(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 November 9, 1999 -- Decided January 28, 2000
PER CURIAM
This attorney disciplinary matter arises from a decision of the Disciplinary Review Board (DRB)
concluding that respondent, Luis Alum, who was admitted to the bar in 1983, should be reprimanded for his
participation in a series of real estate transactions involving “silent seconds” or fictitious credits. The term “silent
seconds” denotes that the borrower has obtained secondary financing to close a real estate transaction without
disclosing that secondary financing to the first mortgage lender. Fictitious credits for repairs that are not done
artificially inflate the value of the property to allow for one hundred percent financing and, on occasion, to provide a
borrower with surplus funds. Although each practice endangers the lender's collateral, Alum claimed that those
practices had become generally accepted by the lending community and thus by the practitioners with whom he had
become associated. Nevertheless, Alum candidly and contritely acknowledged his role in the sham transactions.
The DRB found that Alum's preparation of and submission to lenders of misleading and false mortgage
closing statements violated Rule of Professional Conduct (RPC) 8.4 (c) (conduct involving dishonesty, fraud, deceit
or misrepresentation). In determining to impose only a reprimand, the DRB gave significant weight to the passage of
time since the misconduct, to Alum's candor, and to his unblemished record in the ten years following the
misconduct.
The Supreme Court issued an Order to Show Cause pursuant to R. 1:20-16(b).
HELD: Alum's misconduct in preparing and submitting to mortgage lenders false documentation merits a suspended
suspension for one year and a probationary term of one year, during which he shall perform legal services of a
community nature under the supervision of the Office of Attorney Ethics.
1. Ordinarily, acts of dishonesty, such as the falsification of public documents or lending documents, warrant a
period of suspension. However, in rare instances, such discipline may be tempered when the passage of time has
intervened, inasmuch as the rehabilitative goal of discipline would not be advanced by a suspension in such cases.
(pp. 3-4)
2. Although Alum is guilty of conduct involving dishonesty, fraud, deceit or misrepresentation, the passage of time
as well as the fact that Alum's record as an attorney during the intervening years has been unblemished and his
service to the community exemplary, render inappropriate the imposition of an active term of suspension. Thus, the
imposition of a one-year term of suspension is suspended, and Alum is placed on probation for that one-year term.
During the period of his probation, and under the supervision of the Office of Attorney Ethics, Alum shall perform
legal services of a community nature consisting of the equivalent of one day per week. (pp. 4-5)
CHIEF JUSTICE PORITZ and JUSTICES O'HERN, GARIBALDI, STEIN, COLEMAN, LONG, and
VERNIERO join in this PER CURIAM opinion.
SUPREME COURT OF NEW JERSEY
D-
201 September Term l998
IN THE MATTER OF
LUIS A. ALUM,
An Attorney at Law.
Argued November 9, 1999 -- Decided January 28, 2000
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.
Raymond Barto argued the cause for respondent
(Kaps & Barto, attorneys).
PER CURIAM
This matter arises from a decision of the Disciplinary
Review Board (DRB) concluding that respondent should receive a
reprimand for his participation in a series of real estate
transactions involving “silent seconds” or fictitious credits.
The phrase “silent seconds” denotes that the borrower has
obtained secondary financing to close a real estate transaction
without disclosing to the first mortgage holder the need for such
financing. Fictitious credits for repairs that are not done
artificially inflate the value of the property to allow for one
hundred percent financing and, on occasion, to provide a borrower
with surplus funds. Each practice endangers the lender's
collateral. The DRB found that respondent's preparation and
submission to lenders of misleading and false mortgage closing
statements involved dishonesty, fraud, and deceit and therefore
violated RPC 8.4(c).
To his credit, respondent has candidly, indeed, contritely,
acknowledged his role in the sham transactions. The transactions
occurred in 1988-1989 not long after respondent was admitted to
the bar in 1983. He was then associated in practice with older
practitioners who, he claimed, tolerated what was perceived as
general acceptance of the practices in the lending community.
Following the Court's issuance of an Order to Show Cause in
the matter, the Office of Attorney Ethics (OAE) urged the
imposition of a suspension because of the gravity of the
offenses. Respondent argued that the purposes of discipline
would not be served by imposing a suspension, pointing out that
he serves an underprivileged community and has undertaken in his
practice substantial pro bono work.
In its decision, the DRB had found that
[a]fter giving significant weight to the
passage of time, respondent's candor and his
unblemished record in the ten years following
the within misconduct, the Board unanimously
determined to impose a reprimand. In
reaching its determination, the Board
considered that reprimands were also imposed
on . . . [the other attorneys involved in the
series of transactions]. Attorneys should,
however, be forewarned that, in the future,
similar misconduct will be met with more
severe discipline.
Ordinarily, acts of dishonesty, such as the falsification of
public documents or lending documents, warrant a period of
suspension. In re Di Biasi,
102 N.J. 152 (1986); In re Labendz,
95 N.J. 273 (1984).
In rare instances, we have tempered such discipline when the
passage of time has intervened. In In re Kotok,
108 N.J. 314,
331 (1987), we concluded, based on “considerations of
remoteness,” that the goals and purposes of discipline would not
be furthered by imposing a one-year suspension on an attorney
whose offenses occurred ten years before, when he had just
entered the legal profession. During the intervening ten-year
period the attorney had gained professional skills and experience
so that the rehabilitative goal of discipline would not be
advanced by the suspension. Nevertheless, we recognized the
seriousness of respondent's offense. Hence, in Kotok we imposed
a probationary sanction “embracing suitable conditions designed
to further the goals and purposes of the attorney disciplinary
system.” Id. at 331. See also In re Stier,
108 N.J. 455 (1987)
(holding that conviction of disorderly persons offense of
tampering with public records by making false entry into document
of record, received and kept by government, warranted one-year
term of suspension, suspended with probation).
Based on our review of the record, we find that a
probationary sanction similar to that imposed on the respondent
in Kotok is appropriate in this case. We find that respondent
was guilty of improper conduct that violated RPC 8.4(c).
Nevertheless, we are mindful that such transgressions occurred
eleven years ago, and that in the intervening years respondent's
record as an attorney has been unblemished and his service to
the community has been exemplary.
Accordingly, we hold that the imposition of a one-year term
of suspension is suspended, and respondent is placed on probation
for the length of the term of suspension from practice, namely,
one year. The condition of probation shall be that respondent
must perform legal services of a community nature consisting of
the equivalent of one day per week. These services shall be
performed under the supervision of the OAE. Such services shall
be rendered on behalf of Legal Services or, on application to the
OAE, a comparable community service organization. On the
satisfactory performance of the terms of probation, respondent's
probation shall be discharged.
Respondent shall reimburse the Disciplinary Oversight
Committee for appropriate administrative costs, including the
production of transcripts.
CHIEF JUSTICE PORITZ and JUSTICES O'HERN, GARIBALDI, STEIN,
COLEMAN, LONG, and VERNIERO join in the Court's opinion.
NO. D-201 SEPTEMBER TERM 1998
Application for
Disposition One-year suspension (suspended)
Decided January 28, 2000
Order returnable
Opinion by PER CURIAM