvia to withdraw funds. Even if Graveley had
authorized those withdrawals, Silvia was aware of his history of psychiatric illness and knew that Graveley
was incompetent to authorize him to pay himself exorbitant fees while performing virtually no services. (p.
12)
5. Silvia's conversion to his own purposes of funds entrusted to him by a relative with diminished capacity;
his payment to himself of $500 per week even though he had admittedly ceased performing services for
Graveley; and his misrepresentation to Briarleaf of the amount of money available to satisfy the outstanding
bills constitute dishonest and deceitful acts, in violation of RPC 8.4(c).
It is ORDERED that Silvia 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-
31 September Term 1997
IN THE MATTER OF
PETER B. SILVIA,
An Attorney at Law.
Argued September 9, 1997 -- Decided January 9, 1998
On an Order to show cause why respondent
should not be disbarred or otherwise
disciplined.
Nitza I. Blasini, Deputy Ethics Counsel,
argued the cause on behalf of the Office of
Attorney Ethics.
Peter B. Silvia argued the cause pro se.
This matter arises from a grievance filed with the District XIV Ethics Committee by Warren Wilbur III, Esq., against respondent, Peter B. Silvia. The Office of Attorney Ethics (OAE) filed a complaint charging respondent with violations of RPC 1.15(b) (failure to safeguard client funds) and RPC 8.4(c) (conduct involving dishonesty, fraud, deceit, and misrepresentation). The complaint charged respondent with knowingly misappropriating trust fund disbursements for the benefit of his wife's cousin, Allen C. Graveley.
The Special Master found that respondent had an attorney-client relationship with Graveley, and that he knowingly
misappropriated funds entrusted to him in the course of that
attorney-client relationship. The Special Master observed that
even if respondent was not acting as Graveley's attorney he knew
that Graveley was physically and psychologically ill and
completely dependent on respondent to handle his financial
affairs. The Special Master determined that respondent had a
fiduciary obligation to handle Graveley's finances with the care
he would have used in handling the finances of a client or an
unrelated third-party.
The Special Master found that respondent did not have
authority to withdraw funds from an account containing
Graveley's trust fund income. The Special Master noted that,
even if Graveley had authorized respondent's withdrawals,
respondent knew that Graveley lacked the capacity to do so. The
Special Master found that respondent's conduct constituted
knowing use of client funds without authorization in violation of
RPC 1.15(b), and dishonesty, deceit, and misrepresentation in
violation of RPC 8.4(c).
The Disciplinary Review Board (DRB) sustained the Special
Master's finding that respondent's conduct constituted a knowing
misappropriation of Graveley's funds in violation of RPC 1.15(b)
and RPC 8.4(c), and a majority of the DRB voted to disbar
respondent.
Based on our independent review of the record, we are
persuaded that the evidence clearly and convincingly establishes
that respondent knowingly misappropriated funds from Graveley.
The four trust accounts created for Graveley's support were administered by the Crestar Bank and the Riggs National Bank, both in Washington, D.C. The record does not disclose the precise date when Graveley first began receiving income from those trusts, although, beginning at least as early as 1983, the trust fund income was sent to respondent for Graveley's benefit. Presumably around the same time, and purportedly at Graveley's
request, Graveley and respondent established a joint checking account at the Midlantic National Bank into which Graveley's trust fund checks were deposited. From June 1990 to February 1992 the Crestar and Riggs banks sent Graveley checks totaling in excess of $90,000.
The decision of the DRB summarized the relevant evidence as
follows:
Graveley was admitted to the Briarleaf
Nursing and Convalescent Home (“Briarleaf”) in
Doylestown, Pennsylvania, in December 1990. At
the time he was forty-one years old. He died
at Briarleaf on February 24, 1992. Respondent
signed the Briarleaf agreement of admission
form as the “responsible party” for Graveley.
In this capacity, respondent was required to
promptly pay Briarleaf for any services
incurred by Graveley that were not otherwise
covered by alternate forms of insurance. . . .
. . . .
The admission form and discharge summary
indicated that Graveley was in the “end stage
of renal disease” and had a history of
psychiatric disorders from alcohol abuse. The
discharge form also indicated that Graveley was
suffering from schizophrenia. [F]or unknown
durations, Graveley had been committed to both
Marlboro Psychiatric Hospital in the 1980s and
Greystone Psychiatric Hospital as a teen.
. . . .
Graveley required a great deal of assistance
in his day-to-day life. Initially, Graveley's
uncle provide[d] the assistance. When the uncle
became too old, respondent began caring for
Graveley. According to respondent, he and
Graveley had a verbal agreement [entered into
while Graveley was living independently and
prior to Graveley's admission to Briarleaf]
that respondent was to pay himself $500 per week
for services to Graveley and that, if respondent
needed additional funds, he could take them,
albeit only with Graveley's permission.
The grievant in this matter, Warren
Wilbur, was the attorney for Briarleaf.
Wilbur testified that respondent's payments
to Briarleaf for Graveley's care were always
in arrears. As Briarleaf's attorney, Wilbur
contacted respondent on numerous occasions in
an attempt to recover payment for Graveley's
outstanding nursing home bills. Over the
course of several months, he spoke to
respondent approximately six to ten times
and sent respondent several letters.
During these conversations, respondent
represented himself as Graveley's attorney
and repeatedly informed Wilbur that Graveley
had insufficient funds to pay the bills.
Respondent never disclosed to Wilbur the
existence of the trusts of which Graveley was
a beneficiary.
Subsequently, Wilbur notified respondent
that he intended to sue respondent personally
for the arrearages. According to Wilbur,
[respondent's] vehement answer to me
was that he had always represented
Allen Graveley in the capacity of his
attorney, that he had no personal
liability whatsoever from this bill,
ad infinitum. He kept playing that
role, he was always Allen Graveley's
attorney and he didn't have any
personal liability.
. . . .
Wilbur sent a letter to respondent
requesting information about Graveley's
estate, including all information about
his assets. Respondent replied on his
attorney letterhead, indicating that there
was a balance of $7 in Graveley's checking
account. Respondent attached only the last
page of the bank statement for the account
at Midlantic National Bank in the name of
“Allen Clark Graveley, Jr. or Peter B.
Silvia.” Respondent also furnished
information about Graveley's trusts and
their locations.
Upon receiving that information, Wilbur
began an investigation and obtained copies of
all deposits, checks (front and back) and bank
statements from July 1990 to July 1992. Wilbur
determined that, during that time period,
deposits in the amount of $117,747.64 had been
made, primarily from Graveley's trust
funds . . . . During that same time, respondent
had written checks to himself in the amount of
$58,350 and had written and endorsed a number
of checks to cash, totaling $15,560. Eleven
miscellaneous checks to physicians amounted to
$5,317.64. Finally, [Charles] Bingham,
Graveley's uncle (respondent's wife's father),
received a check for approximately $2,000.
Checks to Briarleaf totaled $37,087.55 and
several other payments were made to the
provider of Graveley's dialysis. Two checks
were written on the date Graveley died, one
for $10,000 made payable to respondent and
the other to Bingham for $1,100.
Wilbur also received a photocopy of a
November 18, 1983 letter, purportedly written
by Graveley to one of the banks that
administered two of the trusts. The letter
indicated that Graveley's “inheritance” was
to be sent to respondent, his “lawyer.”
. . . .
[T]he OAE conducted an investigation of
respondent's actions. A demand audit letter
was sent to respondent on August 3, 1993
requesting, among other things, the production
of all bank statements, canceled checks, check
stubs, deposit tickets and correspondence
pertaining to accounts held jointly in
respondent's and Graveley's names and any
accounts held in trust for Graveley.
OAE Chief of Investigations Gerald Smith
testified at the ethics hearing. According
to Smith, respondent claimed that he had no
records pertaining to Graveley because he
had destroyed them all once Graveley died.
Respondent also contended that there was no
attorney/client relationship between himself
and Graveley . . . . Respondent asserted
that, although Graveley's gross motor skills
were poor, he was certainly competent.
Respondent admitted, though, that Graveley
had bizarre mannerisms.
As to the checks drawn on the joint
account, respondent claimed that he had
cashed the checks made out to “cash” and that
he had turned over the monies to Graveley.
At the ethics hearing, however, respondent
claimed that, after the demand audit, he spoke
to some relatives and recalled that a portion
of the cash had also been distributed to
Graveley's mother, who was confined to another
nursing home and, to Bingham to reimburse him
for expenditures made in Graveley's behalf.
Respondent also asserted that, each time he
visited Graveley, he gave him large amounts
of cash, usually about $200. Respondent added
that, on occasion, he would also mail money to
Graveley. Respondent testified that he never
inquired why Graveley needed such large sums
of money.
Respondent also testified that the $500
checks he had written to himself were
remuneration for services rendered to
Graveley. No documents, however, supported
such a contention, nor was such an arrangement
ever memorialized. According to Smith,
respondent claimed that Graveley had
expressed his desire that respondent's wife
be given a gift of $10,000. Respondent,
therefore, drafted a check to himself in
that amount on the day Graveley passed away.
Smith performed an accounting of the
joint bank account from December 1990 to
February 1992 and concluded that while
Graveley was at Briarleaf, respondent wrote
checks to cash in the amount of $12,150 and
to himself for $45,300. Smith's review of
respondent's attorney trust and business
accounts also revealed that respondent failed
to comply with R. 1:21-6.
During the OAE audit, respondent claimed
that he visited Graveley at Briarleaf
approximately once every week, that he always
entered the nursing home through the loading
dock and, therefore, never signed into the
facility, never ran into any nursing home
personnel and never spoke to any of the
personnel.
A number of Briarleaf personnel testified
at the ethics hearing [and] [t]heir collective
testimony painted a picture of Graveley as an
unkempt individual with poor motor skills,
poor vision, violent episodes, mood swings,
and, on occasion, animalistic mannerisms,
including barking like a dog. The consensus
was that Graveley was incapable of living on
his own or managing his own affairs; he could
be calm one moment and shouting and throwing
things the next.
. . . .
Briarleaf employees testified that they
had never seen [respondent] at the facility.
One of the witnesses suggested that it would
have been impossible for respondent to visit
Graveley once a week for fourteen months and
never run into any staff, particularly since
the employees were constantly in and out of
the residents' rooms . . . . The employees
recalled that Graveley's only visitors were
Graveley's acquaintances from Alcoholics
Anonymous and Graveley's uncle. Finally,
none of the employees had ever seen more
than a few dollars in Graveley's possession.
Similarly, the woman in charge of opening the
residents' mail did not recall that anyone
had ever mailed cash to Graveley.
. . . .
Respondent testified that Graveley was
not incompetent. He admitted, however, that
while Graveley lived on his own, he “needed
everything done for him.” Respondent claimed
that he had “put his life on hold” by taking
care of Graveley's day-to-day necessities.
For example, respondent disclosed that he did
Graveley's laundry, walked his dog, cleaned
his apartment, installed his air conditioner,
took out his trash, took him to Alcoholics
Anonymous meetings and essentially did anything
and everything that Graveley wanted.
Respondent asserted that those tasks were not
the type of services rendered in connection
with an attorney/client relationship.
. . . .
As to the $10,000 check written on the
date Graveley died, respondent claimed that
he had Graveley's permission to issue it.
Respondent contended that Graveley had wanted
to make a gift to respondent's wife, who was
Graveley's cousin. Respondent denied being
aware that Graveley died on the same date,
even though he knew that Graveley was near
death. Respondent testified that he had made
the check out to himself, rather than to his
wife, and then cashed it. He stated that he
deposited the check in an account other than
the joint account he shared with his wife.
Although respondent's wife claimed that she
was aware that Graveley had wished to give
her a gift, it was not clear from the record
that she knew the amount of the gift or when
or where it had been deposited.
With regard to the $1,100 check made out
to Bingham on that same date, respondent
maintained that, while he did not know of
Graveley's death on that day, the check might
have been intended to reimburse his father-in-
law for the expense of Graveley's cremation or
for other expenses. Bingham passed away before
the ethics hearing.
Respondent contended that he failed to
notify the banks of Graveley's death because
he had trouble coping with the death.
Eventually, the Crestar Bank learned of
Graveley's death through another relative.
A letter from a Crestar Bank trust officer
about Graveley's estate indicated that the
bank had not learned of the death until
September 1992, more than six months after
his death. The bank, therefore, was required
to make a demand for the return of the checks
it had issued in July and October for the two
trusts it administered for Graveley. A stop
payment order was placed on the checks, which
had already been mailed to respondent, and
the amounts were credited back to the trusts.
Respondent conceded that the remainder of the
funds in the trust would pass to the Clark-
Ginsberg line of heirs (possibly Graveley's
stepmother and her family), not the Bingham
line. Respondent also admitted that he knew
that, if Graveley had been declared
incompetent, he might not have been appointed
to handle Graveley's funds. Presumably,
respondent was referring to the fact that he
was not Graveley's next-of-kin.
Our independent review of the record leads us to concur with
the DRB's findings of fact and with its conclusion that
disbarment is the appropriate discipline.
Respondent contends that he never held himself out as an attorney representing Graveley. Further, he argues that the tasks he had performed for Graveley were not characteristic of work ordinarily performed by attorneys: “Attorneys don't walk dogs, attorneys don't pick up people, attorneys don't buy clothes for him when he's in the nursing home, attorneys don't be liaisons, attorneys don't do lots of things like this.”
The DRB concluded that respondent consistently described himself as Graveley's attorney. The DRB based that conclusion on Wilbur's testimony that respondent repeatedly told Wilbur that he was Graveley's attorney and therefore had no personal liability for Graveley's nursing home bills. The DRB also relied on a letter from Graveley himself, instructing the banks to send checks from his trusts to respondent, his lawyer. Additionally, the DRB relied on letters from the banks to respondent in his capacity as Graveley's attorney. The evidence clearly and convincingly establishes that respondent held himself out to
others as Graveley's attorney and that there was an attorney-client relationship between respondent and Graveley.
Respondent does not contest the evidence demonstrating that he
wrote checks from Graveley's trust funds to himself in the amount
of $58,350 and endorsed a number of checks payable to cash
totaling $15,560. Respondent contends, however, that he was
authorized by Graveley to write the checks to cash and to
himself. He asserts that Graveley insisted on paying respondent
$500 weekly, but that after Graveley entered Briarcliff there
were no “relationships or job duties ascribed to this money paid
to me.” Additionally, he argues that Graveley was not
incompetent, although respondent admitted that Graveley was
incapable of caring for himself.
Graveley had a history of psychiatric problems and had spent
periods of time in psychiatric institutions. Briarleaf employees
and Graveley's treating physician testified that Graveley engaged
in unusual behavior and was not competent to manage his affairs.
They testified that Graveley swore, screamed, and frequently
exhibited bizarre behavioral traits. Graveley's treating
physician testified that Graveley was unable to make reasonable
decisions and could therefore be easily victimized by others.
Relying on this evidence, the Special Master found, and the DRB
agreed, that Graveley lacked the capacity to make a binding oral
agreement, and that respondent knew that Graveley lacked that
capacity.
We find no reason to disturb that finding. There is no
persuasive evidence that Graveley authorized respondent to
withdraw funds. Even if Graveley had authorized those
withdrawals, respondent was aware of Graveley's history of
psychiatric illness and bizarre behavior, and knew that Graveley
was incompetent to authorize respondent to pay himself exorbitant
fees while performing virtually no services.
In addition to finding that respondent had misappropriated
client funds, the Special Master found that respondent's conduct
involved dishonesty, fraud, deceit, and misrepresentation in
violation of RPC 8.4(c). “Respondent's conversion to his own
purposes of funds entrusted to him by a relative with diminished
capacity is itself a deceitful act.” In addition, respondent
continued to pay himself $500 per week even though he had
admittedly ceased performing services for Graveley. Moreover,
Briarleaf bills were overdue and respondent misrepresented the
amount of money available to pay those bills. As a result,
Graveley had to forgo medical and psychiatric treatment and
placement in a private room. Finally, although respondent
claimed that Graveley wanted to give a gift to respondent's wife,
on the day Graveley died respondent wrote a $10,000 check to
himself and deposited it in an account to which his wife had no
access.
The DRB found respondent's conduct similar to the
“hoodwinking of helpless clients” that this Court condemned in In
re Wolk,
82 N.J. 326, 335 (1980). We agree with the Special
Master and the DRB that such conduct constitutes dishonest and
deceitful acts in violation of RPC 8.4(c).
We cannot avoid the conclusion that respondent knowingly
misappropriated substantial amounts from Graveley's trust funds.
Not only was Graveley a client, he was also a family member who
trusted respondent to tend to his financial affairs because he
was physically and mentally incapable of doing so himself.
Knowing misappropriation of funds from a family member incapable
of self care by a lawyer-relative entrusted with the safekeeping
of those funds for the family member's benefit constitutes a
flagrant abdication of the lawyer's professional
responsibilities. No discipline short of disbarment is
justified.
Respondent is disbarred. He is to reimburse the
Disciplinary Oversight Committee for appropriate administrative
costs.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK,
O'HERN, GARIBALDI, STEIN and COLEMAN join in the Court's opinion.
NO. D-31 SEPTEMBER TERM 1997
Application for
Disposition Disbar
Decided January 9, 1998
Order returnable
Opinion by PER CURIAM