In re Martin

IN_RE_MARTIN.95-074; 163 Vt 633; 660 A.2d 300

[Filed 12-Apr-1995]



                                  ENTRY ORDER

                        SUPREME COURT DOCKET NO. 95-074

                                MARCH TERM, 1995


In re Peter J.R. Martin, Esq.       }          APPEALED FROM:
                                    }
                                    }
                                    }          Professional Conduct Board
                                    }                               
                                    }
                                    }          DOCKET NO. 93.05


               In the above entitled cause the Clerk will enter:

    Pursuant to the recommendation of the Professional Conduct Board
filed February 9, 1995, and approval thereof, it is hereby ordered that Peter
J.R. Martin, Esq., be publicly reprimanded for the reasons set forth in the
board's Notice of Decision attached hereto for publication as part of the
order of this Court.  A.O. 9, Rule 8E.




                                  BY THE COURT:

                                                                     
                                  ________________________________________
                                  Frederic W. Allen, Chief Justice


                                  ________________________________________
                                  Ernest W. Gibson III, Associate Justice


                                  ________________________________________
                                  John A. Dooley, Associate Justice


                                  ________________________________________
                                  James L. Morse, Associate Justice


                                  ________________________________________
                                  Denise R. Johnson, Associate Justice

 
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                              STATE OF VERMONT

                         PROFESSIONAL CONDUCT BOARD


            In  re:     PCB File No. 93.05
                        Peter J.R. Martin, Respondent

                       NOTICE OF DECISION NO.      83

This matter involves the embezzlement of over $100,000 from
Respondent's attorney  trust  account  by  his  office  manager.  Respondent
and Bar Counsel stipulated as to the  facts  (which  we  have  accepted  and
incorporated herein as our own as Attachment A) but differ in their
view as to the appropriate sanction.  Pursuant to A.0. 9, Rule 8(D),
we held a hearing on January 6, 1995, and heard argument from Bar
Counsel, who recommended a period of suspension not to exceed three
months, and from Respondent's counsel, John Kellner, Esq.  Respondent
himself also addressed the Board.

After consideration of briefs and  oral  arguments,  we  recommend  to
the Supreme Court that Respondent be publicly reprimanded.

                             FACTS

Respondent has been a member of the Vermont Bar for nearly 25
years and has no record of any prior disciplinary infractions.  He has
maintained a small law practice, generally with the help of one
associate and some support staff in St. Albans, where he has engaged
in general practice.

From 1978 to 1992, Respondent employed one Cynthia Coon as a
secretary and eventually as an office manager and bookkeeper.  Ms.
Coon handled the financial management of the law firm.  She paid all
expenses - taxes, payroll, supplies - and managed the income.  She had
signature authority on almost all of Respondent's office-related non-
trust accounts.

 

Respondent placed enormous trust in Ms. Coon and did not
personally review or supervise any of the accounts in his office.  In
1988, Respondent learned that Ms. Coon had failed to pay some $10,000
in federal payroll taxes.  Ms. Coon assured him that she would resolve
this problem and Respondent left it to her to do so.  He assumed that
his yearly audits by a Certified Public Accountant gave him sufficient
independent oversight.

In 1991, Respondent learned that his law firm owed $40,00 in
delinquent payroll taxes.  Again, he was reassured by Ms. Coon that
she was on top of the problem and that the debt was being resolved.
Respondent did not undertake a personal review of the firm's financial
records and bookkeeping.

In 1992, Respondent learned that Ms. Coon had embezzled some
$130,000 from him and his client trust accounts.  The diversion of
funds had been accomplished by a number of methods, including forgery.
Respondent found that $113,000 of the embezzled funds had come from
the Mary Morey estate of which he was the executor.

At the time Ms. Coon unlawfully diverted these funds, Respondent
did not have in place appropriate accounting and audit procedures as
required by the Code of Professional Responsibility.

Respondent was shocked when he learned of the embezzlement.  He
immediately reported Ms. Coon to local law enforcement and brought a
civil suit against her.  He retained an accountant to audit his books
and identify how the money was taken and from which accounts.  He
notified every client of the diversion and began making every effort
to repay them.

Respondent acknowledged complete responsibility for these losses
and cooperated fully with Bar Counsel throughout the pendency of

 

these disciplinary proceedings.  Respondent has been financially  and
emotionally devastated by Ms. Coon's betrayal of his trust.  There is
no doubt that Respondent is extremely remorseful for the damage caused
by his neglect of hill professional responsibility to safeguard client
property.

Respondent has fully repaid all injured client except the Morey
Estate, which is still owed approximately $30,000.  Respondent  fully
acknowledges his obligation to repay the Estate and continues in  his
efforts to satisfy that obligation.

Respondent now has in place appropriate accounting and audit
measures.

                   CONCLUSIONS

Disciplinary Rule 9-102(B)(3) provides:

     A lawyer shall maintain complete records Of all funds,
     securities and other properties of a client coming into the
     possession of the lawyer and render appropriate accounts to
     the client regarding them.

Disciplinary Rule 9-102(C) provides a detailed description of how
every attorney shall maintain a trust accounting  system.  Respondent
has conceded that he violated both of these disciplinary rules.

We find that Respondent's misconduct was due to his gross
negligence in turning over financial matters to a bookkeeper  without
proper oversight.  It is easy to understand how Respondent came to
place so much trust in an employee who was so integral to hill
practice.  However, it is difficult to understand how Respondent could
have ignored the early warning signs that of bookkeeping trouble - the
$10,000 debt to the IRS which grew to $40,000.  Those incidents should
have prompted Respondent to take a good, hard look at how financial
matters were being handled in his office.

We agree with Bar Counsel that normally such gross neglect

 

requires suspension.  The Commentary to Standard 2.13  of the ABA
Standards for Imposing Lawyer Sanctions suggests that a public
reprimand is appropriate when the lawyer acts negligently but that
suspension is appropriate when the lawyer is grossly negligent.
similar cases from other jurisdictions support her argument.  See, for
example, In the Matter of Librizzi, 569 A-2d 257,263 (N.J.
1990)(failure to reconcile bank account for 12 years led to $25,000
shortage and a six month suspension from practice); In the Matter of
Scanlon, 697 P.2d 1084 (Ariz. 1985) (lawyer who allowed a secretary
whom he had found stealing money from his operating account to
continue to handle trust accounts was suspended for six months after
the secretary embezzled $30,000 from him); and Louisiana State Bar
Assn v. Keys, 567 So. 2d 588 (La. 1990) (lawyer who learned of
secretary's improper withdrawal of $22,000 from trust account and who
reimbursed the account, but did not notify the client, was suspended
for thirty days).

We decline to recommend a suspension here because of the many
mitigating factors present (absence of a prior disciplinary record,
absence of a dishonest or selfish motive, timely good faith effort to
make restitution, full and free disclosure to disciplinary board,
character and reputation, imposition of other penalties and sanctions,
and remorse) and the presence of only one aggravating factor
(substantial experience in the practice of law).  Under the ABA
Standards, those mitigating factors can properly be applied to so
reduce the level of sanction.

Further, there is no suggestion that Respondent poses any threat
to the public or to the profession.  It is highly unlikely that he
will ever again violate the Code of Professional Responsibility.  The

 

only argument favoring suspension his Bar Counsel's concern that a
strong message needs to be sent to the Bar in light of the recent and
distressing flurry of minor trust account violations.  We believe the
Supreme Court can make that message clear to the Vermont Bar by
publicly reprimanding Respondent in this case.

For all of the foregoing reasons, we respectfully recommend to
the Vermont Supreme Court that it publicly reprimand Respondent for
violating DR 9-102.

Dated at Montpelier, Vermont this  3rd   day of February, 1995.

PROFESSIONAL CONDUCT BOARD

                                               Deborah S. Banse, Chair
George Crosby                                  Donald Marsh
Joseph Cahill, Esq.                            Karen Miller, Esq.
Nancy Corsones, Esq.                           Garvan Murtha, Esq.
Paul S. Ferber, Esq.                           Robert F. O'Neill, Esq.
Nancy Foster                                   Ruth Stokes
Rosalyn L. Hunneman                            Jane Woodruff, Esq.
Robert P. Keiner, Esq.                         Edward Zuccaro, Esq