Appellate Division: Second Judicial Department

M119468

E/ct

A. GAIL PRUDENTI, P.J.

WILLIAM F. MASTRO

REINALDO E. RIVERA

PETER B. SKELOS

MARK C. DILLON, JJ.

2010-11445 In the Matter of Gerard M. Tanella, an attorney and counselor-at-law. Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts, petitioner; Gerard M. Tanella, respondent. (Attorney Registration No. 4145736)

DECISION & ORDER ON MOTION

Motion by the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts for an order: (1) suspending the respondent from the practice of law, pursuant to 22 NYCRR 691.4(l)(1)(ii) and (iii), upon a finding that he is guilty of professional misconduct immediately threatening the public interest based on substantial admissions he made under oath and other uncontroverted evidence of professional misconduct; (2) authorizing the Grievance Committee to institute and prosecute a disciplinary proceeding against the respondent based upon the allegations set forth in a petition dated December 3, 2010; (3) directing the respondent to answer the petition; and (4) referring the issues raised 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 Second Judicial Department on October 22, 2003.

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

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

ORDERED that pursuant to 22 NYCRR 691.4(l)(1)(ii) and (iii), the respondent, Gerard M. Tanella, 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, Gerard M. Tanella, 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, Gerard M. Tanella, 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 Second, Eleventh, and Thirteenth Judicial Districts is hereby authorized to institute and prosecute a disciplinary proceeding in this Court, against Gerard M. Tanella, based on the petition dated December 3, 2010; and it is further,

ORDERED that Diana Maxfield Kearse, Chief Counsel, Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts, Renaissance Plaza, 335 Adams Street - Suite 2400, Brooklyn, N.Y. 11201-3745, 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, Gerard M. Tanella, 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 Honorable Herbert Altman, a retired Justice of the Supreme Court, Kings County, 333 East 23rd Street, Apt. 4D, New York, N.Y. 10010, as Special Referee to hear and report, together with his findings on the issues, and to submit a 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, Gerard M. Tanella, 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 substantial admissions he has made under oath that he has committed acts of professional misconduct and other uncontroverted evidence of professional misconduct.

The investigation by the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts was commenced in response to seven complaints filed against the respondent: (1) a notification dated October 27, 2008, from JPMorgan Chase Bank, N.A., that the respondent's escrow check No. 1160 in the amount of $10,679.79 was returned for insufficient funds; (2) a complaint dated February 23, 2009, by Nelson J. Segarra, alleging neglect of his personal injury claim; (3) a complaint dated May 5, 2009, by Gertrude Friedman, alleging neglect of her medical malpractice action; (4) a complaint dated April 19, 2010, by Eddison M. Bridgeman, alleging neglect of his case against Lexus of Rockville Centre; (5) a complaint by Empire Settlement Funding, LLC (hereinafter Empire), alleging misrepresentations made, and fraud committed by, the respondent in connection with a Law Firm Accounts Purchase Agreement entered into between the parties on May 27, 2009; (6) a complaint dated July 19, 2010, filed by TriStateQuickCash.com, Corp (hereinafter Tristate), regarding checks tendered by the respondent, which were returned for insufficient funds and/or because the account was closed; and (7) a complaint dated August 26, 2010, by Peachtree Financial Solutions (hereinafter Peachtree), alleging that the respondent 's misrepresentations caused it to provide funding for a case which had no possibility of recovery.

The respondent, represented by counsel, appeared for Examinations under Oath at the Grievance Committee's offices on four dates: March 18, 2010, April 15, 2010, July 8, 2010, and July 29, 2010. In connection with the Grievance Committee's investigation, the respondent's bank records were subpoenaed and audited, and several bank accounts were identified: an escrow account, an operating account, a business account, and a personal account.

The Grievance Committee's investigation revealed numerous escrow violations. Check No. 1160, which was made payable to "Professional Billing Services" in the amount of $10,679.79 and drawn against the respondent's escrow account, was returned for insufficient funds on or about October 23, 2008. An audit of the respondent's bank statements revealed, and the respondent confirmed at his Examination under Oath, that funds entrusted to the respondent as a fiduciary were routinely deposited into his operating account without explanation. Between August 2007 and May 2010, funds were routinely transferred by wire between the respondent's operating account and his escrow account, without explanation. The respondent admitted that he kept no ledger book or similar record of deposits into and withdrawals from his escrow account.

The Grievance Committee's investigation established that in or about August 2007, the respondent entered into an agreement with Professional Billing Services and/or Gregory Spektor, pursuant to which the respondent established his law practice in the same building location as Professional Billing Services, i.e., 293 Avenue S, in Brooklyn. The respondent testified that Inna Lyubronetskaya owned the building. The respondent also admitted that he was aware at the time that Spektor had not yet been admitted to the bar. Nonetheless, pursuant to the agreement, Spektor assumed control over the day-to-day operation of the respondent's law practice. Meanwhile, Lyubronetskaya assumed control over the respondent's escrow account, as well as his operating account, including, but not limited to control of all books and records. Lyubronetskaya issued checks on both the respondent's escrow and operating account, to which she affixed a stamp of the respondent's signature.

At the direction of Spektor and/or Lyubronetskaya, the respondent conducted no-fault litigation to recover payments on behalf of medical providers whose patients ostensibly had been involved in automobile accidents. In return, the respondent became a salaried employee of his own law practice. Attorney's fees generated by the no-fault litigation were deposited into the respondent's operating account. Between August 2007 and November 2007, Lyubronetskaya issued checks against said attorney's fees to the order of Spektor, a non-attorney. Between August 2007 and May 2010, Lyubronetskaya issued checks against said attorney's fees to herself and/or Professional Billing Services. On April 15, 2010, the respondent testified falsely that: (1) Lyubronetskaya was a "friend" who assisted him at his request with his accounts, while also preparing checks for his signature on the escrow account; (2) he personally reviewed and signed the escrow account checks prepared for him by Lyubronetskaya; and (3) Lyubronetskaya did not write checks for the operating account.

Separate and apart from the respondent's law office practices, the respondent admitted that he neglected several client matters. During 2007 and 2008, he neglected matters involving Nelson J. Segarra, Eddison M. Bridgeman, and Gertrude Friedman. Not only did the respondent neglect these cases, but he admitted that he engaged in deceitful conduct to cover up his neglect, e.g., by advising his client or others of a settlement when there was, in fact, no settlement, fabricating court orders and other documents to mislead his client into believing there was a settlement, or issuing checks representing alleged settlement proceeds knowing that there were insufficient funds to cover those checks.

In the case of Gertrude Friedman, the respondent admitted that he lacked the requisite experience to handle her medical malpractice action and failed to associate himself with an attorney who could handle it. He admittedly made misrepresentations to the Grievance Committee that he conducted settlement negotiations on Ms. Friedman's behalf, when he had not done so.

Furthermore, in 2007, 2008, and 2009, the respondent entered into funding agreements with TriState, Peachtree, and Empire, predicated on the contemplated settlements of claims by Karen Yuabov and/or Ms. Friedman. Karen Yuabov's claim was in a "no-pay status" because the insurer suspected fraud. Not only did the respondent obtain funding based on misrepresentations, but he subsequently made additional misrepresentations that the case(s) had settled when, in fact, there were no settlements, fabricated court documents, and issued checks knowing there were insufficient funds to cover the checks. Empire commenced a civil action against the respondent and obtained a default judgment against him in the amount of $161,431.51. The respondent has neither satisfied the judgment nor moved to vacate it. Moreover, he issued a check to Empire, knowing that he had insufficient funds to cover the check.

The proposed petition, containing 26 charges, alleges multiple violations of the Code of Professional Responsibility DR 1-102(A)(4)(engaging in conduct involving honesty, fraud, deceit or misrepresentation); DR 1-102(A)(7)(conduct that adversely reflects on an attorney's fitness as a lawyer); DR 9-102 (B),(D) and (E) (mismanagement and misappropriation of escrow funds); DR 1-104(C) (failure to supervise conduct of nonlawyers); DR 3-102 (sharing legal fees with nonlawyers); DR 6-101(A)(1) (competency); DR 6-102(A)(3) (neglect); and rule 8.4(c)(d) and (h) of the Rules of Professional Conduct.

The respondent admits that he engaged in wrongful conduct and concedes that a disciplinary proceeding should be commenced against him. However, he opposes any interim suspension. Contrary to the Grievance Committee's allegations that he willfully associated himself with a corrupt enterprise, the respondent maintains that he was deceived and taken advantage of by unscrupulous individuals. Under the stress and trauma of having his law firm literally taken from him, he neglected his personal injury cases. He expresses extreme remorse, and asks only that the Court bear in mind his physical limitations inasmuch as he suffers from cerebral palsy.

Based on the foregoing, the Grievance Committee's motion is granted, the respondent is immediately suspended from the practice of law, pursuant to 22 NYCRR 691.4(l)(1)(ii) and (iii), pending further order of this Court, the Grievance Committee is authorized to institute and prosecute a disciplinary proceeding against him, and the matter is referred to a Special Referee to hear and report.

PRUDENTI, P.J., MASTRO, RIVERA, SKELOS and DILLON, JJ., concur.

ENTER:

Matthew G. Kiernan

Clerk of the Court