Appellate Division: Second Judicial Department

M53677

E/nl

A. GAIL PRUDENTI, P.J.

HOWARD MILLER

ROBERT W. SCHMIDT

STEPHEN G. CRANE

WILLIAM F. MASTRO, JJ.

2007-01271 In the Matter of Peter A. Gioia, admitted as Peter Anthony Gioia, an attorney and counselor-at-law. Grievance Committee for the Tenth Judicial District, petitioner; Peter A. Gioia, respondent. (Attorney Registration No. 2261311 )

DECISION & ORDER ON MOTION

Motion by the Grievance Committee for the Tenth Judicial District for an order: (1) suspending the respondent from the practice of law, pursuant to 22 NYCRR 691.4(l)(1)(i) and (iii), upon a finding that he constitutes an immediate threat to the public interest based upon his obstruction of the Grievance Committee's investigation by failing to respond to repeated requests for him to submit bank and bookkeeping records for his attorney escrow account and failing to appear and produce records at an examination under oath, scheduled pursuant to a judicial subpoena duces tecum, and upon uncontroverted evidence establishing that he misappropriated escrow funds entrusted to him as a fiduciary; and (2) authorizing it to institute and prosecute a disciplinary proceeding against the respondent based on a petition dated February 2, 2007. The respondent was admitted to the Bar at a term of the Appellate Division of the Supreme Court in the Second Judicial Department on February 4, 1987, under the name Peter Anthony Gioia.

Upon the papers filed in support of the motion and no papers having been filed in opposition or relation thereto, it is

ORDERED that the motion is granted; and it is further,

ORDERED that pursuant to 22 NYCRR 691.4(l)(1)(i) and (ii), the respondent, Peter A. Gioia, admitted as Peter Anthony Gioia, is immediately suspended from the practice of law in the State of New York, pending further order of the court; and it is further,

ORDERED that the respondent, Peter A. Gioia, admitted as Peter Anthony Gioia, shall promptly comply with this court's rules governing the conduct of disbarred, suspended, and resigned attorneys (see 22 NYCRR 691.10); and it is further,

ORDERED that pursuant to Judiciary Law § 90, during the period of suspension and until further order of this court, the respondent, Peter A. Gioia, admitted as Peter Anthony Gioia, is commanded to desist and refrain from (1) practicing law in any form, either as principal or agent, clerk, or employee of another, (2) appearing as an attorney or counselor-at-law before any court, Judge, Justice, board commission, or other public authority, (3) giving to another an opinion as to the law of its application or any advice in relation thereto, and (4) holding himself out in any way as an attorney and counselor-at-law; and it is further,

ORDERED that the Grievance Committee for the Tenth Judicial District is hereby authorized to institute and prosecute a disciplinary proceeding in this court, against the respondent, Peter A. Gioia, admitted as Peter Anthony Gioia, based on the petition dated February 2, 2007; and it is further,

ORDERED that Rita E. Adler, Chief Counsel to the Grievance Committee for the Tenth Judicial District, 150 Motor Parkway, Suite 102, Hauppauge, N.Y. 11788, is hereby appointed as attorney for the petitioner in such proceeding; and it is further,

ORDERED that within 20 days after service upon him of a copy of this decision and order on motion, the respondent, Peter A. Gioia, admitted as Peter Anthony Gioia, shall serve an answer upon the petitioner and the Special Referee, and shall file the original answer with this court; and it is further,

ORDERED that the issues raised by the petition and answer are referred to the Honorable Herbert A. Posner, a retired Judge of the New York State Supreme Court, Queens County, 1118 Bay 24th Street, Bayswater, N.Y. 11691, as Special Referee to hear and report within 60 days after the conclusion of the hearing or the submission of post-hearing memoranda; and it is further,

ORDERED that if the respondent, Peter A. Gioia, admitted as Peter Anthony Gioia, has been issued a secure pass by the Office of Court Administration, it shall be returned forthwith to the issuing agency and the respondent shall certify to the same in his affidavit of compliance pursuant to 22 NYCRR 691.10(f).

We find, prima facie, that the respondent is guilty of professional misconduct immediately threatening the public interest based upon his failure to cooperate with the Grievance Committee's investigation and upon uncontroverted evidence establishing that he misappropriated escrow funds entrusted to him as a fiduciary.

On December 30, 2005, the Grievance Committee received a complaint from Yat Him Ng and Yiai Liang Ng alleging, inter alia, that they entered into a contract of sale to purchase commercial property from the respondent's client, Madan Realty, Inc., dated March 31, 2005. The Ngs were represented by Edmond J. Fong. The Ngs delivered a $65,000 down payment check dated April 4, 2005, to the respondent to be held in escrow pursuant to the contract terms. The respondent allegedly ignored numerous telephone messages and faxes from Mr. Fong and otherwise failed to cooperate in the transaction.

By letter dated October 17, 2005, Mr. Fong advised the respondent that the Ngs had elected to cancel the contract and demanded the return of their down payment. On December 30, 2005, they filed a complaint with the Grievance Committee inasmuch as they had not received any communications from the respondent and were concerned about the security of their down payment.

By letter dated January 24, 2006, the Grievance Committee requested the respondent's written response to the Ng complaint within 15 days. In his answer dated February 25, 2006, the respondent ascribed his failure to reply to Mr. Fong's communications to myriad personal and family problems, vacations, and a lost cell phone. He attributed his failure to refund the Ngs' down payment to communication problems with his client as well as issues regarding responsibility for breaching the contract. With his client's consent, the respondent forwarded a $65,000 check dated February 7, 2006, to Clemente A. Francis, the Ngs' new attorney. Mr. Francis has acknowledged receipt of the refund. The respondent thereafter ceased communicating with the Grievance Committee.

By letter dated June 15, 2006, Grievance Counsel confirmed a telephone conversation with the respondent requesting copies of bank statements for his escrow account for the period March 1, 2005, through March 30, 2006, reflecting that the $65,000 down payment was on deposit during that interval. The respondent failed to adhere to his verbal promise to do so.

By letter dated July 6, 2006, the Grievance Committee reiterated its request for the bank statements, directed the respondent to submit the copies no later than July 12, 2006, and reminded him that an unexcused failure to respond to the Grievance Committee's inquiries constituted professional misconduct independent of the merits of the complaint and could subject him to disciplinary proceedings. The respondent failed to comply. By letter dated August 9, 2006, sent to the respondent's office via certified and regular mail, the respondent was directed to submit an answer, along with an explanation for his failure to cooperate within five days. The Grievance Committee warned that the respondent's continued noncompliance would result in a motion for his interim suspension. Although the return receipt card was returned "unclaimed," the letter sent by regular mail was not returned by the Post Office, thereby creating a presumption of delivery. The respondent nevertheless failed to comply.

On August 14, 2006, the Grievance Committee served the respondent with a judicial subpoena and subpoena duces tecum commanding his appearance and the production of bank and bookkeeping records on September 15, 2006. On September 13, 2006, Grievance Counsel agreed to adjourn the respondent's appearance and to meet with an attorney whom the respondent had consulted, Steven M. Schaedtler. Grievance Counsel thereafter attempted to re-schedule the respondent's appearance. After numerous conversations with Mr. Schaedtler, Grievance Counsel advised Mr. Schaedtler by letter dated December 5, 2006, that the respondent's examination under oath would take place on December 19, 2006, irrespective of whether he was represented by counsel. At Mr. Schaedtler's request, the examination was rescheduled to January 4, 2007, and the Grievance Committee was asked to thereafter contact the respondent directly. By letter dated December 26, 2006, Grievance Counsel requested that Mr. Schaedtler direct the respondent to contact the Grievance Committee regarding his consent to the withdrawal of counsel.

The respondent failed to appear on January 4, 2007, for the scheduled examination and failed to produce the requested records. Mr. Schaedtler appeared at the Grievance Committee's offices on that date and related his continuing efforts to contact the respondent, albeit unsuccessfully.

Grievance Counsel obtained records for the respondent's escrow account directly from Chase Bank pursuant to a judicial subpoena duces tecum. The subject account is comprised of a master account and two client sub-accounts, each of which has its own account number and is interest bearing. The master account is a non-interest bearing, no-frills checking account. In order to disburse funds in connection with a particular client matter, an electronic transfer of funds must first be made from the sub-account to the master account. Each client's funds are thus theoretically segregated until such time as they are needed. Electronic transfers from a sub-account to the master account or other Chase Bank accounts controlled by the respondent are permitted.

The respondent's escrow account statements for the period from February 25, 2005, through August 23, 2006, reflected minimal activity with only two client sub-accounts. Records for a sub-account denominated "Homeowners Assistance Corp. of New York" (hereinafter the Homeowners sub-account) revealed electronic transfers to either the master account or to another Chase Bank checking account under the respondent's control, which was denominated "Middle Country Abstract Corp. Operating Account" (hereinafter the Middle Country Operating Account). The address of that corporation is the same as that of the respondent's law office and its signatories are the respondent, as president, and his wife, as vice-president and secretary.

The bank statements for the Middle Country Operating Account reflect regular electronic transfers from the Homeowners sub-account. The respondent was apparently disbursing funds from the escrow account, in particular, from the Homeowners sub-account, for the operations of Middle Country Abstract Corp. Bank records reveal that the respondent misappropriated the $65,000 down payment entrusted to him by the Ngs in that manner. The respondent devotes most of his professional time and efforts to conducting the business of Middle Country Abstract Corp.

On April 27, 2005, the respondent deposited the Ngs' $65,000 down payment into the Homeowners sub-account. Between April 27, 2005, and October 26, 2005, the respondent depleted the down payment by making dozens of electronic transfers from that sub-account to the Middle Country Operating Account and/or the master account.

Between April 27, 2005, and February 7, 2006, when the respondent should have maintained and preserved the Ngs' $65,000 down payment in escrow, the balance in the Homeowners sub-account individually, and the escrow account, as a whole, fell significantly below that amount on at least five occasions. Between October 27, 2005, and February 13, 2006, the combined balance of the master account and Homeowners sub-account increased as funds were deposited or wired into the account relating to other unidentified matters, including $15,000 and $30,000 deposits made into the Homeowners sub-account on November 8, 2005, and November 16, 2005, respectively, and a $55,000 wire transfer into the Homeowners sub-account on February 1, 2006. On or about February 7, 2006, while the escrow account was replenished with additional, unidentified money, the respondent drew a $65,000 check against the master account, payable to Yat Him Ng and delivered to the Ngs' attorney. Inasmuch as the respondent had previously withdrawn the Ngs' down payment as part of the funds electronically transferred to the Middle Country Operating Account, that check was necessarily honored against funds subsequently deposited into the escrow account.

The respondent's refusal to submit any records or to testify and explain the nature and purposes of these transactions, led the Grievance Committee to submit that there exists uncontroverted evidence that the respondent misappropriated funds entrusted to him as a fiduciary.

In addition, the respondent violated his fiduciary duty by misappropriating interest earned on funds entrusted to him as escrow agent. Pursuant to paragraph 2.05(a) of the contract of sale between the Ngs and Madan Realty, Inc., any interest earned on the down payment held by the respondent was to be paid to the party ultimately entitled to the down payment. Between the date of deposit of the $65,000 down payment on April 27, 2005, and the date the respondent refunded that sum to the Ngs, interest of approximately $1,625 should have been generated. Inasmuch as the respondent had systematically depleted the Ngs' down payment, the amount of interest actually generated was significantly less. The respondent has never accounted for or disbursed any of the interest earned and has apparently retained it for himself without the consent of the parties to the contract of sale.

The petition, dated February 2, 2007, contains 10 charges of professional misconduct, predicated upon the foregoing allegations. Although the Grievance Committee personally served the respondent with the order to show cause and petition on February 2, 2007, the respondent has neither submitted an answer, opposed this motion, nor requested additional time in which to respond. Accordingly, the Grievance Committee's allegations are uncontroverted.

Based on the foregoing, we find that the respondent constitutes an immediate threat to the public interest warranting his immediate suspension pursuant to 22 NYCRR 691.4(l)(1)(i) and (iii). Accordingly, the motion is granted, the respondent is immediately suspended from the practice of law, the Grievance Committee is authorized to institute and prosecute a disciplinary proceeding against the respondent based on the petition dated February 2, 2007, and the matter is referred to a Special Referee to hear and report.

PRUDENTI, P.J., CARNI, SCHMIDT, CRANE and MASTRO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court