Monday, July 04, 2016

NJ Supremes Give Lawyer w/ Dubious Past Bar Boot For Pilfering $15K Of Client Escrow Money That Was To Be Held In Attorney Trust Account

In Midland Park, New Jersey, The Record reports:
  • A lawyer who practiced in Midland Park has been disbarred by the state Supreme Court for taking $15,000 in client funds for his own use.(1)

    The lawyer, William E. Gahwyler Jr., also was accused of other ethical violations, including continuing to practice law even after a 2013 suspension for allegedly falsifying real estate closing documents.(2)

    According to the court’s disciplinary review board, one of his clients while he was suspended was Alla Shapiro, owner of the Woodhouse Spa in Montclair. She was in a dispute with her landlord over a water leak, and had withheld $15,293 in rent. That money was placed into a trust account with another lawyer, to be held until the issue was resolved.

    Shapiro moved the case to Gahwyler, and in spring 2014, her earlier lawyer sent Gahwyler a check for the withheld rent. He requested that it be placed in Gahwyler’s attorney trust account. But, according to the disciplinary review board, Gahwyler placed it in his business account, which he also used for personal expenses.

    By early 2015, the leak was fixed, and the tenant and the landlord asked Gahwyler to pay the $15,293 in back rent to the landlord. But Gahwyler did not send the money, according to the disciplinary review board. In April 2015, according to the board, Gahwyler admitted to the state Office of Attorney Ethics “that he had used the escrow monies for his personal purposes, including, but not limited to, the payment of credit cards, auto loans, IRS payments, and other personal expenses.”
Source: Midland Park lawyer disbarred by state Supreme Court.

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.[...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(1) The New Jersey Lawyers' Fund for Client Protection was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

See generally:
  • N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;

    When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),

    Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.
(2) Gahwyler is the same lawyer who was found liable in a lawsuit filed in a New Jersey bankruptcy court for his role in a foreclosure rescue ripoff. See Foreclosure Rescue Operator, Closing Attorney Found Jointly Liable For $690K+ In Bogus Sale Leaseback, Equity Stripping Ripoff.

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