Appellate Division: Second Judicial Department

M131167

E/ct

WILLIAM F. MASTRO, A.P.J.

REINALDO E. RIVERA

PETER B. SKELOS

MARK C. DILLON

DANIEL D. ANGIOLILLO, JJ.

2011-06326 In the Matter of Michael Sprei, an attorney and counselor-at-law. Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts, petitioner; Michael Sprei, respondent. (Attorney Registration No. 4170817)

DECISION & ORDER ON MOTION

Motion by the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts (1) to suspend 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) to authorize the Grievance Committee to institute and prosecute a disciplinary proceeding against the respondent based upon the allegations set forth in a petition dated July 7, 2011; (3) to direct the respondent to answer the petition; and (4) to refer the issues raised to a Special Referee to hear and report. Separate motion by the respondent (1) to allow him to participate in a monitoring/diversion program, pursuant to 22 NYCRR 691.4(m); and (2) to stay the disciplinary proceeding pending his completion of the diversion program. The respondent was admitted to the Bar at a term of the Appellate Division of the Supreme Court in the Second Judicial Department on November 19, 2003.

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

ORDERED that the Grievance Committee's motion is granted; and it is further,

ORDERED that the respondent's motion is denied; and it is further,

ORDERED that pursuant to 22 NYCRR 691.4(l)(1)(ii) and (iii), the respondent, Michael Sprei, 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 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, Michael Sprei, 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 Michael Sprei, based on the petition dated July 7, 2011; 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, Michael Sprei, 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 Abraham G. Gerges, a retired Justice of the Supreme Court, Kings County, 31 Elizabeth Lane, P.O. Box 5025, Quogue, N.Y. 11959, 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, Michael Sprei, 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 proposed petition contains a single charge that the respondent converted client funds entrusted to him as a fiduciary to his own use and benefit, in violation of rules 1.15(a), 8.4(b), 8.4(c), and 8.4(h) of the Rules of Professional Conduct (22 NYCRR 1200.0).

The investigation of the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts (hereinafter the Grievance Committee) emanated from the receipt of a dishonored check report from Lawyers' Fund for Client Protection.

The respondent represented Ben Werczberger in the sale of a property owned by Mr. Werczberger's company. On or about November 4, 2010, the respondent deposited the sale proceeds in the amount of $740,244.98 into his attorney escrow account at JP Morgan Chase Bank. Werczberger directed the respondent to hold the sale proceeds pending further direction. Between November 4, 2010, and November 12, 2010, the respondent transferred $600,000 of his client's funds from his escrow account to his personal TD Ameritrade stock trading account, without the knowledge or consent of his client. The respondent made stock investments with those funds for his own benefit. As a result of the respondent's transfers, on November 16, 2010, the balance in the respondent's escrow account was only $129,002.90. At his client's direction, on November 17, 2010, the respondent's secretary, with the respondent's knowledge, issued a check from his escrow account, pre-signed by the respondent, in the amount of $400,000. On November 22, 2010, the respondent transferred an additional $100,000 of the Werczberger funds in his escrow account to his TD Ameritrade stock trading account, without the knowledge or consent of his client, to make more stock investments for his own benefit. On November 24, 2010, the $400,000 check was dishonored due to insufficient funds.

The respondent readily admitted in his answer to the complaint that he committed professional misconduct. At his examination under oath before the Grievance Committee on May 9, 2011, at which he was represented by counsel, the respondent again admitted that he committed misconduct. He does not dispute any of the aforementioned allegations. He admitted that he incurred stock losses and consequently, was unable to replace the money he "borrowed." At the time the respondent issued the $400,000 check, he was not aware of the balance in his escrow account, but he assumed it was insufficient to cover the amount of the check. The respondent confessed that his conduct was the product of a gambling illness and that he has since sought help with Gamblers Anonymous. The respondent, who has been sued by his client, had made partial restitution in the sum of $150,000 and is in the process of negotiating a repayment schedule.

The instant order to show cause was personally served on the respondent's counsel on July 13, 2011. Although granted an extension of time until August 29, 2011, to serve a response, the respondent did not respond until October 13, 2011, when he made a motion to allow him to participate in a monitoring/diversion program and stay the disciplinary proceeding pending his completion of the diversion program, pursuant to 22 NYCRR 691.4(m). He opposes that branch of the Grievance Committee's motion which seeks his interim suspension. While he consents to the authorization of a disciplinary proceeding against him, he requests that it be stayed pending his completion of a diversion program. The bases for the relief sought by the respondent are, inter alia, his participation in a monitoring program sponsored by the Lawyers' Assistance Program at the Association of the Bar of the City of New York, his attendance at Gamblers Anonymous meetings, and the fact that he has ceased holding large sums of client funds; thus, he argues that he does not pose a threat to the public. The respondent concedes that the diversion rule addresses attorneys suffering from "alcoholism or other substance abuse or dependency" (see 22 NYCRR 691.4[m][1]), but contends, nonetheless, that the rule should be construed to include psychological disorders like his.

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 the respondent, and the matter is referred to a Special Referee to hear and report. The respondent's motion is denied on the ground that 22 NYCRR 691.4(m) does not apply to attorneys suffering from a gambling addiction.

MASTRO, A.P.J., RIVERA, SKELOS, DILLON and ANGIOLILLO, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court