Appellate Division: Second Judicial Department

M130811

E/ct

WILLIAM F. MASTRO, A.P.J.

REINALDO E. RIVERA

PETER B. SKELOS

MARK C. DILLON

DANIEL D. ANGIOLILLO, JJ.

2010-07363 In the Matter of Peter J. Mollo, admitted as Peter Joseph Mollo, an attorney and counselor-at-law. Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts, petitioner; Peter J. Mollo, respondent. (Attorney Registration No. 2272300)

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. The respondent was admitted to the Bar at a term of the Appellate Division of the Supreme Court in the Second Judicial Department on June 21, 1989, under the name Peter Joseph Mollo.

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, Peter J. Mollo, admitted as Peter Joseph Mollo, 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 J. Mollo, admitted as Peter Joseph Mollo, 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 J. Mollo, admitted as Peter Joseph Mollo, 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 Peter J. Mollo, admitted as Peter Joseph Mollo, 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, Peter J. Mollo, admitted as Peter Joseph Mollo, 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 Stella Schindler, a former New York City Family Court Judge, 63 East Ninth Street, #8J, New York, N.Y. 10003, as Special Referee to hear and report, together with her 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, Peter J. Mollo, admitted as Peter Joseph Mollo, 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 of the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts (hereinafter the Grievance Committee) was commenced in response to (1) a complaint filed by Gaetana Zanonico-Vega and her now-deceased husband, Carlos Vega; (2) a complaint filed by Jean Ballentine; and (3) a sua sponte complaint initiated upon receipt of a decision and order in a case entitled Schwab v. Phillips, commenced in the Supreme Court, Kings County, under Index No. 10944/05, in which the respondent was sanctioned.

Gaetana Zanonico-Vega and Carlos Vega

Gaetana Zanonico-Vega and Carlos Vega (hereinafter the Vegas) owned real property located at 19 Hawk Nest Road, Tomkins Cove, New York. In or about May 2006, the Vegas retained the respondent regarding a pending action to foreclose a mortgage on their property. The Vegas informed the respondent that they were unable to afford their monthly mortgage payments and were unable to obtain refinancing due to a poor credit history. The respondent advised the Vegas of a plan that could allow them to keep their property, i.e., a sale with a leaseback provision and option to repurchase. The respondent introduced the Vegas to a buyer, Shantel Gobin, who worked part-time for the respondent as his office assistant and paralegal.

Thereafter, either the respondent or Gobin prepared a written agreement which provided, inter alia, that: (1) Gobin would purchase the house at an amount that would allow her to obtain financing sufficient to satisfy the Vegas' existing mortgage, pay the closing costs, pay a $20,000 "purchase fee" to Gobin, and provide six months of "monthly expenses" for the property; (2) the Vegas would "forfeit [their] access" to any "proceeds of sale"; (3) Gobin would lease the house to the Vegas for an amount equal to her "mortgage payments, real estate taxes, water and sewer charges, and insurance," and any other expense associated with maintaining the house; and (4) Gobin would give the Vegas the option to repurchase the house at a price sufficient to satisfy Gobin's mortgage and cover her closing costs. On June 1, 2006, the Vegas executed the agreement at the respondent's direction. Under paragraph h of the agreement, defining the sales price for repurchasing the home, the respondent inserted the handwritten words "plus $20,000."

The respondent subsequently prepared, or caused to be prepared, a contract of sale, which reflected a purchase price of $730,000, with a down payment of $73,000. At the same time, the respondent prepared, or caused to be prepared, a separate "Rider" to the contract waiving the down payment. While the respondent's daughter, an attorney, reviewed the contract and title report for Gobin, the respondent was the only attorney at the closing. The Vegas were not allowed to be present in the room where the closing occurred and were instructed to sit in a separate room. Documents were brought out for them to sign, some of which were blank. Among the documents signed by the Vegas was a HUD-1 Settlement Statement, which falsely stated that Gobin had paid a $73,000 down payment.

At the closing, the Vegas' mortgage payoff was $514,772.31. Gobin executed a new mortgage and note in the amount of $657,000. The amount of Gobin's monthly mortgage payment was nearly identical to the Vegas' old monthly mortgage payment, which they had told the respondent that they were unable to afford. At the closing, the lender's attorney issued a check, payable to respondent, as attorney, in the amount of $100,925.16, representing the balance of the Vegas' proceeds of sale. On July 19, 2006, the respondent deposited the check into his IOLA account at Signature Bank. In July 2006, the respondent paid Gobin $20,000 from those funds, and paid his daughter $750 for "legal services" rendered to Gobin. In or before July 2007, the respondent paid himself $20,000 from those funds. By September 2007, the respondent had depleted most of the funds. The respondent received an additional $1,500 from the Vegas as his fee for legal services rendered.

In and about 2007, the Vegas, unable to repurchase the property from Gobin, vacated the property, upon executing a general release dated July 24, 2007, prepared by the respondent. The general release provided that, for the consideration of $15,000 received, the Vegas waived, among other things, all claims, grievances and complaints against the respondent and Gobin.

The respondent appeared at the Grievance Committee's offices for an examination under oath on February 24, 2009. When questioned about the meaning of the words "plus $20,000" inserted on the June 1, 2006, agreement, the respondent testified that $20,000 was intended as a finder's fee for himself, as he believed that the transaction would yield a "profit" and that he would share in it. The respondent admitted that no down payment was, in fact, received, and that the $73,000 down payment was included in the HUD-1 Settlement Statement to satisfy the bank.

Jean Ballentine

Jean Ballentine retained the respondent in 2003 to buy-out her ex-boyfriend's share of real property she jointly owned with him. Initially, the respondent commenced a partition action against the ex-boyfriend. As time went on, Ballentine fell into financial distress and was behind in her mortgage payments. Due to a poor credit rating, Ballentine could not refinance, and because of missed mortgage payments, she was in danger of losing her house. The respondent proposed a sale with a leaseback and an option to repurchase, using Andrew Perez, the respondent's full-time paralegal and stepson, as a straw buyer.

Ballentine agreed to the arrangement and agreed to pay Perez $10,000 plus closing costs as his fee for the transaction. At the first closing (wherein Ballentine conveyed her home to Perez), she paid him $2,000, leaving $8,000 plus closing costs still to be paid. By the time of the second closing (when Perez conveyed the house back to Ballentine), Ballentine owed Perez additional money because she had missed various payments, which Perez had paid on her behalf. At the second closing, which took place on July 12, 2005, in the respondent's office, the lender's disbursement sheet listed $10,049.87 as "Net Amount available to Borrower(s)," namely Ballentine. However, the respondent, and not Ballentine, received $9,449.87 of those funds.

Ballentine commenced an action against the respondent to recover $9,449.87, and a trial was held before the Honorable Arlene P. Bluth in the Civil Court of the City of New York, Kings County. At trial, the disbursement sheet for the second closing was introduced into evidence which reflected a disbursement of $9,449.97 to "Peter J. Mollo, Esq. as atty." Both Ballentine and her attorney at the second closing testified that they believed that someone in the respondent's office inserted the disbursement language after Ballentine signed the sheet. The respondent did not take the stand to testify. The trial court credited Ballentine and particularly her attorney, concluding that the respondent had no right to unilaterally appropriate Ballentine's loan proceeds.

In a decision dated October 13, 2006, the court found in favor of Ballentine, and awarded her $9,449.87, plus interest from July 15, 2005, in addition to costs and disbursements. Judgment was entered on February 16, 2007, against the respondent and in favor of Ballentine, awarding her a total sum of $11,120.43. The respondent appealed the judgment, but the appeal was dismissed due to a failure to perfect, on July 16, 2009. To date, the respondent has failed to satisfy the judgment.

Schwab v. Phillips

By letter dated January 7, 2009, the Honorable Rachel A. Adams advised the Grievance Committee of her decision and order dated January 28, 2009, in a case entitled Schwab v. Phillips, Index No. 10944/05, Supreme Court, Kings County, wherein she determined that the respondent had engaged in sanctionable conduct.

On June 9, 2005, the parties to a matrimonial action entered into a so-ordered stipulation, which included the following provision regarding the disposition of certain marital property: "Both parties agree that all artwork acquired during the marriage shall remain intact and not [be] sold, transferred or hypothecated pending equitable distribution or further order of the Court." On December 14, 2006, the parties entered into a second stipulation (hereinafter the Stipulation) whereby they agreed to place two pieces of artwork for sale at Sotheby's. The Stipulation provided that "upon the sale of either or both items the proceeds shall be maintained in escrow, in an account which shall require the signature of both attorneys." The two pieces of artwork were sold in February 2007.

On or about March 16, 2007, the wife substituted the respondent as her counsel. On or about April 3, 2007, the respondent received a check from Sotheby's in the sum of $61,570, representing the proceeds of the sale, payable to the husband and the wife. Without the husband's consent, and in contravention of the Stipulation, the respondent endorsed the check with his own name, deposited it into his IOLA account, and issued a check to the wife in the sum of $30,256. After the check was deposited and the money disbursed to the wife, the respondent requested that the husband's attorney send him the page of the Stipulation signed by the husband, which the husband's attorney provided on April 9, 2007, unaware that the Sotheby's check had been received and cashed. On April 17, 2007, the husband's attorney received a letter from the respondent along with a check in the amount of $31,785 made payable to the husband's attorney. The letter indicated that the check represented the husband's 50% portion of the proceeds. Unable to resolve the concerns raised by the respondent 's actions, the husband's attorney moved for various relief, including the return of the marital money and sanctions against the respondent.

After a sanctions hearing, in the decision and order dated January 28, 2009, Justice Adams concluded that the respondent had engaged in sanctionable conduct. The court found that the evidence established that "Mollo was fully aware, when he was retained, of the terms of the Stipulation" based on his conversation with the wife. Moreover, the court noted that the respondent had received the wife's file from her prior attorney, and credited the husband's attorney's testimony that he made the respondent aware of the Stipulation during a court appearance on March 20, 2007, and in subsequent telephone conversations with him prior to his disbursement to the wife. The court characterized the April 17, 2007, letter as a "blatant obfuscation of the facts as known to [the respondent, which] became his defense throughout th[e] entire sanctions proceeding." Additionally, the court found that Mollo's "endorsement of a two party check without the permission of one of the parties [was] clearly a misappropriation of funds entrusted to him incident to his law practice and violate[d] Disciplinary Rule 9- 102."

Justice Adams imposed a sanction against the respondent in the sum of $2,500, and awarded costs and attorney's fees to the husband in the sum of $40,000, payable by the respondent and the wife. On appeal, this Court affirmed the $2,500 sanctions imposed on the respondent, but reduced the attorney's fee award to $10,000 (see Schwab v. Phillips, 78 AD3d 1036).

The respondent opposes any interim suspension, claiming that he does not pose a danger or threat to the public. With regard to the Vegas, he denies any conflict of interest with respect to Shantel Gobin as the buyer or his daughter's representation of Gobin. He claims that the $73,000 was a seller's concession agreed to by the Vegas and a requirement of the lending bank. As for Jean Ballentine, the respondent claims that Ballentine owed Perez money and that, as the attorney for Perez, he "had a right to receive funds on behalf of Mr. Perez." With respect to the Schwab v. Phillips matter, the respondent claims the wife was coerced into signing the Stipulation, that she did not inform him of the existence of the Stipulation, and that, therefore, he had no knowledge of the Stipulation, contrary to the court's finding. The respondent maintains that at all times he acted in the best interests of his clients.

Based on the foregoing, the 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.

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

ENTER:

Aprilanne Agostino

Clerk of the Court