Attorney Grievance Comm. for the First Judicial Dep't v. Felicetti (In re Felicetti)
| Decision Date | 14 January 2020 |
| Docket Number | CM7226,M–3393 |
| Citation | 180 A.D.3d 176,116 N.Y.S.3d 286 |
| Parties | In the MATTER OF Scott A. FELICETTI, (admitted as Scott Arthur Felicetti) an attorney and counselor-at-law: Attorney Grievance Committee for the First Judicial Department, Petitioner, v. Scott A. Felicetti, Respondent. |
| Court | New York Supreme Court — Appellate Division |
Jorge Dopico, Chief Attorney, Attorney Grievance Committee, New York (Orlando Reyes, of counsel), for petitioner.
Howard Benjamin, Esq., for respondent.
Hon. Dianne T. Renwick, Justice Presiding, Sallie Manzanet–Daniels, Angela M. Mazzarelli, Troy K. Webber, Jeffrey K. Oing, Justices.
Respondent Scott A. Felicetti was admitted to the practice of law in the State of New York by the Second Judicial Department on May 10, 1989, under the name Scott Arthur Felicetti. At all times relevant to this proceeding, respondent maintained an office for the practice of law within the First Judicial Department.
The Attorney Grievance Committee (AGC) seeks an order pursuant to the Rules of the Appellate Division, First Department (22 NYCRR) § 603.8–a(t)(4) and the Rules for Attorney Disciplinary Matters ( 22 NYCRR) § 1240.8(b)(2), confirming in full the findings of misconduct by a Referee and disbarring respondent. Respondent cross moves, requesting that the majority of the Referee's liability findings be disaffirmed, the recommendation of disbarment be disaffirmed, and that this Court impose a "substantially lesser sanction."
This disciplinary proceeding arises out of several separate allegations of misconduct involving, inter alia, respondent's use of his attorney escrow account, including misappropriation and commingling of client funds, refusal to release settlement funds that were the property of a client, and neglect of client matters. Regarding the escrow allegations, an investigative accountant called by the AGC testified at the hearing on liability that his audit of respondent's account records showed the following: on December 1, 2014, respondent deposited into his escrow account $25,000 in settlement funds on behalf of a personal injury client, and that on the same date he deposited into the account a $10,000 check received on behalf of another client. On the next day, respondent withdrew $8,333 from his escrow account as his one-third legal fee in the first matter, which he deposited into his business (i.e., operating) account. Between December 1, 2014 and January 29, 2015, respondent made no payments to either client, during which period he transferred $32,875 from his escrow account to his business account via 22 separate electronic transfers; and, as of January 29, 2015, his escrow account balance had fallen to $62.28 when he should have been holding $16,655 for the first client and $10,000 for the other.
Further, the December 2014 bank statement for respondent's business account showed that: aside from his $8,333 legal fee in the first client's case, the only other deposits to his business account were transfers from his escrow account; on four dates in December, which were close in time to the electronic transfers from the escrow account, the business account had a negative balance; and, during the period at issue, respondent used the funds transferred from his escrow account to his business account to pay for, among other things, personal expenses which included restaurant, department store, and entertainment charges via the use of a debit card.
In addition, the January 2015 bank statement for respondent's business account showed that, except for one deposit for $561, the only deposits to this account came from his escrow account, which cured the negative balances in his business account, and were mostly used to cover his personal expenses. On March 31, 2015, respondent deposited an additional $67,500 in settlement funds in the first personal injury matter into his escrow account. On April 2, 2015, he paid himself $5,833 out of these funds as a legal fee even though he was entitled to a one-third legal fee of $22,500. The difference between the $22,500 and $5,833 ($16,667) represented the amount he previously misappropriated via the electronic transfers from his escrow account to his business account and the withdrawals therefrom described above. On June 15, 2015, respondent issued an escrow check to the first client for $61,667 in payment of the amount that he had misappropriated during the preceding six months. Respondent denied before the Referee that he intentionally converted client funds, but admitted that he failed to maintain required bookkeeping records, as a result of which he claimed to have been unaware that his transfers of funds from his escrow account to his business account were invading client funds.
Other charges related to the way in which respondent handled other client matters, including that of a personal injury client called to testify by the AGC. Respondent settled that client's case for $650,000 in October 2014, at which time he took his one-third legal fee of $216,666. He and the client orally agreed that he would pay her $10,000 and would hold the remaining funds until she wanted them. Between November 2015 and March 2016, respondent distributed an additional $10,000 to the client in increments as requested but thereafter stopped complying with her requests for funds. In order to obtain the balance of her settlement funds, the client had to retain counsel and file suit against respondent. Respondent defaulted in the action, which he unsuccessfully sought to have vacated. In April 2018, respondent paid the client the balance of her funds, which amounted to $355,558, out of which she had to pay her counsel $118,000 as a one-third contingency fee.
The Referee also heard witness testimony and received evidence that respondent mishandled the personal injury matters of four other clients, including abandoning their matters, failing to comply with their reasonable requests for information, and failing to promptly transfer their files to successor counsel (which, in two instances, required court orders directing him to do so).
Respondent also admitted that since 2010 and 2013, respectively, he failed to file retainer and closing statements with the Office of Court Administration (OCA) as required by 22 NYCRR 603.25(a) and (b). Finally, the AGC presented evidence that respondent failed to cooperate with its investigation in that he repeatedly failed to meet the Committee's deadlines for production of various documents, and he failed to comply with a judicial subpoena directing him to appear for a deposition.
As evidence in aggravation, the AGC introduced a 2007 Admonition the Committee issued to respondent for his neglect of two separate client matters, failure to transfer or return his clients' files, and failure to cooperate with the investigation. In mitigation, respondent testified that he experienced severe illness in the years after 2000, that he went through a custody dispute which resulted in his being granted sole custody of his son, that he is a single parent raising his son while trying to maintain his solo law practice, that he recently developed a dangerous high blood pressure condition that requires medication and medical supervision, and that he has reformed his law practice by associating with other attorneys who can assist him with his caseload, and has changed the computer program by which he manages his escrow and business accounts.
The Referee upheld all of the charges. He found that respondent misappropriated and intentionally converted client funds in violation of rules 1.15(a) (misappropriation) and 8.4(c) (). Specifically, the Referee found that the evidence established that respondent knowingly withdrew client funds without permission or authority to do so, and used them for his own personal purposes. In...
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