In re Disciplinary Action Against Gorshteyn
| Decision Date | 31 July 2019 |
| Docket Number | A17-1635 |
| Citation | 931 N.W.2d 762 |
| Parties | IN RE Petition for DISCIPLINARY ACTION AGAINST Boris A. GORSHTEYN, a Minnesota Attorney, Registration No. 0392840. |
| Court | Minnesota Supreme Court |
The Director of the Office of Lawyers Professional Responsibility filed a petition and supplementary petition for disciplinary action against respondent Boris A. Gorshteyn. The petitions allege numerous acts of professional misconduct, including misappropriation of approximately $382,000 in client funds, abandonment of client matters, settling clients' claims without their knowledge or consent, failing to maintain trust account books and records, and noncooperation with the Director’s investigations. Gorshteyn did not file an answer to either petition. Accordingly, we deemed the allegations in both petitions admitted and allowed the parties to file memoranda on the appropriate discipline. Gorshteyn did not file a memorandum or otherwise appear in this matter. The Director asserts that the appropriate sanction is disbarment. We agree.
Gorshteyn was admitted to the practice of law in Minnesota in 2012. In October 2017, the Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action and an amended and supplementary petition for disciplinary action against Gorshteyn. After the Director was unable to personally serve Gorshteyn, we granted the Director’s application for suspension under Rule 12(c)(1), Rules on Lawyers Professional Responsibility, and gave Gorshteyn 1 year to file a motion to vacate the suspension and seek leave to answer the petitions. In re Gorshteyn , 902 N.W.2d 922, 923 (Minn. 2017) (order). Gorshteyn did not file such a motion or respond to the petition or supplementary petition.
Because Gorshteyn failed to respond to either petition, we deemed the allegations in the petition and supplementary petition admitted. In re Gorshteyn , No. A17-1635, Order at 1 (Minn. filed Nov. 5, 2018). We ordered Gorshteyn to show cause why he should not be disciplined and invited the parties to file memoranda on the appropriate discipline to be imposed in this case. Id. at 2. Gorshteyn did not comply with our order to show cause, did not submit a proposal regarding the appropriate discipline, and did not otherwise appear in this matter.
In July 2013, Gorshteyn started his own practice, Gorshteyn Law, P.C. Gorshteyn was the owner and managing partner of Gorshteyn Law, and his practice mostly handled personal injury matters. Gorshteyn Law primarily served Somali clients, and many of Gorshteyn’s clients needed an interpreter to communicate in English.
In more than 300 paragraphs spanning 60 pages, the petition and supplementary petition set forth detailed accounts of Gorshteyn’s extensive professional misconduct between 2014 and 2017. This misconduct was committed against at least 25 clients. We summarize the most relevant misconduct below.
Misappropriation of client funds and other trust-account related misconduct
From 2014 to 2016, Gorshteyn misappropriated approximately $382,000 in client funds from more than 13 clients.1 He did this by transferring excess fees from his trust account to himself totaling approximately $247,000. In addition, he disbursed or transferred approximately $134,600 in client funds to himself without any relation to earned fees and to which he was not entitled.
Gorshteyn also "failed to disburse from his trust account, or timely disburse from his trust account, numerous clients' funds to or on behalf of the client." Gorshteyn failed to disburse more than 10 clients' funds in a timely manner.
From January 2014 to June 2016, Gorshteyn did not properly maintain trust account check registers, client subsidiary ledgers, trial balance reports, reconciliation reports, and internet transfer memoranda. He also did not annotate many trust account checks and slips with the affected client’s name. Gorshteyn routinely disbursed fees to himself, both through internet transfers and checks drawn on the trust account, without adequately documenting the identity of the affected clients. Further, Gorshteyn allowed non-signatories to apply his stamped signature to trust account checks. His failure to maintain adequate records and to provide the Director with the necessary books impeded the Director’s ability to perform a complete audit.
Through this conduct, Gorshteyn violated Minn. R. Prof. Conduct 1.15(c)(3), 1.15(c)(4), 1.15(h) as interpreted by Appendix 1, 1.15(j), and 8.4(c).
Pattern of client misconduct involving unauthorized settlements
Gorshteyn also committed misconduct involving unauthorized settlement of client claims. Gorshteyn presented at least 13 clients with powers of attorney but failed to explain the purpose or legal implications of these documents. In one instance, Gorshteyn, or someone in Gorshteyn’s office, forged the signature of a client on a power of attorney. In that same matter, Gorshteyn failed to obtain a valid contingent fee agreement. On at least two occasions, Gorshteyn presented fee agreements and powers of attorney written only in English to clients who spoke only limited English. And, in one of those instances, he failed to explain a contingent fee agreement to the client.
Gorshteyn frequently settled or arbitrated cases without the knowledge or consent of the clients.2 On at least 11 occasions, Gorshteyn entered into settlement negotiations and settled claims without informing his clients or obtaining their consent. Twice, Gorshteyn did not inform his client that he had commenced arbitration proceedings or that an arbitration hearing was taking place. And, on at least three occasions, Gorshteyn failed to inform his client of the arbitration award.
On 15 separate occasions, Gorshteyn failed to notify his client of his receipt of funds from settlements or arbitration awards. Frequently, after engaging in unauthorized settlement negotiations, entering into unauthorized settlements, and failing to apprise his clients of arbitration proceedings and awards, Gorshteyn endorsed checks by relying on improperly obtained, nonexistent, or forged powers of attorney and deposited the funds in his trust account. On at least nine occasions, Gorshteyn endorsed and cashed settlement checks or arbitration award checks by relying on powers of attorney that clients had signed without being informed of their purpose or legal implications. In two instances involving the same client, Gorshteyn endorsed a check with a notation stating he was doing so by a power of attorney although the client had never signed a power of attorney. Gorshteyn also endorsed two client arbitration award checks with a notation stating that he was doing so by a power of attorney, but the power of attorney on which Gorshteyn relied was forged.
On at least 13 occasions, Gorshteyn failed to provide clients with notice of the transfer of client funds from Gorshteyn’s trust account to his business account. In at least 10 instances, Gorshteyn failed to timely disburse the proceeds of settlements or arbitration awards. And, on several occasions, Gorshteyn failed to provide his client with a statement showing the distribution of proceeds from settlements and arbitration awards. In addition, Gorshteyn made an unauthorized disbursement of client funds to a clinic in which he had a financial interest.
Gorshteyn routinely failed to communicate with clients regarding the status of their cases. On several occasions, Gorshteyn provided misleading information regarding the status of clients' cases. Gorshteyn failed to adequately communicate with clients in at least 15 different matters. In some cases, after settling no-fault claims, Gorshteyn failed to do any more work on the client’s case. On several occasions, Gorshteyn signed a satisfaction of award or release on behalf of the client without client consent. Gorshteyn had a conflict of interest with two clients because they received medical treatment from a clinic in which Gorshteyn had a financial interest. In both cases, Gorshteyn failed to disclose the conflict of interest, did not comply with the requirements for obtaining informed consent to the conflict of interest, and did not comply with the requirements for entering into business transactions with clients.
Through this conduct, Gorshteyn violated Minn. R. Prof. Conduct 1.1, 1.2(a), 1.3, 1.4(a)(1), 1.4(a)(3)–(4), 1.4(b), 1.5(b)–(c), 1.7(a)(2), 1.15(a)–(b), 1.15(c)(1)–(4), 4.1, 5.1(c), and 8.4(c)–(d). In addition, by forging a client’s name to a power of attorney, or allowing one of his employees to forge the document, Gorshteyn violated Minn. R. Prof. Conduct 4.1 and 8.4(c), or, in the alternative, either 5.1(a)–(b) or 5.3(a)–(b).
Additional client-related misconduct, including the abandonment of his law practice
Gorshteyn engaged in additional client-related misconduct, including the failure to competently and diligently pursue client claims and the abandonment of his law practice in June 2016. In one client’s case, Gorshteyn submitted a petition for no-fault arbitration on behalf of the client but failed to include several thousand dollars in unpaid medical bills in the petition. Gorshteyn failed to amend the no-fault arbitration petition within 30 days of filing it, thereby violating the Minnesota Rules of Arbitration. See Minn. No-Fault Ins. Arb. R. 5(f). As a result of Gorshteyn’s negligence and incompetence, the arbitrator ultimately issued an award denying payment of the client’s unpaid medical bills.
In another case, Gorshteyn failed to respond—and failed to direct his employees to timely respond—to opposing counsel’s discovery request. Instead, he directed an associate attorney "to give priority to making settlement demands in several other client matters, which [Gorshteyn] characterized as ‘short term money makers.’ " When opposing counsel called a discovery conference regarding the overdue discovery responses, Gorshteyn failed to respond and failed to attend the discovery...
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