Appellate Division: Second Judicial Department

M82793

E/nl

A. GAIL PRUDENTI, P.J.

WILLIAM F. MASTRO

REINALDO E. RIVERA

ROBERT A. SPOLZINO

STEVEN W. FISHER, JJ.

2008-09730 In the Matter of Barnett R. Rogers, an attorney and counselor-at-law. Grievance Committee for the Ninth Judicial District, petitioner; Barnett R. Rogers, respondent. (Attorney Registration No. 1511682)

DECISION & ORDER ON MOTION

Motion by the Grievance Committee for the Ninth 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 is guilty of professional misconduct immediately threatening the public interest in that he has failed to comply with the lawful demands of the Grievance Committee in connection with its investigation of professional misconduct and based on other uncontroverted evidence of professional misconduct; 2) authorizing it to institute and prosecute a disciplinary proceeding against the respondent; 3) directing the respondent to submit an answer to the Grievance Committee's petition, dated October 22, 2008, within 20 days; and 4) referring this matter to a Special Referee to hear and report. The respondent was admitted to the Bar at a term of the Appellate Division of the Supreme Court in the First Judicial Department on March 12, 1956.

Upon the papers submitted in support of the motion and the papers submitted in opposition thereto, it is

ORDERED that the motion is granted and pursuant to 22 NYCRR 691.4(l)(1)(i) and (iii), the respondent, Barnett R. Rogers, 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, Barnett R. Rogers, 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, Barnett R. Rogers, 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 or 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 Ninth Judicial District is hereby authorized to institute and prosecute a disciplinary proceeding in this court, against Barnett R. Rogers, based on the petition dated October 22, 2008; and it is further,

ORDERED that Gary L. Casella, Chief Counsel, Grievance Committee for the Ninth Judicial District, 399 Knollwood Road - Suite 200, White Plains, N.Y. 10603, 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 order, the respondent 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 any answer thereto are referred to the Honorable Jerome M. Becker, a former Judge of the Criminal and Family Courts, c/o Douglas Becker, Esq., Joseph P. Day Co., 9 East 40th Street, 8th floor, New York, N.Y. 10016, as Special Referee to expeditiously 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, Barnett R. Rogers, 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 comply with the lawful demands of the Grievance Committee for the Ninth Judicial District in connection with its investigation and other uncontroverted evidence of his professional misconduct.

The Grievance Committee's motion is predicated upon the respondent's failure to comply with its lawful demands for the production of relevant information, documents, and bookkeeping records pertinent to its investigation. The Grievance Committee ultimately obtained relevant bank statements and cancelled checks regarding the respondent's escrow account directly from his bank, pursuant to subpoena. The subpoenaed records reveal serious ethical improprieties involving misappropriations of client funds and other breaches of the respondent's fiduciary responsibilities. It further appears that the respondent made false and misleading statements both to his clients and the Grievance Committee concerning the distribution and status of funds entrusted to him as a fiduciary. The motion papers include a petition containing 12 proposed charges of professional misconduct all arising from a complaint by the respondent's clients, Ralph Libone and Georgia Libone.

The Libones retained the respondent in the late 1990's with respect to the sale of an undeveloped parcel of land in the Village of Piermont. In or about July 2004, the respondent accepted a purchase offer of $459,000 from a corporate developer, ALSHE, contingent upon obtaining subdivision approval for the construction of three separate residences. The respondent had to address several obstacles to the subdivision proposal, including having to obtain 20-25 feet from the adjoining property owners in order to satisfy the frontage requirements for the proposed plan. Although the adjoining landowners purportedly accepted the respondent's offer of $75,000 for the strip of land along the boundary of the two contiguous properties, the Village rejected the proposed subdivision plan.

The respondent persevered on behalf of the Libones and negotiated a modified subdivision plan which contemplated construction of two residences rather than three, for a reduced net purchase price of $300,000, after payment of increased engineering expenses and building permit fees. The Village approved said plan and the closing occurred on July 11, 2007. The Libones were not in attendance but had previously issued powers of attorney allowing the respondent to proceed in their absence. They later became uncomfortable with the respondent's proposed distribution of the sale proceeds because they had not received sufficient information about the final details and expenses. The Libones advised the respondent that they objected to any further distribution without their written consent and requested copies of certain documents relevant to the sale. The respondent allegedly refused to give the Libones any further information unless they executed general releases terminating his power of attorney.

The Libones filed a complaint with the Grievance Committee approximately one month after the closing, attaching copies of correspondence involving the respondent and summarizing telephone conversations that gave them cause for concern. The Libones requested information why outstanding charges and bills had not been paid at the time of closing as is the customary practice. They subsequently contacted the Village Clerk and were advised that the outstanding real estate taxes had been paid in full. The respondent allegedly could not tell them how much had been paid because the real estate taxes had to be figured out. The respondent allegedly refused the complainants' request for a face-to-face meeting and threatened to deposit approximately $175,000 in sale proceeds which he was holding in escrow into court.

The complainants opposed the respondent's proposal to pay $75,000 to the owners of the contiguous parcel and charged that the respondent had a conflict of interest in representing all parties. They expressed concern over the respondent's demand for general releases as a quid pro quo for the disbursement of their share of the sale proceeds. They described themselves as an elderly couple concerned that the respondent was taking advantage of their lack of legal and real estate experience.

In response to the complaint, the respondent rebutted the allegations about the inadequacy of his legal representation and maintained that the transaction could not have been consummated without his zealous representation over approximately 10 years. He reported a balance of $82,575.67 remaining on deposit in his escrow account at Union State Bank in September 2007.

The respondent reportedly advised the Libones that he was preparing a motion authorizing the deposit of the balance of the sale proceeds with the Clerk of the Rockland County Supreme Court after deducting his legal fees. He promised to supply the Grievance Committee with a copy of his closing statement for the underlying transaction as soon as his staff returned from the holidays.

In reply, the Libones expressed concern over the information from the respondent's bank showing a balance of $82,575.67. This clearly contradicted the respondent's claim that he safeguarded approximately $175,000 for them. The Libones had not received any portion of the proceeds from the sale of their property, nor did the respondent provide them with a closing statement, bank statement, or contracts of sale. Without such documentation, they are unable to understand the terms of the contract and determine what monies were owed to them.

By letter dated October 31, 2007, the Grievance Committee asked the respondent to provide by November 14, 2007, specified documents and information relating to his handling of the transaction on behalf of the Libones. The respondent submitted certain information and documents piecemeal over a course of several months before deciding to retain an attorney. His submissions were not responsive to the issues of greatest concern to the Grievance Committee and gave the appearance that he had intentionally withheld relevant documents.

The respondent eventually prepared a closing statement which he submitted to the Grievance Committee on or about November 16, 2007. He explained that the statement was atypical in that he needed to address various loans in addition to the routine calculation of adjustments with the buyer.

Per the closing statement, the respondent distributed $54,570 in satisfaction of various loans allegedly advanced to Mr. Libone and $74,000 to the owners of the contiguous property. The respondent was holding only $47,948 on deposit in his escrow account which he proposed to deposit with the court pending resolution of various issues, including his claim for additional fees and a money judgment from the New Jersey Department of Taxation against Mr. Libone.

However, the respondent failed to produce the bulk of the supplemental documents requested by the Grievance Committee, especially escrow account bookkeeping records. The Grievance Committee was forced to subpoena these records directly from Union State Bank. While the Grievance Committee was preparing its accounting based on the bank records, the Libones objected to the respondent's closing statement noting that a disbursement of $74,000 was made despite their written objections. The Libones acknowledged responsibility for repayment of two loans reflected on the closing statement for a total of $37,165.32 but denied responsibility for or knowledge of the other loans allegedly repaid by the respondent on their behalf.

By letter dated January 15, 2008, the Grievance Committee asked the respondent to review its preliminary reports regarding his escrow account as well as the Libones' objections and to explain any discrepancies. The Grievance Committee reiterated its demand for the production of the respondent's records and apprised him of his right to retain counsel.

The respondent retained counsel in or about February 2008 and the Grievance Committee granted several adjournments over the next four months to allow counsel to review documents and in consideration of the respondent's health related issues. By letter dated July 7, 2008, the Grievance Committee established a final deadline of August 8, 2008, for the submission of bookkeeping records and other documentation requested previously. The respondent submitted additional papers, including a handwritten letter dated August 13, 2008, in which he requested that the Grievance Committee stay its investigation pending resolution of the Libones' Supreme Court action. The respondent conceded that he was unable to locate all of the bank statements but made a commitment to prove that payments were made per his closing statement. The respondent submitted a letter dated September 8, 2008, from his treating physician indicating that his diabetes would be better controlled if he were to retire from the active practice of law.

The Grievance Committee's efforts to trace deposits received and funds disbursed incident to the respondent's representation of the Libones was made without benefit of client ledgers or contemporaneous bookkeeping records. Based on bank records received pursuant to subpoena and other information gathered during its investigation, the Grievance Committee determined that the respondent received $25,000 on behalf of the Libones in or about April 2003 representing a loan from the respondent's wife. Pursuant to written agreement, that sum was held in the respondent's escrow account and earmarked for specific expenses related to the property. Repayment of the loan was to be made in one year. The balance of the deposit was not to be disbursed without the written consent of Ralph Libone. The respondent nevertheless disbursed $25,000 to his wife on or about October 3, 2003, at a time when he lacked sufficient funds attributable to the Libone matter. Total disbursements of $46,581.31 were made by the respondent incident to his representation of the Libones between April 2003 and July 2004 without corresponding funds on deposit for those clients. The respondent failed to provide information to establish the source of those funds.

Similar concerns exist with respect to a $50,000 down payment which the respondent received from ALSHE in connection with the underlying contract of sale and the disbursements made incident to his representation of the Libones matter. After depositing the $50,000 into his escrow account on or about July 7, 2004, the respondent disbursed sums far in excess of the amount he was holding on deposit for that matter between the date he received the down payment and the closing on July 11, 2007.

During that time, the respondent disbursed funds to himself without the Libones' knowledge or consent.

At the closing on the Libones' transaction on July 11, 2007, the respondent received two checks totaling $261,611.56. The respondent thereafter made numerous disbursements notwithstanding notice of the Libones' objections. The account had a negative balance between July 30, 2007, and August 3, 2007, even though the respondent advised the Libones that he was still holding approximately $175,000 on deposit in connection with the sale of their property. Following the closing, the respondent disbursed checks totaling $33,008.36 to his son and over $110,000 to himself. Some of those checks contained a similar reference to the repayment of the loan from the respondent's wife.

The Grievance Committee notes that the respondent has not formally questioned or challenged the accuracy of its analysis of his escrow account for the relevant time period. Per the Grievance Committee, the disbursements made by the respondent after he received notice of the Libones' objections and his failure to provide a timely accounting to his clients are clear indicators of overreaching and self-dealing. The Grievance Committee believes that the respondent made a deliberate misrepresentation to it and to the Libones when he announced that he would turn over the proceeds from the sale of the Libones property to the clerk of the court and seek a judicial resolution of the disputed issues. The respondent has offered no viable defense for his actions other than his belief that the disbursements were appropriate. The Grievance Committee's analysis of the subpoenaed records indicates that the escrow account balance went negative by at least $25,000 between July 30, 2007, and August 3, 2007, when he indicated that he was holding approximately $175,000.00 on behalf of the Libones. The Grievance Committee notes that the respondent was publicly censured by the First Department for similar conduct in 1983 ( Matter of Rogers, 94 AD2d 121).

Based on these multiple breaches, the Grievance Committee submits that the respondent presents an imminent danger to the public.

In opposition to the Grievance Committee's motion, the respondent's counsel notes that the respondent categorically denies stealing any money or being a danger to the public. Per the respondent, the allegations that the loans were the property of the Libones is incorrect.

In his personal affidavit in opposition, the respondent asserts that periodic withdrawals from his escrow account were authorized by Ralph Libone and agreed to by Georgia Libone via written and telephone correspondence with her attorney in her divorce proceeding against Ralph Libone. The respondent admits that the withdrawals were often made payable to himself as they were designated to be used as partial payments of the Libones' contractual obligations as well as partial re-payments of other obligations and loans from third parties in order to deliver clear title to the property.

In addition, the respondent cites his record of 52 years as an active civil law attorney without ever having been accused of such misconduct, as well as his involvement in civic organizations, unions, and pro bono services.

While some of the misconduct alleged may be attributable to inadequate bookkeeping practices, there exists substantial uncontrovertible evidence of overreaching and self-dealing. Although he has consistently argued that each disbursement has been proper and can be supported by documentation, the respondent has failed to provide such documentation. He has clearly failed to comply with his bookkeeping responsibilities and has breached his fiduciary duties to safeguard and account for funds he received.

Under the circumstances, the Grievance Committee's motion is granted in its entirety.

PRUDENTI, P.J., MASTRO, RIVERA, SPOLZINO and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court