In The Matter Of Warhafti

524 A.2d 398 (1987)

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Nature of the Case

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Facts

A random audit disclosed that D continually issued checks to his own order for fees in pending real estate matters. He would replace the 'advance' when the funds were received for the real estate closing. D maintained his own lists of fees taken in advance. This list contained the names of clients and the amounts he anticipated earning from these clients in pending real estate closings. As a closing occurred and the fee was earned, d would delete the client's name and fee. When an anticipated closing fell through, d would replace the fee he had earlier advanced to himself. D received notice of the audit, and borrowed $11,125 from accounts in the names of his two teenage sons and deposited the money into his trust account to cover the withdrawn fees. D made this deposit about five days before the originally scheduled audit date of October 4, 1983. The auditor was not able to determine which clients' monies respondent had taken because of the size of D's real estate practice. D never failed to make the proper disbursements at the closings and that no one ever lost money as a result of his practice. In mitigation, D told of the pressures from a precipitous decline in his real-estate practice and his wife's having to undergo treatment for cancer, and by his son's need for extensive psychiatric counseling. D admitted that he knew what he was doing was wrong. The Ethics Committee concluded that D had failed to comply with the record-keeping provisions of Rule 1:21-6; that several checks he had drawn on business accounts were dishonored for insufficient funds; that he had made false entries in his trust account records, contrary to DR 9-102; and that he had misappropriated clients' funds, also a violation of DR 9-102. It held that D's conduct was clearly unethical in that he did deliberately and repeatedly take funds from his trust account equal to anticipated fees. The Committee recommended that D be publicly disciplined.