IN THE SUPREME COURT OF FLORIDA

Transcription

1 THE FLORIDA BAR, vs. IN THE SUPREME COURT OF FLORIDA Complainant/Petitioner, GREGORY A. MARTIN, Respondent/Cross-Petitioner. / Supreme Court Case Nos.: SC SC The Florida Bar File Nos.: ,077 (11D) ,002 (11D) ,357 (11D) ON APPEAL FROM A REFEREE ANSWER BRIEF OF RESPONDENT N. FRASER SCHUH, ESQ. Fla Bar No.: S.E. 3 rd Avenue Ext. Hallandale, Florida Tel: Fax: (954) nfschuhlaw@aol.com

2 TABLE OF CONTENTS TABLE OF CONTENTS... ii TABLE OF CITATIONS... iii SUMMARY OF THE ARGUMENT... 1 ARGUMENT... 1 I. THERE IS NO SUBJECT MATTER JURISDICTION OVER CASE NO.: SC AS TO RULE II. III. IV. THERE WAS NO SUBSTANTIAL COMPETENT EVIDENCE THAT RESPONDENT VIOLATED RULES (c) OR THERE IS NO SUBSTANTIAL COMPETENT EVIDENCE THAT RESPONDENT WORKED AS AN ATTORNEY ON THE SIDE AND WAS PAID ON THE SIDE. 11 NEITHER DISBARMENT NOR SUSPENSION IS WARRANTED UNDER THE FACTS OF THIS CASE 25 CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE ii

3 TABLE OF AUTHORITIES Cases HHT Properties, LLC v. The Henry Hotel, LLC, Miami-Dade County Circuit Court Case No CA (21)... 3 The Florida Bar v. Arcia, 848 So.2d 296 (Fla. 2003) The Florida Bar v. Barrett, 897 So.2d 1269, 1275 (Fla. 2005)... 5 The Florida Bar v. Burke, 578 So.2d 1099 (Fla. 1991) The Florida Bar v. Joy, 679 So.2d 1165 (Fla. 1996) The Florida Bar v. Nesbitt, 626 So.2d 190 (Fla. 1999) The Florida Bar v. Rogowski, 399 So.2d 1390 (Fla. 1981) The Florida Bar v. Senton, 882 So.2d 997 (Fla. 2004) The Florida Bar v. Vining, 761 So.2d 1044, 1048 (Fla. 2000)... 5 The Florida Bar v. Wolf, 932 So.2d 574 (Fla. 2006) iii

4 ANSWER BRIEF SUMMARY OF THE ARGUMENT The Referee lacked subject matter jurisdiction over the trust account violation alleged in Count III (i.e., Case No. SC09-561). Respondent acted only as an escrow agent and not as an attorney representing either party to the transaction. There was no substantial, competent evidence that Respondent violated Rule (c) as alleged in Count III, or Rule 5-1.1, even assuming there was subject matter jurisdiction. The record does not support a finding of intent, or even negligence. There was no substantial competent evidence that Respondent received legal fees for work done while employed by his former firm, deceived any client or caused loss of income or other damage to his former law firm. Even assuming the Referee s findings of fact are affirmed, a public reprimand or admonishment would be the appropriate sanction. ARGUMENT I. THERE IS NO SUBJECT MATTER JURISDICTION OVER CASE NO.: SC AS TO RULE Case No.: SC09-651, referred to at trial as Count III, should have been dismissed for lack of subject matter jurisdiction as to a violation of Rule before trial upon Respondent s motion to dismiss. Alternatively, the Referee should have found in Respondent s favor on Count III as to Rule after trial for the same

5 reason, that is, that Respondent was acting solely as an escrow agent, and not as an attorney representing a client. Rule 5-1.1(a) (1) of the Rules Regulating the Florida Bar, provides, in part: (a) Nature of Money of Property Entrusted to an Attorney. (1) Trust Account Required: Commingling Prohibited. A lawyer shall hold in trust, separated from the lawyer s own property, funds and property of clients or third persons that are in a lawyer s possession in connection with a representation. [Emphasis added]. The Comment to Rule of the Rules Regulating the Florida Bar states: The obligations of a lawyer under this chapter are independent of those arising from activity other than rendering legal services. For example, a lawyer who acts only as an escrow agent is governed by the applicable law relating to fiduciaries even though the lawyer does not render legal services in the transaction and is not governed by this rule. Respondent acted merely as an escrow agent regarding the Cohens provision of funds. It is undisputed that Respondent did not represent HHT Properties, LLC, the buyer and would-be developer, The Henry Hotel, LLC, the seller of the hotel, or the Cohens. (App. Exs. A-1 and A-2; Tr. at 345, l ; ; 352, L. 1-24). Appellant s own witnesses, Harvey Cohen and Nancy Kaim, admitted that neither had communicated with Respondent in any way prior to the receipt for deposit into escrow of the two checks. (Tr. at 161, l. 7-24; 163, l. 9-19; 175, l. 4-14; 183, l. 2-25; 184, l. 1-8). 2

6 Respondent, a commercial litigator, had represented Jason Zabaleta, a principal of the developer, in completely unrelated matters. The developer, HHT Properties, LLC, which Respondent did not represent, and Jason Zabaleta are clearly separate and distinct, such that Respondent s representation of Jason Zabaleta in an unrelated matter did not make him the lawyer for HHT Properties, LLC. See Rule of the Rules Regulating the Florida Bar. At the time of occurrence of the events in question, the developer was represented by Omar Ortega, Esq. of Dorta & Ortega, P.A., not Respondent, in litigation involving the Henry Hotel. See HHT Properties, LLC v. The Henry Hotel, LLC, Miami-Dade County Circuit Court Case No CA (21). Mr. Ortega, not Respondent, was the registered agent for the developer. (App. Exs. A-1, A-2 and A- 3). The above facts were also set forth in the affidavits filed by Respondent in support of his motion to dismiss, all of which were also admitted into evidence at trial. (App. Ex. A-1 and A-2). The record is clear that Respondent did not represent either party to the transaction. Therefore, Respondent is not subject to discipline under Rule of the Rules Regulating the Florida Bar for where acting merely as an escrow agent. The proper forum for the resolution of any dispute regarding the funds tendered by the Cohens was in the court system, not in a Bar disciplinary proceeding. The evidence shows that the Cohens resorted to the court system, and entered into a 3

7 Stipulation of Settlement with the developer in which they withdrew with prejudice all of the allegations in their lawsuit and received payment in full. (Tr. at 165, l ; 166, l. 4-6; A-1; Tr. at 360, l ). The record is also abundantly clear that Respondent did not receive so much as a penny of the proceeds of those two checks. (Tr. at 362, l. 9-17). Carlos Ruga, a Bar auditor, reviewed the pertinent records from all of Respondent s bank accounts and did not contradict Respondent s testimony that he received none of the proceeds of the Cohen checks for the simple reason that he could not. (Tr. p. 81, 1. 6, p. 111, l. 3). The Referee erred in denying Respondent s motion to dismiss Case Nos.: C for lack of subject matter jurisdiction, and in not dismissing this claim after trial. II. THERE WAS NO SUBSTANTIAL, COMPETENT EVIDENCE THAT RESPONDENT VIOLATED RULES (c) OR Assuming arguendo that the Referee had subject matter jurisdiction to decide the issues raised by Count III as to Rule 5-1.1, the Referee s findings of guilt should be reversed as to that Rule and Rule (the only two violations found by the Referee) due to the insufficiency of the evidence in the record. A lawyer s misconduct must be proven by clear and convincing evidence. The Florida Bar v. Neu, 597 So.2d 266, 268 (Fla. 1992). Clear and convincing evidence must be of such weight that it produces a firm belief or conviction, without hesitancy, 4

8 as to the truth of the allegations to be established. 1 In re Henson, 913 So. 2d 579, 590 (Fla. 2005). This Court reviews the record for competent, substantial evidence to support the Referee s finding of fact. The Florida Bar v. Barrett, 897 So.2d 1269, 1275 (Fla. 2005); The Florida Bar v. Vining, 761 So.2d 1044, 1048 (Fla. 2000). Complainant clearly failed to carry its burden of proof by introducing competent, substantial evidence of guilt of a violation of either Rule. In order to prove that Respondent violated Rule (c) by acting with dishonesty, fraud, deceit or misrepresentation, Complainant must prove the necessary element of intent. Neu, supra. Intent has been defined as the conscious objective or purpose to accomplish a particular result. Standards for Imposing Lawyer Sanctions and Black Letter Rules ( the Standards ). There is absolutely no competent, substantial evidence that Respondent acted with intent to misappropriate funds belonging to the Cohens. In fact, there is substantial evidence to the contrary. Neither the Cohens nor the broker, Nancy Kaim, had any communication whatsoever with Respondent at any relevant time. (Tr. at 161, l. 7-24; 163, l. 9-19; 175, l. 4-14; 183, l. 2-25; 184, l. 1-8; 349, l ; 350, l. 1-8; 351 l. 1-25; 352, l. 1; 353, l. 9-25; 354, l. 1-16). There is undisputed evidence that Respondent had no knowledge at any relevant time of any so-called advance condomium reservation 1 The vast majority of the findings of fact by the Referee upon which he based his conclusions are grounded solely upon his determination that Respondent s explanations of what happened, even though often supported by the Affidavits of third-party witnesses, were not credible. However, the Referee s rejection of portions of Respondent s testimony does not support any finding that the Bar s allegations are true. This is analogous to a party testifying it was raining and the finder of fact disbelieving it and finding that it was sunny, despite the fact it could just as easily have been overcast or snowing. Lack of credibility alone simply cannot create evidence of anything, much less clear and convincing evidence. 5

9 agreement. (App. Exs. A-1 and A-2; Tr. 351, l. 4-25; 352, l. 1). Respondent had been told that the checks were for an investment, not a purchase deposit. (App. Exs. A-1 and A-2; Tr. at 354, l ; 355, l. 1-4; 357, l. 7-25; 358, l. 1-4). Respondent was also told that the proceeds belonged to Jason Zabaleta. (App. Exs. A-1 and A-2 and Tr. at 357, l. 7-25; 358, l. 1-49). The undisputed facts show that Jason Zabaleta informed Respondent that (i) he had sold some of his ownership interest in HHT Properties, LLC to the Cohens, and guaranteed a return to the Cohens upon the sale of a condominium unit; and (ii) that the proceeds of the checks were his money. (App. Exs. A-1; Tr. at 357, l. 7-25; 358 l. 1-4). This three-day period had already passed when Respondent s office received the checks. Respondent testified without contradiction that he had no reason to disbelieve Jason Zabaleta or doubt his veracity. (Tr. at 356). The real estate broker, Nancy Kaim, did not testify that she had any contact or communication whatsoever with Respondent prior to the receipt of these two checks. She did not tell Respondent that she had sold any condominium units in the Henry Hotel, let alone twenty units. (Tr. at 348, l. 25; 349, l. 1-2). Obviously, she never told Respondent that the Cohens money was tendered as a deposit for the purchase of condominiums, and that he should not disburse until the closing of a purchase and sale of condominium unit. She never sent Respondent any advance condo reservation agreement, asked him to sign it or asked to see any escrow agreement. (Tr. at 182, l ; 183, l. 1-25; 184, l. 1-9). It is undisputed that Respondent was not the attorney for the developer, and 6

10 did not know that any real estate broker was working with the developer. (Tr. at 345, l ; 346, l. 1-21; 348, l ; 349, l. 1-9). One of the members of the Cohen family, Harvey Cohen, is a Florida attorney. (Tr. at 147, l ). He did not ask Respondent for a copy of the escrow agreement mentioned in the advance condo reservation agreement. (Tr. at 161, l. 25; 162, l. 1-25; 163, l. 1-19). Clearly, he did not tell Respondent that the proceeds of the two checks were to be held in escrow until the purchase and sale of a condominium unit had closed. (Tr. at 161, l. 7-24). He did not have a copy of the advance condo reservation agreement signed by Respondent, a copy of any escrow agreement, or a receipt. (Tr. at 159, l ; 160, lo. 1-5; 161, l. 25; l62, l. 1-25; 163, l. 1-9). Jason Zabaleta, the only person Respondent knew with regard to the subject transaction, never advised Respondent that there was any underlying written agreement. Having been advised that this was an investment as opposed to a purchase deposit, Respondent had no reason to believe that there was such a written agreement or to seek a copy of such agreement from Mr. Zabaleta. (Although there was no testimony regarding this issue, there is often no written agreement in such situations, particularly when dealing with accredited investors). In other words, Respondent fulfilled his duty by questioning the principal of the developer concerning the underlying agreement with the Cohens. He certainly had no duty to review any written agreement that he did not know existed. 7

11 It is undisputed that Respondent acted strictly in accordance with instructions given to him by Zabaleta regarding the deposit of the two checks and the disbursement of the proceeds of those two checks. (App. Exs. A-1 and A-2; Tr. at 357, l , 358, l. 1-25; 362, l. 4-17). Having been told by Jason Zabaleta that the checks were the initial installment of an equity investment in the Henry Hotel project and that the proceeds belonged to him, Respondent instructed his assistant in his absence to stamp an endorsement on the back of the checks and deposit them. (Tr. at 358, l , 359, l. 1-25; 360, l. 1-9). It is undisputed that Respondent was away from his home and office at the time (indeed, he was acting as the caregiver for his elderly mother, who was terminally ill with leukemia). Respondent s assistant did so; she filled out the deposit slip in her own handwriting and deposited both checks without Respondent ever having seen them. (Tr. at 357, l ). Respondent subsequently disbursed the proceeds of the two checks in accordance with Jason Zabaleta s instructions. (Tr. at 362, l ). As discussed above, he received none of the money. (Tr. 362, l. 9-14). Respondent did not see the checks for the first time until the following year when Harvey Cohen contacted him. (Tr. p. 357, 1. 16; p. 360, l. 9). Despite the conclusion that Respondent violated Rule (c), the Report makes no finding of fact that Respondent made any misrepresentation to anyone. The Report, at page 13, merely states Also somewhat defying credibility, Mr. Martin has testified that his first knowledge of the project came upon contact from Nancy Kaim, 8

12 an agent with Coldwell Banker, who indicated that someone was about to sue for their deposit back. [Emphasis added]. Respectfully, the Referee was clearly confused. Respondent has consistently stated that he knew about the Henry Hotel project. (Tr. at 344, l ; 345, l. 1-13). What he testified at the hearing was that he first became aware that the developer was allegedly selling condominium units when he received the phone call from Nancy Kaim, (Tr. at 353, l. 7-25), and not that this was the first time he heard of the project. That phone call (the first contact he ever had with Nancy Kaim) was made in November 2005, more than two months after Respondent had received the Cohens two checks. (Tr. at. 353, l. 7-25). Thus, there is no evidence that Respondent acted dishonestly, fraudulently, deceitfully or by making any misrepresentation whatsoever to anyone. E.g., Neu, supra; The Florida Bar v. Burke, 578 So.2d 1099 (Fla. 1991). The undisputed evidence all shows that the Respondent had no knowledge he was doing anything wrong, if, in fact, he was. As a result, there could be no intent on his part. This is a far cry from the clear and convincing evidence required to find Respondent responsible for a violation of Rule Obviously, given the complete lack of evidence of intent, a violation of Rule could be based only upon clear and convincing evidence that Respondent acted grossly negligently or negligently in disbursing the proceeds of the two checks as instructed by Jason Zabaleta. E.g., The Florida Bar v. Wolf, 932 So.2d 574 (Fla. 2006), Neu, supra; Burke, supra. Such evidence does not exist. 9

13 There is not even a suggestion that Respondent commingled funds; failed to maintain a receipts and disbursements journal for these checks; failed to record reasons for disbursements; or used the monies received to pay personal expenses, as was the case in matters where gross negligence or negligence was found by this Court. See, e.g., Wolf, supra; Neu, supra; Burke, supra; The Florida Bar v. Nesbitt, 626 So.2d 190 (Fla. 1999); The Florida Bar v. Rogowski, 399 So.2d 1390 (Fla. 1981). The Black Letter Rule in the Standards defines negligence as the failure of a lawyer to heed a substantial risk that circumstances exist, or that a result will follow, which failure is a deviation from the standard care that a reasonable lawyer would exercise in the situation. [Emphasis added]. There is no competent, substantial evidence that Respondent knew or should have known that the developer was allegedly illegally selling a condominium unit rather than lawfully raising capital from an investor. There is no competent, substantial evidence that Respondent knew or should have known there was a substantial risk that the proceeds would be allegedly misappropriated by Jason Zabaleta. There was no expert testimony that Respondent should have disbelieved what Jason Zabaleta had told him, undertaken an investigation, and located the makers of the checks and interviewed them. There was no expert testimony that any such duty would constitute standard care in the situation. Complainant did not point to any Bar Rule as authority for the proposition that having a non-lawyer stamp 10

14 an endorsement on a check and deposit it into a trust account as instructed is a per se deviation from standard care. Under these circumstances, had Respondent disobeyed Jason Zabaleta s disbursement instructions, he would have subjected himself to potential liability for conversion. Complainant failed to meet its burden of proof by clear and convincing evidence of a violation of either Rule or Rule in Count III, and the Referee s finding of guilt should be reversed. 2 III. THERE IS NO COMPETENT SUBSTANTIAL EVIDENCE THAT RESPONDENT WORKED AS AN ATTORNEY ON THE SIDE AND WAS PAID ON THE SIDE To reverse the Referee s findings of fact that Respondent practiced law on the side and was paid on the side, this Court need not reweigh the evidence or compare the credibility of witnesses who gave conflicting testimony. On the key allegations made in Count I (i.e., Bar File No ,357 (11D)), there was no conflicting evidence given by witnesses and no proof whatsoever that Respondent received any money that should have been paid to Adorno & Yoss, LLP ( Adorno ). The uncontradicted evidence supports the opposite conclusion. 2 Respondent respectfully submits that the ones who were negligent were Coldwell Banker and its agent, Nancy Kaim. The real estate broker never inquired whether the developer had received approval from the State of Florida to solicit and accept purchase deposits from condominium unit buyers, never met with Respondent; never even contacted Respondent to tell him who they were and what they were doing; never asked Respondent to see the Escrow Agreement ; never asked him to countersign or acknowledge any advance condo reservation agreement, as required on its face; did not send the checks to Respondent; and never asked him for any receipt, which was promised to the buyer in the advance condo reservation agreement. Had the real estate broker done any of those things, this never would have happened. 11

15 Salvador Bonilla-Mathe, the chairman of the board and chief executive officer of Gulf Corporation, gave an Affidavit that was admitted into evidence. (App. Ex. B). He stated without any contradictory evidence in the record that the two checks drawn on Gulf Corporation in the amounts of $15,300 and $20,000 were payments for legal work that Respondent had done for Gulf Bank in a major federal lawsuit before he joined Adorno & Yoss, LLP ( Adorno ). (App. Ex. B). Salvador Bonilla-Mathe stated in his Affidavit again without contradiction that Adorno had been paid for the work done by Respondent, other attorneys in the firm and paralegals. (App. Ex. B). No accounts payable to Adorno were on its books. (App. Ex. B). There is no evidence in the record that Respondent s employment agreement or shareholder s agreement obligated him to tell Adorno of those two payments by Gulf Corporation, as the Referee apparently found. That federal lawsuit was pending when Respondent joined Adorno, and Gulf Bank paid Adorno in full for its fees and costs incurred in that matter. (App. Ex. B; Tr. at 277, l ; 278, l. 1-5). Salvador Bonilla-Mathe also swore in his affidavit that Respondent was paid for services rendered by him as a director of Gulf Corporation. (App. Ex. B). There is no record evidence that Respondent breached any agreement with Adorno by serving as a director of Gulf Corporation, or that he was required to turn over a director s fee to the law firm. Respondent testified, without contradiction by Adorno s Managing Partner, George Yoss, that he was not precluded by any 12

16 agreement from serving as a director of a client corporation or receiving payment for acting as a director. (Tr. at 279, l ; 280, l. 1-25; 281, l. 1-21). Respondent was not the only attorney at Adorno to serve on a board of directors. (Tr. at 280, l. 1-13). Clearly, Salvador Bonilla-Mathe had no reason to perjure himself in his Affidavit, and no interest in the outcome of this proceeding. Complainant did not take the deposition of Salvador Bonilla-Mathe or any other employee, officer or director of Gulf Corporation. Complainant did not call as a witness any other employee, officer or director of Gulf Bank (or Gulf Corporation) to refute any of the sworn statements made by Salvador Bonilla-Mathe. Complainant did not call Salvador Bonilla-Mathe as a witness on its case or on rebuttal. His Affidavit stands completely uncontradicted and his credibility unimpeached. There was no finding made by the Referee that Salvador Bonilla-Mathe was not credible, nor could any such finding possibly have been made. The testimony by Respondent was simply corroborative of the evidence given by Salvador Bonilla-Mathe. He testified that there had been a dispute years before regarding the calculation of the fee he did before joining Adorno, and before completing its liquidation and dissolving Gulf Corporation paid him a portion of what Respondent believed he had rightfully been owed. (Tr. at 283 l ; 284, 1-25; 285, 1-3. Nevertheless, the Referee found that Mr. Martin s testimony was not credible. That finding is without supporting evidence in the record. 13

17 Alireza Rezai, the principal of Construction International, Inc., gave an Affidavit which was admitted into evidence. (App. Ex. C). He swore in his Affidavit that the $10,000 check was a payment made to Respondent for work done by a landscaping and irrigation company that Respondent owned, and not for any legal work. (App. Ex. C). It is undisputed that Respondent did own such a business, that its existence was disclosed to Adorno before Respondent was hired, and that Adorno never objected to Respondent s ownership of or part-time involvement in that business. (Tr. at 221, l ; 222, l. 1-16). Mr. Rezai confirmed under oath that Respondent never asked him or his company to pay him for any work done by him or anyone else at Adorno, and he was never paid for any legal work done by him or anyone else at Adorno. (App. Ex. C). As with Gulf Corporation, Complainant did not call Alireza Rezai as a witness on its case or on rebuttal. It did not take his deposition. It did not subpoena anyone else from Construction International, Inc. to testify at the hearing or at deposition. The Affidavit of Alireza Rezai stands uncontradicted and his credibility unimpeached. The Referee made no finding of fact that Alireza Rezai was not credible or that his factual statements were convoluted. Clearly, there is no evidence in the record to support any such finding. Respondent s testimony was merely corroborative of the sworn statements made by Alireza Rezai. There is no evidence in the record to support the finding that 14

18 Respondent did work on the side for Construction International, Inc. or was paid any money rightfully owed to Adorno, for any such work on the side. Michael Harmon, a trustee and settler of the Landau Beneficial Trust, and Allan Duprey, a business associate of Michael Harmon, made Affidavits which were admitted into evidence. (App. Ex. D and E). Both Michael Harmon and Allan Duprey swore under oath that Respondent was not paid for any legal work, and did not ask to be paid for any legal work. (App. Exs. D and E). Both stated under oath that all payments made by Respondent were done in accordance with instructions given by Michael Harmon. (App. Exs. D and E). Michael Harmon and Allan Duprey both swore under oath that Respondent was instructed on a number of occasions to cash checks and turn over the money to one of them, usually Michael Harmon. (App. Exs. D and E). There is no evidence in the record that Respondent kept any of that cash, or ever cashed any check on his own behalf. There is no corresponding deposit of cash into either of the personal bank accounts maintained in the name of Respondent and his wife. Quite the contrary, the affidavits of Michael Harmon and Allan Duprey confirm that every penny was accounted for by Respondent and disbursed in strict accordance with the instructions given him by Michael Harmon on behalf of the Landau Beneficial Trust. (App. Exs. D and E). Despite those uncontradicted affidavits, the Referee found that the Florida Bar auditor has identified tens of thousands of dollars in cash realized by Mr. Martin for cashed checks and other payments made from the trust account to benefit Mr. 15

19 Martin. The auditor obviously had no personal knowledge as to why any check was written and whether Respondent actually received the benefit of any such disbursement. The auditor did not even speak with Michael Harmon or Allan Duprey, let alone inquire of them what money Respondent actually received or retained, whether any payment was made without the prior authorization of Michael Harmon, or whether any money actually received by Respondent was made in payment for legal work done on the side. However, based solely upon the Bar auditor s surmises, Complainant persists that Respondent received for his own use $150,000 of these funds. This is pure fantasy. The Referee makes reference to a check for $3,500 and finds that it was reimbursement for expenses advanced by [Respondent]. Michael Harmon approved all of the disbursements from the Respondent s trust account. (App. Ex. D). Michael Harmon approved the payment of the $2,840 to a school as reimbursement of expenses owed to Respondent. (Tr. at 262, l ). Michael Harmon explained in his Affidavit, as did Allan Duprey, the use of Respondent s trust account and the reasons therefor. (App. Exs. D and E). Respondent testified, without contradiction, that the account at Mellon United Bank had been opened before Respondent joined Adorno, and that the bank statements had been sent to Adorno s accounting department for some time thereafter. (Tr. at 225, l ). Respondent testified bank statements for that account had been sent to Adorno for years, and that he had not been told to close that account. (Tr. at 225, l. 16

20 21-25; 226, l. 1-11). Respondent and Salvador Bonilla-Mathe (in his Affidavit) testified that the trust account at Gulf Bank had been opened at the request of Gulf Bank and under the threat of no longer sending business to Adorno unless there was some trust account relationship with the bank. (App. Ex B; Tr. at 226, l ; 227, l. 1-11). Regarding the $50,000 retainer to be paid to Adorno, it is undisputed that Respondent was never instructed by Michael Harmon or anyone else to disburse that amount (or other amount) to Adorno. (App. Ex. D). It was Michael Harmon who explained in his Affidavit why he did not do so. (App. Ex. D). Yet, again, Complainant did not call Michael Harmon or Allan Duprey as a witness on its case in chief or on rebuttal. Complainant did not depose Michael Harmon. Complainant did depose Allan Duprey, but chose not to submit the transcript of his deposition at trial. Complainant did not obtain any affidavit from Michael Harmon or Allan Duprey, or offer any evidence whatsoever to contradict their statements made under oath. Clearly, the Referee made no finding of fact that the affidavits of Michael Harmon and Allan Duprey were not credible, nor could the Referee have done so. Michael Harmon and Allan Duprey were disinterested witnesses, with no incentive to perjure themselves to help Respondent. To the contrary, had Michael Harmon disputed any disbursement made by Respondent or denied that he had authorized it, he had every incentive to testify against Respondent and even complain about him to the Florida Bar. 17

21 As before, Respondent s testimony was corroborative of that of Michael Harmon and Allan Duprey. There is no competent, substantial evidence to find that Respondent did work on the side for Landau Beneficial Trust or that he was paid by Landau Beneficial Trust for doing any work on the side. The Referee makes a gratuitous remark that he saw a certain analogy to a money laundering scheme under which funds come from an unknown source, possibly unclean, are run through a bank account, in this case an attorney s trust account, and exit said account clean. Rather than coming from an unknown source, the money was wire transferred from the trust account of an out-of-state attorney who represented Landau Beneficial Trust. (Tr. at 220, l ). That is hardly an unknown source. following: In the Summary and Findings section of the Report, the Referee states the In his almost seven years with the Adorno & Yoss firm, Gregory A. Martin has been shown in this proceeding to have violated his employment contract by maintaining clients separate from the firm in a total of three or four instances, Michael Harmon and the Landau Trust, Gulf Corporation and Jason Zabaleta. Absolutely nothing of that sort was established. Those findings are completely contradictory to the evidence in the record. With respect to Jason Zabaleta, it was never alleged that he was represented on the side by Respondent. That finding is yet another manifestation of the Referee s confusion. The two checks 18

22 that are the subject of Count III were delivered by Jason Zabaleta to Respondent s assistant five months after Respondent had left Adorno s employment. It is obviously impossible that anything alleged in Count III could have constituted a breach of Respondent s employment agreement with Adorno. As to Count I, absolutely nothing alleged by Complainant, and none of the evidence introduced by Complainant, bears the slightest connection to the legal representation of Jason Zabaleta. In his Summary and Findings the Referee also states: Had the Respondent from the beginning been candid and forthright and admitted both to the Florida Bar investigators that yes he had personally maintained clients in violation of his contract this matter may have been over with his firing and prosecution of the civil suit for damages. Those findings of fact are not only unsupported in the record, but contrary to undisputed evidence in the record. If Respondent lied in denying he had personally maintained clients in violation of his contract then it inevitably follows that Salvador Bonilla-Mathe, Alireza Rezai, Michael Harmon and Allan Duprey each committed perjury. There is not a scintilla of evidence in the record that those four witnesses (or Respondent) lied. The reference to the civil suit brought by Adorno against Respondent is still one more vivid demonstration of the Referee s confusion. The final judgment was offered into evidence only at the penalty phase of the hearing. The negligence alleged by Adorno in that lawsuit has absolutely nothing to do with anything alleged 19

23 by Complainant. The lawsuit does not even contain a cause of action for breach of Respondent s employment agreement or any other contract. The judgment is, in fact, on appeal and, therefore, has no preclusive or conclusive effect. See Martin v. Adorno & Yoss, LLP, Case No , pending in the Third District Court of Appeal. Complainant has spent years trying to unearth some evidence that Respondent did work on the side and that he was paid on the side. Not only did Complainant subpoena years worth of Respondent s trust account and (post-may 2005) operating account records, but it subpoenaed years worth of his and his wife s personal bank account records. All of these subpoenas were served without notice to Respondent or his wife. Carlos Ruga, the Bar auditor and the principal witness for Complainant concerning these allegations, never contacted Salvador Bonilla-Mathe, Alireza Rezai, Michael Harmon or Allan Duprey, even after receiving those Affidavits in December, 2009 in support of a motion for partial summary judgment. 3 Despite the lack of supporting evidence, Complainant persisted in attempting to prove that the Respondent had a law practice on the side and was paid for legal work he allegedly did on the side. Unfortunately for Complainant, the surmises of a Bar auditor do not constitute evidence, much less clear and convincing evidence, of anything. 3 In a twist of irony, Complainant claims that Respondent had a duty to disbelieve Mr. Zabaleta concerning the Cohen checks and investigate further, but submits Mr. Ruga s guesses as the sole support of most of its allegations in Count I, without presenting any evidence that it attempted to determine that these guesses were accurate, despite the fact that Respondent s reputation and livelihood were at stake. 20

24 Despite the years of investigation and the subsequent legal proceedings, Complainant never produced a single bill for work done by Respondent on the side or one witness who could testify that Respondent did legal work on the side or was paid for legal work done on the side. The time Respondent spent on Michael Harmon and the Landau Beneficial Trust s matters was not hidden from the firm and in fact, the letter prepared by Respondent and introduced into evidence by Complainant were obviously left behind at Adorno when Respondent left the firm. There is no evidence whatsoever from Salvador Bonilla-Mathe, Alireza Rezai, Michael Harmon or Allan Duprey that Respondent made a false statement to any one of them. Indeed, the Referee made findings of fact that no client had complained about Respondent or anything he had done. The Referee s Report acknowledges that no client suffered any loss due to Respondent. At most, Complainant proved that Respondent, in his enthusiasm to land a whale of a client for Adorno, should have used better judgment in not following up to have a client number issued by the firm or tell the firm how Michael Harmon had instructed the money to be disbursed. With the benefit of hindsight, he certainly would have done so. The fact that Respondent devoted approximately hours in this business development effort is neither unusual nor disturbing, and certainly no evidence that he personally maintained Michael Harmon and Landau Beneficial Trust as clients. Rather, both Michael Harmon (in his Affidavit) and Respondent testified that the agreement was made with Adorno, not Respondent. Michael 21

25 Harmon stated in his Affidavit that he always understood that he was a firm client. He confirmed that he did not meet with Respondent outside the office of Adorno (except for a couple of social occasions) and made no attempt to hide from Adorno. There is insufficient evidence to support a finding of guilt on Count I. There is certainly no clear and convincing evidence that Respondent knowingly made a false statement of material fact or law to a third person, as prohibited by Rule (a). There is no clear and convincing evidence that Respondent made a false statement of material fact to Complainant or the Referee, in violation of Rule (a). There is insufficient evidence to support the finding that Respondent violated or attempted to violate the Rules of Professional Conduct. Finally, there is no evidence in the record that Respondent acted with the requisite intent to violate Rule (c) by engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. Therefore, the Referee s determination that Respondent is guilty of violating each of those Rules with regard to Count I should be reversed. IV. NEITHER DISBARMENT NOR SUSPENSION IS WARRANTED UNDER THE FACTS OF THIS CASE Even if this Court were to affirm the Referee s findings of guilt, neither disbarment nor suspension would be warranted. In recommending disbarment, Complainant frequently distorts the evidence or lack of evidence in the record, and 22

26 often makes factual statements that are flatly contradicted by the evidence in the record. While Respondent is accused of stealing fees from three firm clients, those same clients swore under oath they never paid Respondent a penny for legal work done while he was at Adorno. There was no finding that Respondent stole money from Adorno or any of those three. Complainant alleges that Respondent deceived Michael Harmon and Landau Beneficial Trust. Mr. Harmon, however, declared in his Affidavit, I have no first hand knowledge of anything that Mr. Martin did that was not performed honestly and above reproach. I consider Mr. Martin to be a credit to the legal profession in every respect. Those are hardly the words of a witness who was deceived by Respondent. Complainant s argument that Respondent deceived Mr. Harmon is at odds with its accusation that Respondent did work for the Landau Beneficial Trust on the side and was paid on the side. If Mr. Harmon were deceived into believing that Adorno represented him, why would he supposedly have paid Respondent on the side as opposed to Adorno directly? Notably the Report contains no finding of fact that Respondent deceived Mr. Harmon, or that the retainer agreement was fraudulent in any respect. Complainant relies essentially on three decisions in advocating disbarment as a cumulative sanction. However, none of these decisions supports Complainant s arguments. 23

27 The decision in The Florida Bar v. Arcia, 848 So.2d 296 (Fla. 2003), is not even remotely on point. In Arcia, the lawyer formed his own professional association ( PA ) while an associate at a law firm, and represented firm clients through his PA. He solicited firm clients by intercepting calls to the firm. He deposited checks from firm clients into his PA s account. He would sometimes intercept mail to the firm and take checks made payable to his PA. He induced some of the firm s clients to pay his PA by falsely representing himself to be a partner and instructing them to make payment to his PA. He prepared misleading documents such as stationery. He never told the firm about his PA and never turned over any of the fees. He filed federal court pleadings saying he and a firm partner were representing a client in the case, when the partner knew nothing about it. He repeatedly lied to the firm and clients, and ultimately admitted taking $62,000 in fees owed to the firm. The firm lost clients as a result, including H & R Block franchisees. He created a conflict of interest by representing a client adverse to a firm client. As a sanction, he received a three year suspension, not disbarment. Here, the clients whom Respondent supposedly represented on the side and who allegedly paid Respondent for legal work done while he was at Adorno denied ever being represented on the side or paying Respondent for any legal work done while at the firm. In Arcia, there was no such denial by the clients. Respondent did not mislead any client, intercept any client or prospective client; create any false documents; file any false pleadings, or cause any loss of clients or other damage to 24

28 Adorno. Arcia received a three-year suspension under circumstances substantially more egregious than those found by the Referee, herein. This Court s decision in The Florida Bar v. Senton, 882 So.2d 997 (Fla. 2004), is even farther afield than the facts in Arcia. In Senton, the lawyer pressured his client into having sexual intercourse on two occasions. Afterward, she collected evidence, including hair samples and seminal fluid, placed them in a bag and sealed it with tape. She later filed a police complaint, accusing him of twice assaulting her. He denied ever having engaged in sexual conduct with her. A DNA analysis of the samples she had collected concluded that he would be 1.4 billion times more likely a suspect than two unknown people from the population. The referee found that he fabricated testimony and evidence. He found that Senton exploited the lawyer-client relationship by coercing a client into sexual conduct under threat, and took advantage of her. He also found that Senton engaged in bad-faith obstruction of the disciplinary proceeding by intentionally failing to comply with rules and orders, and giving a blood sample for DNA testing only when ordered to do so by this Court. The Report contains no finding of fact that Respondent lied under oath, fabricated evidence or obstructed the proceeding. Senton faced overwhelming DNA evidence of sexual conduct with his client. Here, Respondent s denial of doing work on the side and being paid on the side was denied under oath by Salvador Bonilla-Mathe, the chairman and CEO of Gulf Corporation, Alireza Rezai, the 25

29 president of Construction International, Inc., Michael Harmon of Landau Beneficial Trust, its trustee and settler, and his business associate, Allan Duprey, the very clients for whom Respondent allegedly did work on the side. To find that Respondent had lied under oath, the Referee could only have decided despite a total lack of evidence to the contrary that all of those four persons perjured themselves. There is not even a suggestion in the record that Respondent fabricated the affidavits of those four material witnesses, let alone other evidence presented to the Referee. The decision in The Florida Bar v. Joy, 679 So.2d 1165 (Fla. 1996), which Complainant cites as authority for the proposition that Respondent was negligent by not requesting a copy of the advance condominium reservation agreement, is readily distinguishable. In Joy, the attorney represented both a corporation and its minority shareholders. He represented the minority shareholders without the knowledge of the corporation s majority shareholder. Apartments owed by the corporation were destroyed by fire, and the company retained Joy to sue the insurer, which had denied the corporation s claim. A settlement was reached pursuant to which the insurer sent a check for $500,000 payable the lawyer s trust account for the benefit of his corporate client and the second mortgagee. The transmittal letter with the $500,000 check stated that the funds could not be disbursed until a settlement agreement had been reached between the corporation and the second mortgagee. Joy discussed with the majority shareholder and president the possibility of moving the money to try to shield it from 26

30 creditors, including the second mortgagee. The corporation s president rejected that advice. Without the knowledge of his corporate client, the insurance carrier who sent him the check or the second mortgagee, Joy removed the money from his trust account and transferred it to an account in the name of his wife, as trustee for a nonexistent corporation. He then told the second mortgagee s lawyer that he had disbursed the funds and that it had no further interest in the insurance proceeds. When the president of his corporate client learned what had happened, he fired Joy as corporate counsel and advised the second mortgagee that the corporation would honor its agreement with it. Joy had received $93,500 in fees from the money. He also received a 91 day suspension from this Court. Unlike Respondent, Joy represented a party in the lawsuit that culminated in the settlement with the insurer. He knew full well the terms of the escrow agreement and the restriction imposed by the maker on its disbursement. Respondent did not represent a client in the underlying matter. He did not know of the existence of any advance condo reservation agreement. He did not know of any possible restriction on the disbursement of money (apart from any three-day rescission right arising under Florida s securities laws). He verified with Jason Zabaleta that the moneys were investment funds that belonged to Jason Zabaleta. There are no findings by the Referee to the contrary. Respondent followed instructions regarding the disbursement of the money; Joy deliberately disobeyed them. Joy misrepresented to 27

31 the second mortgagee that the funds had been transferred and it had no further interest in the money. Respondent is not even accused of making a misrepresentation to the Cohens. Finally, Joy received nearly 20% of the money; Respondent received nothing. Complainant also bases its argument for additional discipline on three of the provisions of the Standards, which it claims apply in this instance, 4.61, 5.11 (f) and 7.1. However, the underlying facts and findings of the Referee do not support Complainant s arguments. Standard 4.61 states: Disbarment is appropriate when a lawyer knowingly or intentionally deceives a client with the intent to benefit the lawyer or another regardless of injury or potential injury to the client. However, there was no finding by the Referee that Respondent employed the retainer agreement to deceive Mr. Harmon, no finding as to Respondent s intent at the time the retainer agreement was signed and no finding that Mr. Harmon was deceived at all. In fact, the Report, at page 14, states that [h]ad the Respondent from the beginning admitted to the Adorno & Yoss firm and the Florida Bar investigator that yes he had personally maintained clients in violation of his contract. The Report [Emphasis added.], similarly states that [w]hat we do have, however, is an Officer of the Court not being truthful to the law firm that employed him, or the Florida Bar investigators or finally to this Court during these proceedings. [Emphasis added.] Nowhere does the Referee mention any deceit perpetrated by Respondent on Michael Harmon or the Landau 28

32 Beneficial Trust. In any event, Complainant s argument in this regard is belied by Mr. Harmon s affidavit, as well as logic. As mentioned above, Mr. Harmon in his affidavit affirms his belief in the honesty and integrity of the Respondent. These are hardly the words of a man who has been deceived. In addition, Complainant s position is illogical. If Respondent wanted to represent Michael Harmon and the Landau Beneficial Trust on the side, it would make more sense not to have Mr. Harmon sign an agreement with Adorno, given the fact that the purported fees were paid to Respondent and not to Adorno. Would a man who controls a multi-million dollar trust pay $100,000 in fees to an individual lawyer where he has signed a retainer agreement with a firm? It is much more likely that the funds supposedly paid to Respondent as fees were actually the repayment of expenses and, as to the bulk of the $100,000, checks cashed by Respondent for Mr. Harmon, who did not have a local bank account as testified by Respondent and as set forth in the affidavits of Michael Harmon and Allan Duprey. In any event, the fact that the Referee did not make a finding that Respondent deceived his purported client renders Complainant s argument that Standard 4.61 applies a specious one. 4 Complainant next argues that Respondent should be disbarred under Standard 5.11 (f) for his deceptive practices, theft from his firm, preparation of fraudulent 4 The lack of a finding that Respondent deceived or misled a client also renders the other subsections of Standard 4.6 inapplicable. 29

33 documents in order to effectuate the misconduct, and outright misrepresentations to the court during Referee proceedings. In the first place, it is apparent from a review of this Standard that it is applicable only in egregious situations, such as felonious or seriously criminal conduct or similar heinous deceitful and dishonest activities, such as murder. The Referee said as much in his Report at page 15. In addition, the Referee did not find theft from Adorno or the preparation of fraudulent documents referred to in Complainant s arguments. Complainant s half-hearted argument in its Brief in support of the application of this Standard speaks volumes. It simply does not apply under the findings of fact by the Referee. Standard 5.12, which would provide for the suspension recommended by the Referee, likewise is inapplicable in that it requires a finding of criminal conduct on the part of an attorney. There was no allegation or finding of any criminal conduct on the part of Respondent. Assuming Respondent s conduct was a violation of Bar Rules, which he denies, the only subsection of Standard 5.1 which could be applicable is 5.13, which holds that when a lawyer knowingly engages in any other conduct that involves dishonesty, fraud, deceit or misrepresentation and that adversely reflects on the lawyer s fitness to practice law. Standard 5.13 provides public reprimand as the discipline to be imposed. Finally, Complainant argues that Standard 7.1 requires disbarment of Respondent. Rule 7.1 states: 30

34 Disbarment is appropriate when a lawyer intentionally engages in conduct that is a violation of a duty owed as a professional with the intent to obtain a benefit for the lawyer or another, and causes serious or potentially serious injury to a client, the public, or the legal system. This Standard does not apply in that there was no finding of intent and no finding of serious injury or potentially serious injury to a client, the public, or the legal system. The Referee found no injury, much less serious injury, to Michael Harmon, the Landau Beneficial Trust, Jason Zabaleta, Gulf Corporation or Construction International, Inc., the only clients mentioned in these proceedings. There was also no finding of injury to public or to the legal system as a result of any acts found to have been engaged in by Respondent, nor could there be under the Referee s findings of fact. The same arguments apply to Standard 7.2, relating to suspension, which requires not only knowing conduct, but also requires injury or potential injury to a client, the public or the legal system, although not serious injury as required in Standard 7.1. None of the Standards calling for the disbarment or suspension of a lawyer is applicable here, and Respondent s discipline should, at the most, be a public reprimand. CONCLUSION There was no competent, substantial evidence in the record of guilt of any of the violations alleged in Count I or Count III. Therefore, the Report should be reversed. 31