(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 February 28, 1995 -- Decided July 21, 1995
PER CURIAM
Ramon Irizarry issued a check to the Clients' Security Fund, now known as the Lawyers' Fund for
Client Protection, that was returned for insufficient funds. As a result, the Office of Attorney Ethics (OAE)
scheduled a select audit of Irizarry's books. The audit took place from January 1989 through May 1990. The
OAE auditor discovered a shortage of over $37,000 in Irizarry's trust account. Irizarry was directed by the
auditor to close the existing trust account and open a new one. Contrary to the OAE's instructions, Irizarry
continued to use the old trust account not only to issue checks to others, but also to pay himself fees, thereby
exacerbating the deficiency.
Irizarry had received numerous bank statements revealing that his trust account was overdrawn. At
the time of the select audit, the ledger cards for several clients showed debit balances. Irizarry had deposited
personal funds into the trust account on several occasions.
One case exemplifies Irizarry's unethical conduct. He represented Zoilo and Maria Maldonado in
connection with their purchase of real estate. Irizarry received $55,420.10 from his clients and deposited this
amount into his old trust account. The closing, held on April 14, 1989, proceeded routinely. Irizarry issued a
$45,987.51 trust account check, dated April 27, 1989 and made payable to Citicorp Mortgage, to pay off the
first mortgage. The check was presented for payment on July 12, 1989, and was returned for insufficient
funds. When presented again on July 19, 1989, the check was again returned for insufficient funds.
On July 17, 1990, Irizarry was temporarily suspended from the practice of law by the Supreme Court.
With his consent, he has remained under suspension.
The District XIV Ethics Committee (DEC) charged Irizarry with knowing misappropriation of client
funds; gross neglect; and lack of diligence. A Special Master recommended public discipline. The
Disciplinary Review Board (DRB) recommended disbarment.
HELD: The record clearly and convincingly establishes that Ramon A. Irizarry knowingly misappropriated
client funds. Therefore, Irizarry is disbarred from the practice of law.
1. Although the record reveals constant deficiencies in Irizarry's trust account, the Maldonado matter
suffices to establish his guilt of knowing misappropriation. By issuing trust account checks to himself,
Irizarry knowingly invaded the Maldonado trust funds. (pp. 3-4)
2. An attorney's duty to preserve client funds is nondelegable. Lawyers may not absolve themselves of
misappropriation of client funds by delegating to employees the authority to complete signed checks and then
failing to supervise those employees. (pp. 5-6)
3. There is no basis for a remand for further proceedings before the Special Master. (p. 7)
So Ordered.
JUSTICE O'HERN, dissenting, in which JUSTICE STEIN joins, is of the view that the record shows
blatant record-keeping violations but that a finding of knowing misappropriation cannot be sustained by clear
and convincing evidence.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, GARIBALDI and COLEMAN
join in this opinion. JUSTICE O'HERN filed a separate dissenting opinion in which JUSTICE STEIN
joins.
SUPREME COURT OF NEW JERSEY
D-
19 September Term 1994
IN THE MATTER OF
RAMON A. IRIZARRY,
An Attorney at Law.
Argued February 28, 1995 -- Decided July 21, 1995
On an Order to show cause why respondent
should not be disbarred or otherwise
disciplined.
John J. Janasie, Deputy Ethics Counsel,
argued the cause on behalf of Office of
Attorney Ethics.
Theodore W. Daunno and Ramon A. Irizarry,
pro se, argued the cause for respondent
(Mr. Daunno, attorney).
PER CURIAM
The District XIV Ethics Committee (DEC) charged respondent
with knowing misappropriation of client funds, RPC 1.15 and
8.4(c); gross neglect, RPC 1.1(a); and lack of diligence, RPC
1.3. The Special Master recommended public discipline, and the
Disciplinary Review Board (DRB) recommended disbarment. We agree
that the record clearly and convincingly establishes that
respondent knowingly misappropriated client funds. Accordingly,
we adopt the recommendation of the DRB and order that respondent
be disbarred.
Respondent first came to the attention of the Office of Attorney Ethics (OAE) when respondent's check to the Clients' Security Fund, now known as the Lawyers' Fund for Client Protection, was returned for insufficient funds. The OAE naturally scheduled a select audit of respondent's books. A field auditor with the OAE conducted the initial audit on January 27, 1989. The OAE conducted subsequent audits ending in May 1990. On July 17, 1990, we temporarily suspended respondent. With his consent, respondent has remained under suspension to date.
Respondent admits that when the auditor arrived for the
initial audit, respondent's office was in chaos. The auditor
found severe deficiencies and irregularities in respondent's
records. More significantly, after constructing a tentative
balance of respondent's books, the auditor discovered a shortage
of $37,465.31 in respondent's trust account. He directed
respondent to close the existing trust account and open a new
one. Although respondent disputes that the auditor directed him
to close the account, both the Special Master and DRB rejected
respondent's testimony and accepted that of the auditor.
Moreover, respondent does not dispute that he knew that the
deficit existed.
Nor could he. Respondent had received numerous bank statements revealing that his trust account was overdrawn. At
the time of the select audit, the ledger cards for several
clients showed debit balances totaling $12,982.94.
In addition, respondent deposited personal funds into the
trust account on several occasions. To respondent's credit, the
deposits reflect an attempt to bring the account into balance.
The deposits also evince, however, respondent's knowledge of the
trust account deficit.
Contrary to the OAE's instructions, respondent continued to
use the old trust account not only to draw checks to other
drawees, but also to pay himself fees, thereby exacerbating the
deficiency. From February 3 through July 28, 1989, respondent
drew trust account checks to himself totaling more than $32,000.
Although the record reveals constant deficiencies in
respondent's trust account, one matter, respondent's
representation of Zoilo and Maria Maldonado, suffices to
establish that respondent is guilty of knowing misappropriation.
Respondent represented the Maldonados in connection with their
purchase of certain real estate from Ramon and Tirsa Martin.
Respondent received $55,420.10 from his clients and deposited
this sum into his old trust account. The closing, held on April
14, 1989, proceeded routinely.
Respondent issued a $45,987.51 trust account check, dated April 27, 1989, and made payable to Citicorp Mortgage, to pay off the first mortgage. The record does not reveal the date on which
respondent forwarded the check to Citicorp. The check was
presented for payment, however, on July 12. It was returned
unpaid because of insufficient funds. When presented on July 19,
1989, the check was again returned for insufficient funds.
Although respondent subsequently deposited personal funds
into the account, he never deposited enough to pay principal,
interest, and penalty charges due Citicorp. Ultimately, the
title company satisfied the mortgage. By issuing trust account
checks to himself, respondent knowingly invaded the Maldonado's
trust funds. He is guilty of knowing misappropriation.
"We have consistently maintained 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." In re Warhaftig, 106 N.J. 529, 533 (1987); In re Noonan, 102 N.J. 157, 160 (1986). 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 or benefit therefrom." In re Wilson, 81 N.J. 451, 455 n.1 (1979). The record clearly and convincingly establishes that respondent issued trust account checks to himself knowing that he was out of trust and that he was invading trust funds.
Respondent seeks to exculpate himself by stating that he relied on his bookkeeper and office staff. He asserts that he habitually signed trust account checks in blank and left them
with office personnel to complete. He attributes the misuse of
trust funds in the Maldonado matter, and indeed all of his
troubles, to high employee turnover, his medical problems, and
extensive travel to his law office in Puerto Rico.
An attorney's duty to preserve clients' funds, however, is
nondelegable. Lawyers may not absolve themselves of the
misappropriation of client funds by delegating to employees the
authority to complete signed checks and then failing to supervise
those employees. "The intentional and purposeful avoidance of
knowing what is going on in one's trust account will not be
deemed a shield against proof of what would otherwise be a
`knowing misappropriation.'" In re Johnson,
105 N.J. 249, 260
(1987); see also In re Davis,
127 N.J. 118, 130 (1992)
(misappropriations occurring after respondent had been placed on
notice about egregious bookkeeping practices constituted knowing
misappropriation or were product of "willful" ignorance).
In re Skevin, 104 N.J. 476 (1986), cert. denied, 481 U.S. 1028, 107 S. Ct. 1954, 95 L. Ed.2d 526 (1987), is particularly instructive on this issue. Like respondent, Skevin denied that he had knowingly misused funds. Skevin asserted that he had deposited in his trust account almost $1,000,000 in personal funds, a sum that he thought was sufficient to cover personal withdrawals. Id. at 483. He did not maintain a running balance of his own funds in the account. He simply assumed sufficient funds existed for the disbursements. Id. at 485. We reasoned that "each such [disbursement] posed an at least realistic
likelihood of invading the accounts of another client since
respondent had no way of knowing what the balances were." Ibid.
We held that "willful blindness satisfies [the] requirement of
knowledge . . . ." Id. at 486 (citation omitted). In so
holding, we stated 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 . . . ." Ibid.
A willfully 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," ibid., is as culpable as
the respondent who knowingly misappropriates. At a minimum,
respondent was willfully blind. As we stated in Wilson, supra,
"disbarment is the only appropriate discipline [for knowing
misappropriation of client funds]." 81 N.J. at 453.
Throughout these proceedings court-appointed pro bono counsel
has represented respondent. Respondent's counsel cross-examined
the OAE's auditor and argued before both the DRB and this Court.
Respondent has moved to remand the case for further
proceedings before the Special Master. We find no basis for a
remand. The Special Master, the DRB, and this Court have already
considered the dispositive issues.
We hereby order that respondent be disbarred. He shall
reimburse the Ethics Financial Committee for appropriate
administrative costs, including the costs of transcripts.
Chief Justice Wilentz and Justices Handler, Pollock,
Garibaldi and Coleman join in this opinion. Justice O'Hern filed
a separate dissenting opinion in which Justice Stein joins.
SUPREME COURT OF NEW JERSEY
D-
19 September Term 1994
IN THE MATTER OF
RAMON A. IRIZARRY,
An Attorney at Law.
O'HERN, J., dissenting.
The Court accepts the analysis of the Disciplinary Review
Board (DRB) that premises respondent's disbarment on three
predicates: (1) his payment of fees to himself out of a trust
account that he had been advised to close, (2) his misuse of
mortgage closing proceeds in connection with the Maldonado/Martin
closing, and (3) his willful ignorance of record-keeping
requirements tantamount to a knowing misuse of client funds.
Because the record does not establish by the requisite standard
of clear and convincing evidence that such conduct established a
knowing misappropriation of client funds, In re Wilson,
81 N.J. 451 (1979), I must dissent.
On January 27, 1989, Chris McKay, a field auditor for the
Office of Attorney Ethics (OAE), appeared at respondent's office.
Respondent maintained a busy practice in cramped quarters above a
luncheonette in Newark. His office was roughly fifteen feet by
twenty feet. Behind it was a smaller room where his financial
records were laid out on a table. When McKay arrived,
respondent's wife was posting entries into the ledger cards.
McKay received "a stack of client ledger cards. There were two
boxes full of bank statements for the trust and the business
account and they were loosely folded over, one-write journal
sheets, which is basically the checkbook register for a one-write
system. It's a carbon system." Respondent had previously
engaged Matthew Azares, a certified public accountant, and was in
the process of converting his books from a manual system to a
computerized system. He planned to put the data into the "Libra"
system, a computerized system of bookkeeping designed in
consultation with the OAE. The work was incomplete. McKay said:
"To be honest with you, there were people coming in and out
throughout the whole first day of the audit there. There did
seem to be some confusion. There's no doubt about that."
McKay constructed a tentative balance of respondent's books.
He did that by examining the client ledger cards and comparing
them with the bank balances and the check register. By the
afternoon of January 27, 1989, McKay had established that
balance. He concluded that respondent's books were "short over
$37,000." Ironically, $30,000.00 of the deficit was accounted
for by a ledger card indicating that it represented respondent's
own funds. The explanation for that card is somewhat unclear and
unsatisfactory, but as near as can be determined, respondent
maintained that amount in his account as a "float" to guard
against any possible shortages.
The problem with accepting the OAE's analysis of a deficit is
that it assumes the existence of a good bookkeeping system: that
when trust account checks were issued, corresponding debits would
have been made on the ledger cards. Respondent had been using a
"one-write system." Under that system of carbons, a ledger card
is to be inserted manually under the checkbook and entries are to
be made automatically in a running ledger, on the client ledger
card, and on the check. There is no evidence, however, that that
occurred here. In fact, at the time of the audit in January
1989, respondent's account had not been reconciled since December
1987.
McKay described the scene of the audit:
I was provided with some legal pad, much like
it was prepared and written and torn off that
were in several statements, but I don't know
for certain that the numbers that were
written on those pieces of legal paper were
prepared just for the day I was there or
prepared prior to it. In other words, even
if--I recall three or four different months
having that yellow paper, but I don't know if
that was again began before the
[accountant's] engagement letters * * * .
He explained that he "was trying to get bits and pieces of
information from all the individuals," and he asked them for
various documents. Based on his analysis, McKay concluded that
"[t]here [were] more [funds] on client cards than the bank
balance showed as of November."
A critical exchange between McKay and respondent followed.
McKay testified that he had instructed respondent to close his
old trust account and to open immediately a new Libra trust
account. Respondent characterized the conversation differently.
He thought that initially he had to get his books in order so
that the question of deficits could be straightened out. As
noted, one of the negative balances in the trust account
represented $30,000.00 of respondent's money. Therefore,
respondent believed, on the basis of McKay's tentative analysis,
that the maximum shortfall in the account was $7,000.00.
Following McKay's departure from respondent's office, follow-up
correspondence was sent to respondent by the head auditor of the
OAE, Samuel Gerard. That letter contained no reference to the
closing of the trust account but made formal demands on
respondent. Respondent was to provide records requested
previously, and "bank statements and cancelled checks for the
attorney business account for the two years preceding January 31,
1989 * * *."
A period of protracted exchanges followed. Occasionally,
Azares submitted data to McKay but it never fully satisfied the
OAE. Therefore, the OAE moved for the immediate temporary
suspension of respondent for failure to reconcile his trust
accounts properly. Further, the OAE feared that respondent's
continued activity would endanger clients' trust funds. We
entered an order of temporary suspension on July 20, 1990.
Subsequently, the OAE filed a formal complaint against
respondent. The matter was referred to a Special Master for the
district-level hearing. There are three crucial allegations in
the complaint that are the predicates for the conclusion of the
Special Master and the DRB that respondent is guilty of knowing
misappropriation. The OAE summarized the charges in the brief it
submitted to this Court:
The Board, as well as the Special
Master, has found the respondent guilty of
knowing misappropriation of client trust
funds because of [1] his regular payment of
"fees" to himself out of a trust account that
he knew was already short, as well as [2] his
knowing misappropriation of the Maldonado
[closing] funds. * * * Furthermore, during
the time period in question, respondent
deposited almost $88,000 into the trust
account trying unsuccessfully to cover
shortages. * * *
Additionally, the Board unanimously recommends the respondent's disbarment for [3] his "willful ignorance" of his record
keeping practices, and reckless approach to
the sanctity of his client trust funds citing
In re Skevin,
104 N.J. 476 (1986) and In re
Davis,
127 N.J. 118 (1992). Even when
advised by McKay of the serious trust account
shortages, respondent did not even bother to
look at his bank statements to see what he
had on deposit, but continued to
misappropriate.
The first two charges are detailed in paragraphs eleven and
twelve of the formal ethics complaint. Paragraph eleven alleges
that "[d]uring the period of February through August 1989,
despite respondent's receipt of overdraft notices and McKay's
advice alerting respondent to the shortage in his attorney trust
account, respondent knowingly aggravated the shortage by issuing
himself * * * twenty-seven checks, totaling in excess of
$34,000." Paragraph twelve of the complaint alleges that
on April 17, 1989, while representing Zoilo
and Maria Maldonado, [respondent] deposited
into his shorted attorney trust account
$69,095.60 during a real estate transaction.
These funds were earmarked, in part, to
satisfy an existing mortgage in the name of
Ramon and Tirsa Martin, herein "Martin
mortgage", on the property purchased by the
Maldonados.
That mortgage, held by Citicorp Mortgage, Inc. (Citicorp), had a
balance at closing of $45,987.51. On April 27, 1989, respondent
issued an attorney trust account check in the amount of
$45,987.51 to Citicorp to satisfy the mortgage. That check,
however, was returned for insufficient funds on July 12, 1989.
The check was presented for payment again on July 19, 1989, but
again it was returned.
With respect to the withdrawal of approximately $34,000.00 in
attorney's fees from the trust account, respondent explained that
that sum represented either retainers that he had received to
perform legal services, or fees that he had earned in connection
with other client matters. In no case have we ever disbarred an
attorney who withdrew fees from properly deposited settlement
checks. However, in In re Skevin,
104 N.J. 476, 485 (1986), an
attorney was disbarred due to his advance withdrawal of fees.
Here, McKay acknowledged that there was "nothing wrong" with
Irizarry's withdrawal of properly documented fees or retainers.
McKay said, in response to questioning that attorneys often
deposited retainers in their trust accounts:
Q. [SPECIAL MASTER]: Assuming that
you want to advance costs against
any type of transaction, why would
you put the money in your trust
account?
A. MCKAY: It was at some point it was
very common to utilize the trust
account to advance costs. Before a
lot of the restrictions came in.
Q. [SPECIAL MASTER]: And that was
many attorneys would do that?
A. MCKAY: Especially senior
practitioners. They lean towards
it more heavily.
Respondent testified that he believed that he could not satisfy
the retainer without drawing on the funds. Respondent's counsel
questioned McKay:
Q. [W]hat was wrong with the $34,000.00
that Mr. Irizarry took out of [the
trust] account?
A. Aside from realizing that the trust
account was in maybe in a negative way,
setting that aside, nothing.
Q. And we didn't even know it was in a
negative way?
A. No. That's why I said it's only according to his records, that nothing should be done until his
people--until Matt Azares [the CPA]
could determine whether or not
there were balances or don't take
funds out unless it's going to a
client and you are certain and then
the funds can be from one trust
account to another.
Q. In fact, you used that language a
little earlier. You said don't
take anything out of there unless
you are absolutely certain on that
individual. Is that correct?
A. That's correct.
Q. So again, as you just said, there's
nothing wrong [with] what he did,
except for the fact you said
there's a possibility of him being
short or not short?
A. That's correct.
Because McKay's information was derived largely from data
furnished by respondent, whether those were earned fees does not
appear to have been definitively resolved. When answering a
question about whether respondent was entitled to those fees,
McKay explained:
That was hard to determine, because if
you review the checks, only a couple of them
have notations for the cases that they were
on behalf of. The rest were issued without
any notation. And again this goes over to
where Matt Azares did some work and he was
instructed to apply those fees to specific
cases. So at the time of the review when I
picked up those checks, I could not be told
accurately which matter they were on behalf
of. That was determined at a later point.
The documentation Azares submitted to the OAE suggests that the amounts withdrawn represented fees or costs to which respondent was entitled. The complaint, however, lists the checks totaling $34,242.00, which "aggravated the shortage" in
the trust account. The reconciled accounts submitted by Azares
show some of his explanations:
Check # Date Amount Azares Explanation
1152 2/9/89 $1,000.00 Earned fee on Juan Torres
matters. More than
$118,000.00 transaction; total
fees $3700.00.
1160 2/16/89 $1,200.00 Earned fee on Rafael
Tavarez matters. Total
transaction approximately
$37,000.00; total fees
$3050.00.
1265 6/15/89 $1,200.00 Earned fee on Eddy Davis
matters. A $55,000.00
transaction; total fees
approximately $3000.00.
1272 7/7/89 $ 300.00 Reimbursement for costs of
$300.00 attributable to
$12,300.00 negligence case of
Michael Rodriguez; fees
$4088.66.
While not among the items complained of, Angel Cruz' account
shows a personal injury award of $15,000.00 in May 1988, and a
fee of $2433.00, representing the balance of the total fee of
$4933.00. That money was collected in May 1989. Some of those
entries may have the flavor of after-the-fact reconciliations,
but on their face the accounts appear plausible.
With respect to the Martin/Maldonado mortgage, the record
does not establish why the check issued on April 27, 1989, was
not presented for payment until July 12, 1989. At that time
there were insufficient funds in respondent's trust account to
cover that check. The check was presented again for payment on
July 19, 1989, but again the account was overdrawn. On August
31, 1989, respondent transferred his remaining attorney trust
account balance of approximately $17,000.00 into a new attorney
trust account that he had opened on May 8, 1989. That amount was
reserved for the Martin mortgage. Aware that the funds in that
account were insufficient to satisfy the Martin mortgage,
respondent borrowed funds and increased the balance to over
$46,000.00. On October 19, 1989, he issued his attorney trust
account check in the amount of $46,037.5l to Citicorp to satisfy
the Martin mortgage. Citicorp refused to accept the check
because interest had accrued.
A distressing series of missed communications ensued. The
bank insisted that respondent should deal only with its
attorneys. When respondent contacted the bank attorneys, he was
referred to a paralegal. The paralegal was too busy to return
his call. Things went from bad to worse. Believing that it was
no longer needed, respondent's staff returned the money that he
had borrowed. The mortgage went into default and ultimately the
title insurance company satisfied the mortgage. Respondent
acknowledged that he owed more than $52,000.00 to the title
insurance company for his neglect.
To explain those shortfalls, respondent points to a number of
deficiencies in his office procedures. Most notably, he
explained that he had found a duplicate payment of $25,000.00
made in connection with another house closing. Following McKay's
appearance, his office was in turmoil. His bookkeeper, Kelly Ann
Irizarry, became very ill and missed many days of work. His
computer expert, who was also the office manager, had an ulcer
that became aggravated. Despite those explanations, the DRB,
citing In re Skevin, supra,
104 N.J. 476, and In re Davis,
127 N.J. 118 (1992), recommended that respondent be disbarred for
"willful ignorance" of his record-keeping practices and a
reckless approach to the sanctity of his client trust fund.
This case, however, falls far short of the clarity of Skevin
or Davis. In Skevin, the attorney intentionally withdrew money
from existing trust funds anticipating a later receipt of funds
from settlements made but not yet collected. 104 N.J. at 477-81.
In Davis, there was clear and convincing evidence that the
respondent engaged in knowing misappropriation of client trust
funds. 127 N.J. at 120. Nor is this case similar to In re
Warhaftig,
106 N.J. 529 (1987), in which the attorney
systemically borrowed funds for his own personal use from client
trust accounts. Although a lawyer may not deliberately establish
a set of books so confused that client trust funds are
endangered, In re Johnson,
105 N.J. 249, 260 (1987); In re
Orlando,
104 N.J. 344, 350 (1986), respondent does not appear to
have undertaken such activity. He is not like the attorneys in
In re Fleischer,
102 N.J. 440 (1986), who deliberately
established a system whereby they could pay office expenses out
of their trust accounts.
Respondent appears to be more like the attorney in Johnson,
supra. In that case an attorney allegedly failed to carry out
contracts of employment, kept retainers without performing
services therefor, commingled clients' trust funds, failed to
account to his clients, and demonstrated a pattern of neglect in
handling clients' legal matters. The OAE sought the disbarment
of that attorney, and the DRB recommended a three-year
suspension. We accepted the DRB's recommendation. 105 N.J. at
251. We said:
The OAE contends that respondent "had to
know" that [he knowingly misappropriated
clients' funds]. * * * But respondent's
calamitous method of doing business is just
as reasonable an explanation of the situation
(to the extent that any explanation is
"reasonable" in these proceedings) as the one
the OAE would have us accept, based as it is
on the assumption that respondent had any
knowledge of what was going on with his
accounts. The evidence about respondent's
state of mind is no more compelling in the
direction of knowledge than it is in the
direction of unhealthy ignorance; and before
we will disbar on the basis of a lawyer's
knowing misappropriation, the evidence of
that knowledge must be clear and convincing.
We perceive that respondent was either a
most evil man--a thief--or he was
spectacularly misguided in his all-consuming
effort to build a practice at the expense of
other considerations--most of them ethical
and professional considerations, some of them
personal. We reject the first proposition
and accept the second. Respondent's intense
dedication became his undoing. His tireless
industry in the interest of some clients made
him a danger to others. The shambles he
created in his office has brought him
perilously close to the permanent loss of the
right to practice, which he worked so hard to
earn.
In In re Gallo, 117 N.J. 365, 372 (1989), we explained that "to find that [an attorney] knowingly misappropriated * * * clients' funds, we must find clear and convincing evidence of such a misappropriation." In that case, review of the trust account balances disclosed that those funds were invaded and commingled. Id. at 369-71. We and the DRB concluded, however, that although the respondent had been grossly negligent in his approach to record keeping, he had not knowingly misappropriated client funds. We said: "Whether through ignorance or
inattentiveness, the accounting procedures in respondent's office
at the time of his audit were entirely inadequate." Id. at 373.
The principal distinction between Gallo and this case, however,
is that in Gallo "no client ever suffered financial injury as a
result of respondent's ethical violations." Id. at 374.
Although no client has suffered financial injury as a result
of respondent's ethical violations, the claim of Commonwealth
Title Insurance Company remains unsatisfied. The DRB found that
"between 1988 and 1989, respondent deposited over $92,000 of his
own funds into the trust account to cover cost advancements and
errors." Thus, it seems illogical that he would not have made up
the final deficiency in the Martin mortgage. Respondent
contended that the shortfall in funds was caused by an erroneous
assumption by his staff that certain funds were available for
disbursements. That assumption stemmed from the failure of
respondent's staff to deduct approximately $25,000.00 from a
client's ledger card while simultaneously transferring that sum
to another ledger card of that client.
What we are left with in this case is proof of an office in
"shambles," Johnson, supra, 105 N.J. at 259, but no smoking gun.
We are also left with the unsatisfactory prospect of disbarring
an attorney because his records are incomplete and inadequate.
Respondent spent $650.00 per week in an effort to reconcile his
accounts. In the proceedings below, great emphasis was placed on
the fact that McKay had told respondent to discontinue use of his
old trust account. Because that message was conveyed in a
confused setting (people were standing in the office doorway
during the discussions, and some follow-up discussions took place
in the luncheonette below the office) and because Gerard's
follow-up letter did not refer to such a request, I think it
would be terribly unfair to disbar on that basis.
In his opening remarks to the Special Master, counsel for the
OAE said: "We feel [this is] a case of knowing misappropriation
* * * ." More than that is required. Although the record
clearly shows blatant record-keeping violations under RPC
1.15(d), a finding of knowing misappropriation cannot be
sustained by clear and convincing evidence. As we have done in
other cases, I conclude that "respondent's problems stemmed from
flagrant record-keeping errors combined with an apparent lack of
comprehension of the proper operation of an attorney's bank
accounts. He apparently failed to recognize or understand that
'part of [his] responsibility to the legal system is the
maintenance and supervision of accounting records.'" In re
Grabler,
114 N.J. 1, 12 (1989) (quoting In re Orlando, supra, 104
N.J. at 350). Respondent's situation is unlike the attorney in
In re Brown,
102 N.J. 512 (1986). In that case, the attorney
knowingly invaded the trust funds of one client to pay another
after a client had given the attorney a bad check that caused the
initial shortage of funds. Id. at 514. That attorney was
disbarred.
In this case, respondent was actually unaware, in some
instances, that certain clients had received more funds than they
were entitled to. In addition, the OAE's auditor, McKay,
admitted that his own assumptions were based on the accuracy of
respondent's books. Eventually, respondent replaced Azares with
another accountant, Arceldine Decine. She reviewed the old trust
account and the new trust account. In her report she noted:
No bank reconciliations had been performed in
the account since December 1987. * * * Debits
and credits were overlooked and not posted to
the client ledger until a subsequent month
resulting in the writing of checks against
unavailable funds. Checks deposited by a
client which subsequently bounced were not
debited to the client ledger on a timely
basis resulting in the writing of checks for
that client against unavailable funds.
Multiple ledgers were opened for the same
client resulting in confusion, mispostings
and a lack of balance accountability. * * *
The most notable of these errors was * * * an
unsubstantiated credit of $30,000 * * *.
In his report of July 10, 1990, Azares recapitulated his
experience in these matters. He said that in the heat of the
rush to meet the OAE audit, "[b]ank statements and cancelled
checks ended up in bundles with no logical order. Cash
disbursements and cash receipts became unidentifiable as to
dates, clients and nature. Reconciliation of the trust account
became virtually impossible in such a short time." Azares never
completed his work but he said: "Without the work completely
finished, it seems that any deficit in the trust ledger account
would be the result of staff chaos and staff errors. There are
also symptoms that inadvertent overpayments to or on behalf of
certain clients were also the major reasons for such deficit."
Obviously, all of this falls far short of the certainty that
is required in such matters. It is not realistically possible
for the OAE to reconstruct the records of an attorney whose
records were in such a state. File numbers did not exist for
many matters, and numerous files were kept in piles or cartons.
Still, we cannot and should not disbar attorneys because of
frustration over their ineptness. We may end up disbarring
attorneys (mostly sole practitioners whose clients have a great
need for their services) not because the attorneys lack skill as
advocates, but because they lack skill as office managers.
I believe that the five-year suspension of respondent, during
which his case was sorted out, has vindicated the public interest
and impressed upon respondent an understanding of his full
responsibility for supervision of the accounting practices in his
firm. As a condition of restoration of practice, I would order
that respondent practice under the supervision of another
attorney or provide the OAE with a certified audit of the books
and records required to be maintained pursuant to Rule 1:21-6 on
a quarterly basis. I would also order that if he practices
alone, his attorney trust account should be maintained under co-signatory power with a certified public accountant of the State
of New Jersey. Such arrangement, I believe, should continue
until such time as the Court is assured that respondent's systems
for office management are operating properly.
Friends and associates of Ramon Irizarry attest to the
significant contributions that he has made to his community.
They have emphasized that respondent, through his law practice,
has been devoted to helping minority businesses grow and develop
as equal partners in the marketplace. He has been in the
forefront of community development. His wife explained it best:
"It has been with great sacrifices that we have brought up our
family, acquired our home, and reared our children * * *. It has
also been with great sacrifices that my husband has established
his law office." Whatever Ramon Irizarry's flaws are, they are
not irreparable. Cf. In re Templeton,
99 N.J. 365 (1985)
(adopting DRB's recommendation of five-year conditional
suspension of attorney).
Justice Stein joins in this opinion.
SUPREME COURT OF NEW JERSEY
D-
19 September Term 1994
IN THE MATTER OF :
RAMON A. IRIZARRY, : O R D E R
AN ATTORNEY AT LAW :
It is ORDERED that RAMON A. IRIZARRY of NEWARK, who was
admitted to the bar of this State in 1980, and who was thereafter
temporarily suspended from practice by Order of the Court dated
July 17, 1990, and who remains suspended at this time, be
disbarred and that his name be stricken from the roll of
attorneys of this State, effective immediately; and it is further
ORDERED that RAMON A. IRIZARRY be and hereby is permanently
restrained and enjoined from practicing law; and it is further
ORDERED that RAMON A. IRIZARRY comply with Rule 1:20-20,
dealing with disbarred attorneys; and it is further
ORDERED that RAMON A. IRIZARRY reimburse the Disciplinary
Oversight Committee for appropriate administrative costs.
WITNESS, the Honorable Robert N. Wilentz, Chief Justice, at
Trenton, this 21st day of July, 1995.
/s/ Stephen W. Townsend
CLERK OF THE SUPREME COURT
NO. D-19 SEPTEMBER TERM 1994
Application for
Disposition Disbar
Decided July 21, 1995
Order returnable
Opinion by PER CURIAM