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SJC-12148
IN THE MATTER OF ARIEL J. STRAUSS.
Suffolk. January 24, 2018. - April 12, 2018.
Present: Gants, C.J., Lowy, Cypher, & Kafker, JJ.
Attorney at Law, Disciplinary proceeding, Misuse of client
funds, Suspension.
Information filed in the Supreme Judicial Court for the
county of Suffolk on January 20, 2016.
The case was heard by Duffly, J.
Terrence D. Pricher, Assistant Bar Counsel.
Jeffrey D. Woolf for Board of Bar Overseers.
Thomas F. Maffei for the respondent.
LOWY, J. We consider in this case the information filed by
the Board of Bar Overseers (board) that an attorney
intentionally misused a client's funds with temporary
deprivation resulting, and its recommendation as to the
appropriate level of discipline to be imposed. A single justice
of this court suspended Ariel J. Strauss (respondent) from the
2
practice of law for six months, and the board and bar counsel
appealed.1 For the reasons that follow, we reverse the order of
term suspension and, accepting the board's recommendation, order
an indefinite suspension.2
Background. On August 25, 2014, bar counsel filed a two-
count petition for discipline against the respondent. Count one
alleged that between June 1, 2012, and September 30, 2013, the
respondent failed to properly maintain a check register for his
client trust account, and failed to perform a reconciliation of
the account periodically. The respondent did not dispute the
underlying facts as to count one, and a hearing committee of the
board (committee) agreed that the conduct violated Mass. R.
Prof. C. 1.15 (f) (1) (B) and (E), as appearing in 440 Mass.
1338 (2004).
The second count involved the respondent's conduct in
connection with the settlement of a client's personal injury
claim. The committee found that the respondent (1) failed to
safeguard the client's funds in a trust account, in violation of
1 This bar discipline appeal is subject to S.J.C. Rule
2:23 (b), 471 Mass. 1303 (2015). After review of the
preliminary memoranda and record appendix filed pursuant to the
rule, we directed the appeal to proceed in the regular course.
2 We deny the motion to dismiss the appeal that was filed by
Ariel J. Strauss (respondent). We allow his motion to
supplement the record appendix to include additional materials
before the single justice.
3
Mass. R. Prof. C. 1.15 (b) (1), as appearing in 440 Mass. 1338
(2004); (2) failed to pay the client the proceeds of her
settlement promptly, in violation of Mass. R. Prof. C. 1.15 (c),
as appearing in 440 Mass. 1338 (2004); (3) failed to provide the
client with notice of withdrawal of his fee, the amount of the
fee, an itemized bill for services rendered, and a balance of
the client's funds left in the account, in violation of Mass. R.
Prof. C. 1.15 (d), as appearing in 440 Mass. 1338 (2004); (4)
authorized distributions that caused a negative balance in his
client trust account, in violation of Mass. R. Prof. C. 1.15 (f)
(1) (C), as appearing in 440 Mass. 1338 (2004); and (5) engaged
in conduct involving dishonesty, fraud, deceit, or
misrepresentation, in violation of Mass. R. Prof. C. 8.4 (c) and
(h), 426 Mass. 1429 (1998).
The committee determined that the respondent's misconduct
included a "[k]nowing misuse of one client's funds for the
benefit of another," and recommended the respondent be
indefinitely suspended from the practice of law. The board
adopted the committee's findings and recommendation, and an
information and record of proceedings was filed in the county
court. After a hearing, the single justice issued an order
imposing a six-month suspension.
Discussion. There is no dispute that the respondent
violated multiple rules of professional conduct relating to the
4
appropriate use and maintenance of client trust accounts. The
disciplinary proceedings therefore focused on the allegation
that was in dispute and carried the most substantial sanction:
whether the respondent intentionally misused client funds, with
temporary deprivation resulting. Our review of the factual
findings concerning this allegation is limited. We uphold the
subsidiary facts found by the committee and adopted by the board
"if supported by substantial evidence, upon consideration of the
record, or such portions as may be cited by the parties."
S.J.C. Rule 4:01, § 8 (6), as appearing in 453 Mass. 1310
(2009). "While we review the entire record and consider
whatever detracts from the weight of the board's conclusion, as
long as there is substantial evidence, we do not disturb the
board's finding, even if we would have come to a different
conclusion if considering the matter do novo." Matter of Segal,
430 Mass. 359, 364 (1999). See id., quoting G. L. c. 30A, § 1
("'Substantial evidence' means such evidence as a reasonable
mind might accept as adequate to support a conclusion'"). See
Matter of Slavitt, 449 Mass. 25, 30 (2007). We give no special
deference to the determination of the single justice. See
Matter of Tobin, 417 Mass. 81, 88 (1994). See also Matter of
Karahalis, 429 Mass. 121, 123 (1999).
1. Facts as found by the committee and adopted by the
board. According to the committee's findings, the respondent
5
represented a client on a contingency fee basis in connection
with a personal injury claim. With the client's authorization,
the respondent settled the claim for $5,000, and the client
signed a release in early December, 2012. At the time, the
client asked the respondent for her share of the settlement in
cash because she would be traveling internationally, and
believed cashing a check would be difficult at her destination.
The respondent agreed. It was not until about December 20,
2012, after the client had left on her trip, that the respondent
received two settlement checks from the defendant's insurer in
the personal injury claim: one in the amount of $558.51,
representing the amount of a claimed lien for medical expenses,
payable to the lien claimant; and the other for the lien-free
balance of $4,441.49. The respondent deposited the lien-free
settlement check into his client trust account and, the next
day, withdrew his fee of $ 1,666.67. Before the deposit, the
respondent had a zero balance in that account, thus the entire
balance was due to the client. The respondent failed to notify
the client that he had withdrawn his fee. He also failed to
provide her a statement of the amount of the withdrawal or the
balance of her funds in the account, any explanatory statement,
or the amount due to her.
Unrelated to the client, on December 28, 2012, the
respondent deposited an additional $800 in cash into his client
6
trust account, raising its balance to $3,574.82. On January 13,
2013, the respondent wrote a $3,400 check on the account for the
benefit of his father. According to the respondent's bank
records, the balance of the account fell to $175.82 at a time
when the respondent was required to hold $2,774.82, for his
client. After a check drawn on the account was dishonored for
insufficient funds, bar counsel was notified. See Mass. R.
Prof. C. 1.15 (h), as appearing in 440 Mass. 1338 (2004).
After approximately two weeks abroad, the client returned
to the United States in January, 2013. The committee found
that, on her return, she "wanted as much of her money as the
respondent could give her lien-free as soon as he could give it;
she did not insist on payment in cash and she did not authorize
the respondent to hold the lien-free portion of the settlement
until the lien was resolved." The committee did not credit the
respondent's testimony that, after her return, the client wanted
to delay receipt of the settlement funds until issues associated
with the $558.51 were resolved.3 On March 6, 2013, the
3 We recognize that the single justice took a different view
of the evidence. Neither the single justice nor this court,
however, considers the findings of the Board of Bar Overseers
(board) de novo. See Matter of Segal, 430 Mass. 359, 364
(1999). The scope of our review is limited to ascertaining
whether there is substantial evidence to support the board's
findings. Id. The hearing committee (committee) found, and the
board accepted, that when the client returned to Massachusetts
after her trip, she wanted the proceeds of her settlement. She
7
respondent paid the client the entire $2,774.82 due to her in
cash, as well as the $558.51 medical expense lien, also in cash,
and she signed a receipt.4
The respondent claimed that he neither misused his client's
funds nor deprived her of their use. Despite the client trust
account bank records to the contrary, he asserted that when he
deposited the settlement check in his trust account in December,
2012, he was holding cash in excess of that amount for the
benefit of another client, his father.5 He testified that, after
depositing the settlement check, he reserved an equivalent
amount in cash in an envelope on his desk that he "earmarked"
for his client based on her pre-trip request that she be paid in
did not insist on cash, which she previously requested because
of her impending trip, and she did not authorize the respondent
to retain all of the settlement funds until the medical lien was
resolved. The client testified that she did not know why she
had had to wait so long for the funds, and that she was
impatient. Although the respondent testified otherwise, the
committee was not required to credit his testimony.
4 The respondent advised the client of his belief that the
lien was improper. He paid the client the amount of the lien,
$558.51, from his own funds, and the receipt signed by the
client indicated that the respondent was authorized to retain
any of the lien amount he thereafter recovered.
5 The respondent claimed that the funds were part of a total
of $20,000 in cash that he had received from his father.
However, he deposited only $16,000 of that amount into his
client trust account, and the deposits were listed differently
on two separate sets of records he provided to bar counsel.
Neither of those records was consistent with bank records for
the same account.
8
cash. He explained that he then held the funds in the trust
account for his father's benefit.6 In addition, he claimed that
the client instructed him not to pay her any of the settlement
proceeds, until the question whether the lien was proper had
been resolved. Not only did the committee decline to credit the
respondent's explanation, it also found that the respondent
provided bar counsel with "reconstructed records" to conceal his
misuse of the client's money for his father's benefit. There
were also documents and other evidence that undermined the
respondent's version.
The committee is "the sole judge of the credibility of the
testimony presented at the hearing." Matter of Saab, 406 Mass.
315, 328 (1989), quoting S.J.C. Rule 4:01, § 8 (3), as appearing
in 381 Mass. 784 (1990). It may decline to credit a witness's
testimony, provided it explains its reasoning and those reasons
are supported by the record. See Herridge v. Board of
Registration in Med., 420 Mass. 154, 164-165 (1995), S.C., 424
Mass. 201 (1997). The committee was not required to credit the
6 In support of his explanation, the respondent offered
records of cash receipts and disbursements from his client trust
account, his father's testimony, the testimony of his client
concerning her desire to be paid in cash, and the fact that she
ultimately was paid in cash. The committee, however, found that
the respondent fabricated certain of the records to support his
claim. In one example, the committee noted that one record
ostensibly created in September, 2013, included transactions
from November, 2013.
9
respondent's assertion that he held thousands of dollars in cash
for the client's benefit for several months.7 "[A]rguments
hinging on [credibility] determinations generally fall outside
the proper scope of our review," Matter of McBride, 449 Mass.
154, 161-162 (2007), and they will not be rejected unless it can
"be said with certainty that [a] finding was wholly inconsistent
with another implicit finding" (quotations and citation
omitted), Matter of Murray, 455 Mass. 872, 880 (2010). This is
not such a case. On the contrary, bank records established that
the respondent deposited the settlement check into the trust
account, and then promptly drew a check on those funds for the
benefit of his father.
Even apart from the committee's credibility determinations,
there is substantial evidence to support the hearing committee's
findings that the respondent deposited settlement funds
belonging to the client into his client trust account, and then
7 The committee expressly did not credit the respondent's
testimony that he held cash for the client in an envelope in his
office. We do not therefore consider whether a contrary finding
would have warranted a different result. See Matter of Murray,
455 Mass. 872, 873 (2010) (adopting rebuttable presumption of
intentional misuse with permanent deprivation, where respondent
received cash belonging to client, failed to deposit in client
trust account, and could not account for portion of it); Matter
of Gonick, 15 Mass. Att'y Discipline Rep. 230, 237, 239 (1999)
(misuse of client funds occurred when funds removed from trust
account and deposited into personal account). See also Matter
of Levy, Supreme Judicial Court, No. BD-2016-42, 5-6 (Aug. 26,
2016) (misuse of client funds found even though lawyer had
substantial funds in other accounts at same bank).
10
intentionally misused them by writing a check on those funds for
the benefit of his father. The delay in paying the client her
settlement funds, at least after the client returned from her
trip, supports the conclusion that she was temporarily deprived
of her funds.
2. Conduct of the hearing. Before the single justice, the
respondent claimed that the committee improperly considered
evidence of uncharged misconduct without according him a fair
opportunity to defend against it. After reviewing the record,
we reject the claim. Proceedings before the board and its
hearing committee need not comply rigidly with the rules of
evidence and procedure that are applicable in court. See Matter
of Dasent, 446 Mass. 1010, 1012 (2016). Evidence introduced by
bar counsel for the purpose of impeaching the credibility of the
respondent and the respondent's witness, his father, and
evidence of his father's business practices -- including his
alleged reliance on cash transactions -- was relevant to the
credibility of the respondent's claim that he substituted cash
that he had held for his father for funds deposited in his
client trust account.8 The committee properly could consider
8 Among other things, the respondent testified that he
received approximately $20,000 in cash from his father, which he
deposited in increments of $4,000 or $8,000 into his client
trust account. As the committee observed, his trust account
11
this evidence in making credibility determinations and in
concluding that the respondent's explanation was not credible.9
See Matter of Barrett, 447 Mass. 453, 460 (2006).
The respondent also claimed that bar counsel impermissibly
shifted the burden of proof to the respondent. Although bar
counsel argued that the respondent and his father were not
testifying truthfully, there is nothing to the respondent's
claim that the assertions effectively shifted the burden to the
respondent to disprove bar counsel's allegations of professional
misconduct. See Matter of London, 427 Mass. 477, 482 (1998).
Nor did the respondent object to bar counsel's opening
statement, which directly addressed the respondent's defense.
During closing argument, the respondent repeatedly pointed to
bar counsel's burden of proof, and emphasized that mere
disbelief of the respondent's testimony does not equate to
evidence of misconduct. There was substantial and substantive
records did not list the cash deposits in a manner consistent
with the bank records.
9 With respect to the respondent's claim that his due
process rights were violated by the committee's consideration of
certain misconduct not charged in the petition for discipline,
as the board's findings indicate, those matters could be "put to
one side" because "[t]he committee did not mention these matters
until it had announced its amply supported and articulated
findings and conclusions, and after it had determined that it
felt 'constrained' to apply the presumptions under [Matter of
Schoepfer, 426 Mass. 183, 187 (1997)]." In any event, we have
permitted uncharged misconduct to be considered in aggravation
of sanction. See Matter of the Discipline of an Attorney, 448
Mass. 819, 825 n.6 (2007).
12
evidence to support the board's conclusions as to each element
of the charged misconduct. See Matter of Balliro, 453 Mass. 75,
84 (2009).
3. Sanction. Having concluded there was substantial
evidence of the charged misconduct, we turn to the question of
sanction. As to that, we give deference to the board's
recommendation, and review the discipline imposed by the single
justice de novo, to determine whether it "is markedly disparate
from judgments in comparable cases." Matter of Slavitt, 449
Mass. at 30, quoting Matter of Finn, 433 Mass. 418, 423 (2001).
See Matter of Greene, 476 Mass. 1006, 1008 (2016).
"Fundamentally, however, '[e]ach case must be decided on its own
merits and every offending attorney must receive the disposition
most appropriate in the circumstances.'" Matter of Foley, 439
Mass. 324, 333 (2003), quoting Matter of the Discipline of an
Attorney, 392 Mass. 827, 837 (1984).
Where, as here, an attorney has intentionally misused
client funds with the intent to deprive the client of those
funds, or where the client actually was deprived of the funds,
regardless of the attorney's intent, the presumptive sanction is
indefinite suspension or disbarment. Matter of Schoepfer, 426
Mass. 183, 187 (1997). We apply that presumption because "there
is minimal risk that an attorney's misuse of those funds will
arise from any confusion, misunderstanding, or ambiguity as to
13
whether the funds belong to the client or the attorney." Matter
of Sharif, 459 Mass. 558, 567-568 (2011).
We have no difficulty concluding that the respondent
intentionally misused his client's funds: the funds were
properly deposited into his client trust account, and then
improperly withdrawn for the benefit of another. The committee
simply was not required to credit the respondent's assertion
that he kept thousands of dollars in cash in an envelope for
several months. Although the respondent eventually delivered
the funds to the client, there is also no doubt that she was
temporarily deprived of their use.
We agree with the single justice's observation that there
may be circumstances where there are "clear and convincing
reasons" to depart from the presumptive sanction. See Matter of
Sharif, 459 Mass. at 566-567. This is not, however, such a
case. The board's findings establish that the respondent
intentionally -- not negligently -- misused client funds. They
also establish that the client was deprived of the use of the
funds for a relatively short period. But this is precisely the
circumstance for which Matter of Schoepfer, 426 Mass. at 187,
adopted a presumptive sanction of disbarment or indefinite
suspension. Although the evidence consisted of misuse of a
single client's funds, and those funds were delivered to the
client within weeks or months of the settlement, attorneys are
14
obliged to safeguard client funds regardless of the amount.
They may not treat client funds as fungible commodities, using
funds belonging to one client for the benefit of another, or
even for their own purposes. We view the circumstances
presented as more egregious than those presented in Matter of
Sharif, 459 Mass. at 571 (three-year suspension for intentional
misuse of funds advanced for fees). Compare Matter of Pudlo,
460 Mass. 400, 407-408 (2011) (one-year suspension for negligent
expenditure of unearned legal fees owed to client to pay his own
expenses, and related improprieties in record-keeping and
notification); Matter of Murray, 455 Mass. 872, 888 (2010) (six-
month suspension for misuse of client funds);10 Matter of Ryan,
24 Mass. Att'y Discipline Rep. 621, 631 (2008) (nine month
suspension for misconduct including charging excessive fee and
commingling and negligent misuse of client funds).
10We recognize that bar counsel and respondents have
sometimes submitted stipulations concerning misconduct and
disciplinary recommendations. Those stipulations have sometimes
led to entry of lesser sanctions, generally in deference to the
board's recommendation. See, e.g., Matter of Cedrone, 30 Mass.
Att'y Discipline Rep. 55, 58 (2014) (suspension for term of one
year and one day for depositing client trust funds into
attorney's operating account, intentionally spending portion of
funds on matters unrelated to client, misconduct in three client
matters, and inadequate record-keeping). The fact that a
departure was made from the presumptive sanction in the
circumstances of those cases, however, does not require
imposition of a lesser sanction in this case.
15
We also view as significant the presence of aggravating
factors, and the absence of special factors in mitigation. The
committee and the board weighed in aggravation that the
respondent engaged in multiple violations of the rules of
professional conduct, and that he used the disciplinary
violations concerning record-keeping to "conceal" his misuse of
client funds. See Matter of Saab, 406 Mass. at 326-327. There
also was evidence on which the board could conclude that the
respondent reconstructed records to hide his misuse of client
funds to benefit his father. See Matter of Rickles, 30 Mass.
Att'y Discipline Rep. 340, 345 (2014) (disbarment where billing
records determined to have been altered to include additional
time entries). Not only do we accept these factors in
aggravation, but we consider as well that the respondent
provided bar counsel with "falsified evidence," and displayed a
lack of candor by presenting false testimony and fabricated
account documents. See Matter of Hoicka, 442 Mass. 1004, 1006
(2004). Finally, we agree with the board that there were no
special factors to be considered in mitigation of sanction.11
See Matter of Alter, 389 Mass. 153, 157-158 (1983).
11Although the respondent made a reference to a broken
ankle in his testimony, he neither raised the ankle as a
mitigating factor in his answer to the petition for discipline,
see Rules of the Board of Bar Overseers § 3.15, nor claimed that
it caused his delay in paying the settlement funds to the
16
Conclusion. Considering all of the factors together, we
conclude that the board's recommendation that the respondent be
indefinitely suspended from the practice of law is consistent
with the disposition in similar cases. Accordingly, we reverse
the order of term suspension and remand the matter to the county
court for entry of an order of indefinite suspension. The
judgment of reinstatement shall be vacated as of the effective
date of the order of indefinite suspension. Recognizing that
the respondent already has been suspended from the practice of
law for almost seven months pursuant to the order of term
suspension, the order of indefinite suspension shall permit the
respondent to petition for reinstatement no earlier than three
months prior to four years and five months from the effective
date of the order of indefinite suspension. See S.J.C. Rule
4:01, § 18 (2) (b), as appearing in 453 Mass. 1315 (2009).
So ordered.
client. He also failed to provide any medical records to
support the claim. See Matter of Patch, 466 Mass. 1016, 1018
(2013). The board properly declined to consider the injury in
mitigation of sanction. Likewise, the respondent's apparent
focus on his work in a yogurt shop is not properly weighed in
mitigation.