Appellate Division: Second Judicial Department

M169607

E/ct

RANDALL T. ENG, P.J.

WILLIAM F. MASTRO

REINALDO E. RIVERA

PETER B. SKELOS

JOHN M. LEVENTHAL, JJ.

2013-10707 In the Matter of Anthony C. Coluzzi, an attorney and counselor-at-law. Grievance Committee for the Tenth Judicial District, petitioner; Anthony C. Coluzzi, respondent. (Attorney Registration No. 2533099)

DECISION & ORDER ON MOTION

Motion by the Grievance Committee for the Tenth Judicial District (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 upon his admissions 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 November 14, 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 Judicial Department on March 24, 1993.

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, Anthony C. Coluzzi, 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, Anthony C. Coluzzi, 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, Anthony C. Coluzzi, 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 Tenth Judicial District is hereby authorized to institute and prosecute a disciplinary proceeding in this Court against Anthony C. Coluzzi, based on the verified petition dated November 14, 2013; and it is further,

ORDERED that Robert A. Green, Chief Counsel, Grievance Committee for the Tenth Judicial District, 150 Motor Parkway, Suite 102, Hauppauge, N.Y. 11788, 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 John P. Clarke, Esq., 35 Broad Street, Williston Park, N.Y. 11596, as Special Referee, to hear and report, and to submit a report, which contains his findings on the issues, 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, Anthony C. Coluzzi, 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, Anthony C. Coluzzi, 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 admissions and other uncontroverted evidence of professional misconduct. This motion emanates from a complaint on behalf of Louise Becker, as well as a sua sponte complaint based on a civil action, commenced by Diane Wiedler.

The Louise Becker Matter

Upon receipt of a complaint against the respondent from Stephen E. Cooper, Esq., the Grievance Committee commenced an investigation into allegations related to Louise Becker's sale of real property in Southold, in 2006. Specifically, the complaint alleged that the respondent simultaneously represented Mrs. Becker, as seller, and Rosario Pisano, as purchaser, regarding the subject property. It was further alleged that the respondent improperly inflated the sales price, and created an illusory second mortgage, to be held by Mrs. Becker, in order to enable Mr. Pisano to obtain a first mortgage in an amount exceeding the agreed-upon purchase price.

The Grievance Committee's investigation revealed that the respondent was acquainted with Mr. Pisano prior to the subject transaction. Previously, Mr. Pisano had discussed with the respondent his plan to invest in real estate by purchasing properties, renovating them, and thereafter selling them for a profit. In fact, prior to the Becker transaction, the respondent sold one of his own investment properties to Mr. Pisano's wife. In or about May 2006, Mrs. Becker's daughter, who also was an acquaintance of the respondent, approached him, and asked if he could assist her mother in selling her home. At that time, the house was unencumbered by any mortgages or liens. Shortly thereafter, the respondent met with Mrs. Becker at the property. Thereafter, the respondent spoke with Mr. Pisano, and informed him that Mrs. Becker's home was for sale. The respondent indicated to Mr. Pisano that he might be able to renovate the property, and earn a profit, if he bought, and subsequently sold, it. Mr. Pisano viewed the property, met with Mrs. Becker, and agreed to purchase the property, for $500,000. The respondent drafted a contract of sale, which listed him as Mrs. Becker 's attorney, and did not list any attorney for the purchaser, Mr. Pisano. Moreover, the contract listed a sales price of $620,000. The sole purpose of the inflated sales price was to enable Mr. Pisano to apply for a mortgage in an amount exceeding what he agreed to pay Mrs. Becker, and allow him to consummate the transaction without contributing any of his own funds.

The respondent's knowledge of, and complicity in, the foregoing misrepresentation (e.g., the inflated sales price) to the purchaser's lending institution, is reflected in a letter dated August 9, 2006, which the respondent sent to Mrs. Becker setting forth the terms of the transaction as agreed to by the parties. In the letter, the respondent explained that, although the "actual" purchase price would be $500,000, the contract of sale would reflect a purchase price of $620,000, so that the purchaser could obtain a mortgage in the amount of $566,000. The respondent further advised Mrs. Becker that she would not be entitled to any monies above and beyond the $500,000 agreed upon, including any funds from a second mortgage. Mr. Pisano thereafter applied to a mortgage lender - Mortgage It - for a loan in the amount of $566,000, based upon the $620,000 purchase price reflected in the contract. According to the HUD-1 Settlement Statement (hereinafter HUD-1), which ultimately was prepared and executed, Mr. Pisano was still responsible to provide the balance of funds to Mrs. Becker, which, after "seller's concessions," totaled $62,900. Inasmuch as the lender - Mortgage It - required that Mr. Pisano document the source of his personal financial interest in the transaction, and Mr. Pisano was not contributing any of his own funds, it was agreed that Mrs. Becker would hold a note, which would reflect the difference between the actual purchase price and the inflated purchase price. The note would show, at least on paper, that Mr. Pisano was liable to Mrs. Becker for the difference. On September 13, 2006, over one month after the respondent wrote to Mrs. Becker that she would not be entitled to anything over $500,000, Mr. Pisano executed a note, in Mrs. Becker's favor, in the amount of $62,900. The document was notarized by the respondent, and provided to the mortgage broker. Despite a clause stating that the note was to be secured by a "security instrument," no mortgage was ever drafted. The presentation of the note, presumably induced the lender to give Mr. Pisano a first mortgage for the purchase of the property in the amount of $566,000.

A closing of sale took place on September 26, 2006. The first mortgage was funded the following day. Mrs. Becker was not present at the closing, inasmuch as she previously had executed a power of attorney naming her daughter as attorney-in-fact. At the closing, the respondent took possession of six checks, payable to Mrs. Becker, totaling $496,849, and reflecting the $500,000 "purchase price," less certain fees and costs. Additionally, the respondent took possession of an additional check, payable to himself, as attorney, in the sum of $40,339.78. That check represented the funds left over from the mortgage proceeds, after payment to Mrs. Becker. The respondent deposited the $40,339.78 check into his escrow account, and thereafter drafted a check to Mr. Pisano, for the full amount, thereby delivering to him a portion of the proceeds of sale to which Mrs. Becker should have been entitled in accordance with the contract of sale and the HUD-1.

On September 27, 2006, the day the first mortgage loan was funded, the respondent delivered the six checks payable to Mrs. Becker, to Mrs. Becker's daughter, as her attorney-in-fact. At that time, the respondent also drafted a letter "forgiving" the $62,900 "note," which Mrs. Becker's daughter signed, again as attorney-in-fact. Accordingly, Mr. Pisano's obligation to make further payments to Mrs. Becker, which was a pre-requisite for his obtaining a first mortgage, was forgiven in its entirety, unbeknownst to the lender.

As reflected by the respondent's letter to Mrs. Becker dated August 9, 2006, Mr. Pisano had no intention of paying Mrs. Becker anything more than the agreed-upon $500,000. In fact, when the respondent drafted the note, ostensibly making Mr. Pisano liable to Mrs. Becker for $62,900, he knew that Mr. Pisano would make no payments thereon. The sole purpose of the note was to ensure that Mr. Pisano's mortgage would be approved by the lender. Knowing the foregoing, the respondent was instrumental in misrepresenting the realities of the transaction to the lending institution, fraudulently inducing the lender to fund a loan in an amount greater than they otherwise would have. Had Mr. Pisano received a 90% loan-to-value mortgage on the actual sales price of $500,000, he would have received a mortgage of only $450,000, requiring him to personally invest an additional $50,000. However, as a result of the respondent's actions, Mr. Pisano was able to obtain a mortgage in an amount greater than what he actually paid for the property, without making any personal investment, while receiving $40,339.78 of the equity in Mrs. Becker 's home.

Additionally, the respondent's representation of Mrs. Becker in the sale of her home, after he recruited Mr. Pisano as purchaser evidences a clear conflict of interest, in that his professional judgment on behalf of Mrs. Becker was affected by his preexisting business relationship with Mr. Pisano. In an unrelated lawsuit the respondent testified during an examination before trial that only six months after the sale of Mrs. Becker's home, Mr. Pisano planned to sell the house for an asking price of $720,000, and that he and Mr. Pisano would act as "silent partners" in that transaction.

The Diane Weidler Matter

The Grievance Committee commenced a sua sponte investigation into further allegations of the respondent's professional misconduct arising from a matter entitled Weidler v Coluzzi, commenced in the Supreme Court, Nassau County, under Index No. 011303/2007.

The complaint in that action alleged that in or about March 2007, the respondent recommended that the plaintiff, Diane Weidler, purchase a property located in Bay Shore, for investment purposes. Ms. Weidler and the respondent had been acquaintances for approximately 20 years. Ms. Weidler knew the respondent to be a real estate attorney, and a real estate broker, but at no time did the respondent indicate to her that he was acting as a real estate broker in the subject transaction, or that he was to have any role therein. Moreover, at no time did the two agree to be partners in the transaction. Although the respondent recommended another acquaintance to represent Ms. Weidler, as attorney, he personally drafted the contract of sale, listing a sales price of $440,000, as well as naming himself as attorney for the seller. The respondent thereafter utilized his personal business contacts, inter alia, to secure a mortgage for Ms. Weidler, as the purchaser.

At the closing, which occurred on or about April 30, 2007, Ms. Weidler received a principal loan amount of $440,000, as reflected on the HUD-1. The respondent was not listed on the HUD-1 as receiving any funds, even though he actually received a check from the proceeds of the loan in the amount of approximately $75,000. Ms. Weidler objected to the foregoing payment, but was told by the real estate broker, who was another acquaintance of the respondent, that the respondent was entitled to "cash out." Following the closing, Ms. Weidler learned that the respondent, and the seller, had entered into a "secret agreement" whereby, if the respondent secured a purchaser for the property, he would be entitled to the balance of any price paid for the property over $340,000. This agreement was not in writing, and was never disclosed to Ms. Weidler. Moreover, unbeknownst to Ms. Weidler, at the time she signed the contract of sale, which reflected a sales price of $440,000, the property actually was listed for sale at $369,000.

On or about June 1, 2010, the respondent was found civilly liable on causes of action for fraud in the inducement, fraud by concealment, breach of fiduciary duty, and unjust enrichment. A judgment was entered on August 5, 2010, in favor of Ms. Weidler, and against the respondent, in the principal sum of $94,730.25.

The respondent's conduct in the subject real estate transactions (i.e., Becker and Weidler) demonstrates a pattern of conduct wherein the respondent utilizes his status as an attorney, and his experience as a real estate broker, to misrepresent the nature of real estate transactions to unsuspecting purchasers, sellers, and/or lending institutions, by artificially inflating the sales price, as reflected in the contracts of sale, in order for himself, or an associate, to profit. The respondent's deposition testimony in the Weidler matter suggests that this pattern of conduct is ongoing.

In opposition, the respondent asserts that he has not admitted any professional misconduct, that he has steadfastly denied the same, and that there is no basis to immediately suspend him. He avers that his denials of wilful or intentional misconduct are sufficient, without more, to overcome the motion for his interim suspension on the basis of either admissions, or uncontroverted evidence. Moreover, he asserts that the delay in commencing a disciplinary proceeding, which concerns transactions occurring six to seven years ago, is "due to the fact that no . . . immediate threat to the public interest exists." However, these arguments are unpersuasive, inasmuch as the verdict and judgment in the Weidler matter, and the letter to Mrs. Becker dated August 9, 2006, provide uncontroverted evidence of the respondent's misconduct.

Under the totality of the circumstances, 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.

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

ENTER:

Aprilanne Agostino

Clerk of the Court