Attorney Grievance Comm. for the First Judicial Dep't v. Novofastovsky (In re Novofastovsky)

• Decision Date: 08 February 2022
• Docket Number: Motion No. 2021-03974,Case No. 2018-00325
• Citation: 204 A.D.3d 15,160 N.Y.S.3d 258
• Parties: In the MATTER OF Ilya NOVOFASTOVSKY, an attorney and counselor-at law: Attorney Grievance Committee for the First Judicial Department, Petitioner, v. Ilya Novofastovsky, (OCA Atty. Reg. No. 4179263), Respondent.
• Court: New York Supreme Court — Appellate Division

204 A.D.3d 15

160 N.Y.S.3d 258

In the MATTER OF Ilya NOVOFASTOVSKY, an attorney and counselor-at law: Attorney Grievance Committee for the First Judicial Department, Petitioner,

v.Ilya Novofastovsky, (OCA Atty. Reg. No. 4179263), Respondent.

Motion No. 2021-03974

Case No. 2018-00325

Supreme Court, Appellate Division, First Department, New York.

Entered February 8, 2022

Jorge Dopico, Chief Attorney, Attorney Grievance Committee, New York (Vitaly Lipkansky, of counsel), for petitioner.

J. Richard Supple, Esq., for respondent.

Rolando T. Acosta, J.P., Sallie Manzanet-Daniels, Angela M. Mazzarelli, Peter H. Moulton, Bahaati E. Pitt, JJ.

Per Curiam

Respondent Ilya Novofastovsky was admitted to the practice of law in the State of New York by the Second Judicial Department on November 19, 2003. At all times relevant to this proceeding, he maintained a law office within the First Judicial Department.

On August 30, 2018, this Court suspended respondent from the practice of law based upon his failure to comply with the Attorney Grievance Committee's (AGC) investigative requests that he answer a complaint and provide his escrow account ledger (M-1127). In November 2019, based on evidence found in a file belatedly produced by his former counsel, respondent moved for an order vacating the interim suspension order on the grounds that his failure to cooperate with the AGC was the result of the conduct of his former counsel, who, unbeknownst to respondent, failed to respond to the AGC's interim suspension motion and investigative demands. The AGC, which confirmed that respondent had fully cooperated with its investigative demands, did not oppose his reinstatement. By December 3, 2019 order, the Court vacated the interim suspension order and reinstated respondent to the practice of law, effective nunc pro tunc to August 30, 2018 (M-7578).

In August 2021, the AGC filed a petition of charges alleging that respondent negligently misappropriated escrow funds and failed to maintain required bookkeeping records. The parties now jointly move under the Rules for Attorney Disciplinary Matters ( 22 NYCRR § 1240.8(a)(5) ) for discipline by consent and ask this Court to publicly censure respondent. In support, the parties have filed a joint affirmation containing a statement of facts, conditional admissions of professional misconduct, factors in mitigation, and agreed upon discipline, as well as respondent's affidavit acknowledging his admission to the stipulated facts, his consent to the agreed upon discipline, which he has freely and voluntarily given, and his full awareness of the consequences of his consent.

The following facts are taken from the parties’ joint affirmation: In or about 2007, respondent opened his own law firm and, at all relevant times, was his firm's sole principal and sole authorized signatory for the firm's escrow account. From the inception of his law firm, respondent did not maintain a master ledger detailing transactions in the firm's escrow account. Rather, he maintained records on a client-by-client basis without contemporaneously reconciling all transactions in the escrow account.

At the AGC's request, respondent reviewed his escrow account records and ex post facto prepared a master ledger. The AGC's investigative accountant reviewed respondent's ledger, separately analyzed his escrow account records, and created a ledger based on that analysis. The analysis showed that, at its lowest point, respondent's escrow account had a balance of $77,170.05 when it should have been $176,306.15, thereby evidencing a $99,136.10 shortfall in client funds.

The $99,136.10 shortfall in the firm's escrow account cannot be explained except as an unintentional, temporary misappropriation of client funds, which was the direct result of respondent's negligent failure to maintain a contemporaneous master ledger. No client was deprived of funds or suffered a delay in receiving funds.

Respondent admits that his actions, as set forth above, violated the five charges alleged in the petition of charges. Respondent admits he: violated New York's Rules of Professional Conduct (22 NYCRR 1200.00) rule 1.15(a) by negligently misappropriating funds in the firm's escrow account; violated rules 1.15(d)(1)(i), 1.15(d)(1)(ii), and 1.15(d)(2) by failing to maintain a ledger or similar record of disbursements and deposits for his law firm's escrow account; and violated rule 8.4(h) by engaging in conduct that adversely reflects on his fitness as a lawyer based on the misconduct described above.

The parties maintain that there are no aggravating factors and stipulated to the following mitigating factors: respondent's misconduct did not adversely impact clients or third parties; all clients or third parties timely received the funds due to them and no payments were ever dishonored; respondent's rules...