Appellate Division: Second Judicial Department

M163712

E/ct

RANDALL T. ENG, P.J.

WILLIAM F. MASTRO

REINALDO E. RIVERA

PETER B. SKELOS

LEONARD B. AUSTIN, JJ.

2013-07395 In the Matter of Robert C. Fontanelli, admitted as Robert Carl Fontanelli, an attorney and counselor-at-law. Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts, petitioner; Robert C. Fontanelli, respondent. (Attorney Registration No. 2931467)

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)(i) and (iii), upon a finding that he is guilty of professional misconduct immediately threatening the public interest based upon his failure to cooperate with lawful demands of the Grievance Committee, and other uncontroverted evidence of professional misconduct; (2) to authorize the Grievance Committee to institute and prosecute a disciplinary proceeding based upon the allegations set forth in a verified petition dated August 1, 2013; and (3) 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 Department on January 13, 1999, under the name Robert Carl Fontanelli.

Upon the papers filed in support of the motion and no papers having been filed in opposition or in 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 (iii), the respondent, Robert C. Fontanelli, admitted as Robert Carl Fontanelli, 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, Robert C. Fontanelli, admitted as Robert Carl Fontanelli, 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, Robert C. Fontanelli, admitted as Robert Carl Fontanelli, 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 Robert C. Fontanelli, admitted as Robert Carl Fontanelli, based on the verified petition dated August 1, 2013; 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, Brooklyn, N.Y. 11201, is hereby appointed as attorney for the petitioner in such proceeding; and it is further,

ORDERED that the issues raised by the verified petition and any answer thereto are referred to David I. Ferber, c/o Ferber Chan Essner & Coller, LLP, 530 Fifth Avenue, 23rd Floor, New York, N.Y. 10036, as Special Referee, to hear and report, including 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 within 20 days after service upon him of a copy of this decision and order on motion, the respondent, Robert C. Fontanelli, admitted as Robert Carl Fontanelli, shall serve a copy of his answer to the petition upon the Grievance Committee and the Special Referee, and file the original with the Court; and it is further,

ORDERED that if the respondent, Robert C. Fontanelli, admitted as Robert Carl Fontanelli, 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 lawful demands of the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts, and other uncontroverted evidence of professional misconduct.

By letter dated December 14, 2012, the Lawyer's Fund for Client Protection (hereinafter Lawyer's Fund) notified the Grievance Committee that the respondent's escrow check no. 2737, in the amount of $155,384.57, was returned due to insufficient funds. In a letter to the respondent dated January 7, 2013, addressed to his law office at 32 Court Street, Brooklyn, N.Y. 11201, the Grievance Committee enclosed a copy of the dishonored check notification, and requested the respondent's written explanation within 20 days, along with certain bank and bookkeeping records. Although the letter, which was sent by regular first class mail, was not returned, the respondent failed to answer. On or about January 8, 2013, the Grievance Committee received a complaint from Elaine D. McMahon, the respondent's former client, whom the respondent had represented in connection with the sale of real property located in Kings County, on October 9, 2012. McMahon stated that the respondent's escrow check no. 2737, dated November 16, 2012 and payable to her order in the amount of $155,384.57, was returned due to insufficient funds. In a letter to the respondent dated January 16, 2013, addressed to his law office, the Grievance Committee provided the respondent with a copy of McMahon 's complaint, and requested his written answer, within 10 days. No answer was received. By separate letters dated February 14, 2013, each of which was sent by certified mail, return receipt requested, to the respondent's law office, the Grievance Committee requested the respondent's written answers to the dishonored check notification, as well as the McMahon complaint. The postal receipts, which were signed and returned to the Grievance Committee, contained an illegible signature. No answers were received. The Grievance Committee thereafter hand-delivered a letter to the respondent's law office on or about March 22, 2013, enclosing the letters previously sent relative to the dishonored check notification, and the McMahon complaint, and directed him to respond to both within 10 days. No answers were received.

On March 4, 2013, the Grievance Committee received a complaint from Jean Michel Apolon, in his capacity as president of Avemm Corporation (hereinafter Avemm). According to Apolon, the respondent represented Avemm in connection with the sale of commercial property located in Kings County for $1.5 million on December 7, 2012. Prior to the closing, Apolon advised the respondent that he intended for the transaction to be a tax-deferred exchange, and instructed the respondent to transfer the proceeds to Asset Preservation, Inc. On January 22, 2013, Apolon met with the respondent to finalize the paperwork for the exchange. The respondent informed Apolon, during that meeting, that he would transfer the sale proceeds, which he was holding in escrow, to Asset Preservation, Inc., the next day. According to Apolon, the respondent never transferred the sale proceeds as requested. In a letter to the respondent, dated March 14, 2013, and mailed to his law office, the Grievance Committee enclosed a copy of the Apolon complaint, and requested the respondent 's written answer within 10 days. Although the letter, which was sent by regular first class mail, was not returned, the respondent failed to answer.

In the absence of answers to the foregoing complaints, the Grievance Committee sent the respondent a letter dated April 8, 2013, directing him to appear on April 23, 2013, for an examination under oath (hereinafter EUO). On April 22, 2013, the respondent appeared at the Grievance Committee's office with a written answer to the McMahon complaint. He advised Committee staff that he would personally deliver the remaining answers, as well as his escrow records, the following day. As a result of the foregoing, the EUO scheduled for April 23, 2013, was canceled.

By letter dated April 19, 2013, the Lawyer's Fund notified the Grievance Committee that the respondent's escrow check no. 2764, payable to the order of Parti-Pak Productions, Inc. (hereinafter Parti-Pak), in the amount of $75,000, was returned on March 21, 2013, due to insufficient funds. On May 1, 2013, the Grievance Committee sent a copy of the dishonored check notification to the respondent, by regular first class mail, to his law office, requesting a written explanation within 20 days, along with certain bank and bookkeeping records. Although the letter was not returned, no answer was received. In the interim, the respondent failed to return to the Grievance Committee's office with the balance of his answers and/or his escrow records, as promised.

By letter dated May 13, 2013, sent to the respondent's law office via certified mail, return receipt requested, the respondent was directed to appear at the Grievance Committee's office on May 21, 2013, for an EUO relative to the McMahon and Apolon complaints, as well as the dishonored Parti-Pak check notification. In addition to the escrow records previously requested, the Grievance Committee requested, inter alia, the respondent's operating account records for the period May 2012 through April 2013, as well as his closing files for the McMahon and Avemm matters. The postal receipt, which was returned to the Grievance Committee on May 14, 2013, was signed, but contained an illegible signature. On May 21, 2013, the respondent appeared for his EUO late, without the banking records or closing files requested. Thereafter, the respondent provided neither the written answers that were requested, nor the escrow records or closing files he was directed to produce. The Grievance Committee sent the respondent a letter, via certified mail, return receipt requested, on or about May 22, 2013, once again requesting, within 10 days, the written answers and escrow records that were still outstanding, as well as additional records requested at the May 21, 2013, EUO. Although "Marie Colon" signed the return receipt on May 28, 2013, the respondent failed to answer. On July 19, 2013, the respondent was personally served at his law office with a judicial subpoena and a subpoena duces tecum, directing him to appear at the Grievance Committee's office on July 24, 2013, for an EUO, and to produce, inter alia, the client files and banking records previously requested. The respondent failed to appear, as directed. Despite a message left at his office, the respondent failed to contact the Grievance Committee.

The Respondent's Banking Records

In the course of its investigation, the Grievance Committee subpoenaed records, from the respondent's bank, for his operating and escrow accounts, covering the period from May 1, 2012 through April 30, 2013. A review of those records revealed the following:

Conversion of Avemm Funds

On December 7, 2012, at a closing in connection with the sale of commercial property located at 798 St. John's Place, Brooklyn, N.Y., the respondent received checks totaling $1,000,511.14, on behalf of Avemm: a $319,199.84 check from Cullen and Dykman, LLP (the bank attorney), a $143,500 cashier's check from First American Title (the title company), and a $537,811.30 check from Empire Cornerstone Saint John's, LLC (the purchaser), which he deposited into his escrow account on December 10, 2012. The opening balance in the respondent's escrow account on December 1, 2012, was $9,088.92. The ending balance, on December 31, 2012, was $22,902.85.

In a letter to the respondent dated February 21, 2013, Apolon wrote:

"We have become very concerned since the close of title on December 7, 2012. Prior to the closing we advised you that we were doing a 1031 Exchange. All of the proceeds from the closing were paid to you as attorney. Since that date despite numerous requests [,] the funds . . . have not been transferred . . . to [Asset Preservation, Inc.]"

The respondent's bank records reflect that, on the day Apolon sent the foregoing letter, the balance in the respondent's escrow account was only $102.85. The bank records reflect, further, that the proceeds of the Avemm sale were disbursed in connection with unrelated matters: a wire transfer on December 10, 2012, in the amount of $395,000, to Paula Scalzo; a withdrawal, on December 14, 2012, in the amount of $335,000; and a transfer, on December 26, 2012, in the amount of $75,000, to the respondent's operating account. In addition, the following checks cleared the respondent's escrow account on December 11, 2012: check no. 2765 payable to "Eighteen Assoc." for $5,814.94 (ref. "Oct rent"); check no. 2766 payable to "Eighteen Assoc." for $5,814.94 (ref. "Nov rent"); check no. 2767 payable to "Eighteen Assoc." for $5,814.94 (ref. "Dec rent); check no. 2768 payable to "Eighteen Assoc." for $948.67 (ref. "electric Oct"); check no. 2769 payable to "Eighteen Assoc." for $948.67 (ref. "electric Nov"); and check no. 2770 payable to "Eighteen Assoc. " for $948.67 (ref. "Dec electric"). Eighteen Associates, LLC, appears to be the property management company that collects rent and electric charges for the respondent's law office.

To date, the respondent has failed to pay any of the proceeds of the Avemm sale to Avemm and/or Asset Preservation, Inc.

Conversion of the McMahon Funds

In July 2012, Elaine McMahon retained the respondent to represent her in the sale of her residential property located at 1729 East 32nd Street, Brooklyn, NY. On July 13, 2012, McMahon signed a contract to sell the property for $495,000 to Anna Davidov and Yuriy Davidov. The contract provided for a $20,000 down payment to be held in escrow by the respondent. The down payment check, in the amount of $20,000, was deposited into the respondent's escrow account on July 19, 2012. According to the July 2012 statement for the respondent's escrow account, the balance on deposit in the account on July 24, 2012, was $15,939.25. The balance continued to drop throughout August and September 2012, reaching negative balance, - $59,877.30, on September 7, 2012. On October 9, 2012, the date of the McMahon closing, the negative balance in the respondent's escrow account was - $20,023.03. At the closing, the respondent received two checks on behalf of McMahon, as follows: an $82,041.36 cashier's check from Yuriy Davidov (the purchaser), and a $56,343.21 check from Menicucci, Villa & Associates, PLLC (the bank attorneys). According to the HUD- 1 Settlement Statement dated October 9, 2012, McMahon was entitled to receive $158,823.05 from the sale. On October 10, 2012, the $82,041.36 cashier's check, which the respondent received at the closing, was deposited into his escrow account. By October 23, 2012, the balance on deposit in the escrow account was only $19,468.33. No monies had been distributed to McMahon as of that date. The respondent's bank records reflect, further, that on October 10, 2012, the $56,343.21 check, which the respondent received at the closing, was deposited into his operating account. On the day prior to that deposit, the balance in the respondent's operating account was negative $1,360.71. The deposit brought the balance up to $54,957.50. Throughout October 2012, the closing funds deposited in the respondent's operating account were depleted, resulting in a final balance, on October 31, 2012, of negative $11.10. On or about November 11, 2012, the respondent issued check no. 2737, drawn on his escrow account, to McMahon, in the amount of $155,384.57. The check was dishonored on November 16, 2012, inasmuch as the balance on deposit in the respondent 's escrow account was only $50,581.23.

The respondent has neither opposed the motion nor submitted any response relative thereto.

Based upon the foregoing, the motion is granted, the respondent is immediately suspended from the practice of law, pursuant to 22 NYCRR 691.4(l)(1)(i) 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.

ENG, P.J., MASTRO, RIVERA, SKELOS and AUSTIN, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court