IN THE SUPREME COURT OF FLORIDA (Before a Referee) The Florida Bar File Nos ,482(11D) REPORT OF REFEREE

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1 IN THE SUPREME COURT OF FLORIDA (Before a Referee) THE FLORIDA BAR, Complainant, vs. GREGORY A. MARTIN, Respondent. Supreme Court Case No. SC The Florida Bar File Nos ,482(11D) ,614(11D) ,151(11D) ,733(11D) / REPORT OF REFEREE I. SUMMARY OF PROCEEDINGS: Pursuant to the undersigned being duly appointed as Referee for the Supreme Court of Florida to conduct disciplinary proceedings as provided for by Rule of the Rules Regulating The Florida Bar, the following proceedings occurred: On February 3, 2011, The Florida Bar served its Complaint and First Request for Admissions in these proceedings. On November 14 and 15, 2011, a final hearing was held in this matter. The undersigned made findings of guilt and accordingly, a sanctions hearing was held on March 29, All of the aforementioned pleadings, responses thereto, notices, orders, and exhibits, along with this report, constitute the record in this case and are forwarded to the Supreme Court of Florida.

2 II. FINDINGS OF FACT AND CONCLUSIONS OF LAW: A. Jurisdictional Statement: Respondent is and was at all times material herein, a member of The Florida Bar, albeit emergency suspended effective January 12, 2011, and subject to the jurisdiction and disciplinary rules of the Supreme Court of Florida. B. Narrative Summary of Case: Respondent engaged in a pattern of misconduct and facilitated the fraudulent transactions of his associates by accepting deposit or escrow funds into his trust account, and then, rather than holding same in trust as was required by the terms of the relevant contracts, Respondent instead immediately disbursed those funds to his associates and their designated agents. In each case, no deal ever came to fruition, and no funds remained in trust to be returned to any of the victims of these fraudulent transactions. The funds were not disbursed to the entities identified in the contracts, and were not disbursed for the specific purpose for which the funds were entrusted. Details of these transactions are described below. Gregory Martin was the Escrow Agent in two (2) such fraudulent transactions involving Imusol Trading, S.A., in Uruguay, owned by James E. Burke. The first victim with regard to Imusol was Star Properties of Rochester, LLC, who deposited $400, into Respondent s trust account. The second victim with regard to Imusol was Lawson S. Triplett Jr., who deposited 2

3 $500, into Respondent s trust account. Gregory Martin was also the Escrow Agent in another transaction involving a company named Intensa, in which a third victim identified as Bernt Egil Ohna, from Norway, deposited 200,000 euros into Respondent s trust account. Allan Duprey, an agent of both Imusol and Intensa, and a long time associate of Gregory Martin, was intimately involved in two (2) of these transactions. According to Respondent, his role in these matters was merely to act as an escrow agent and not as the attorney for Imusol or its president James E. Burke. Respondent claims he was just holding the money, and therefore has no liability or responsibility for the disbursements. 1 The Complaints of Jason Palmer and Lucien Morin The first fraudulent transaction in this scheme began on August 12, 2009, when Six Star Properties, represented by Jason Palmer, and Imusol Trading, S.A, represented by James E. Burke, entered into an escrow agreement with Respondent. The agreement is also signed by Respondent, Gregory A. Martin, 1 Respondent raised this same defense in Supreme Court Case No. SC09-561, The Florida Bar File No ,077(11D), currently pending before the Florida Supreme Court on appeal and cross appeal, and the subject of a Notice of Related Case filed with this Complaint. In that case, in which I also presided as Referee, I recommended that Respondent be found guilty of violating Rules 4-8.4(c) and for his failure to hold and maintain escrow funds as required in his trust account, and immediately disbursing same to a third party upon request. The events in the instant case occurred during and around the time of the final hearing in SC

4 Partner. The agreement required Six Star Properties to deposit $400, into Gregory Martin s trust account. The required deposit was delivered in several installments. On August 20, 2009, the first wire transfer in the amount of $15, was delivered to Respondent as escrow agent. On August 27, 2009, the second wire transfer in the amount of $200,000.00, from Francis R. Perticone Living Trust, was delivered to Respondent as escrow agent. As will be described below, Respondent immediately disbursed these funds even before the remainder of the total deposit was delivered. On September 1, 2009, the third wire transfer in the amount of $150, from Jason G. Palmer was delivered to Respondent as escrow agent and the last wire in the amount of $35, was delivered on September 4, 2009, for a total of $400, The funds described above were disbursed almost immediately, even before the total deposit was received, and therefore before the conditions precedent in the contract occurred. Additionally, none of the funds were disbursed to the entity described in the contract, Imusol Trading, S.A., nor were any of the funds disbursed for the purpose identified in the contract: On August 27, 2009, Six Star Properties had delivered $215, of the total $400, deposit. On that same day, Respondent issued a wire transfer in the amount of $14, to Armstrong Relocation Company; he personally 4

5 withdrew $19,000.00; he transferred $21, to Kathryn G. Burke and an additional $41, to Allan Duprey, his long time associate; and he wired $117, to a bank in Madrid, Spain, for the benefit of James E. Burke. Following these disbursements, the balance in the trust account was $ The remainder of the required $400, deposit from Six Star Properties was delivered in two additional installments. On September 1, 2009, Jason G. Palmer deposited $150, into Respondent s trust account. These funds were disbursed by Respondent the next day. On September 2, 2009, respondent wired $138, to the bank in Madrid, Spain, for the benefit of James E. Burke. In addition, respondent issued two (2) trust account checks totaling $11,300.00, one payable to him and the other payable to cash, leaving a balance in the trust account of $ The remainder of Six Star Property s deposit, in the amount of $35,000.00, was deposited into Respondent s trust account on September 4, On September 9, 2009, Respondent wired these funds to the bank in Madrid, Spain, for the benefit of James E. Burke. Although Respondents fee to act as escrow agent in this matter was $20,000.00, Respondent disbursed $30, to himself from Six Star Property s funds. 5

6 The deal between Six Star Properties and Imusol Trading did not come to fruition, and Six Star Properties did not receive any benefit from this transaction. Six Star Properties, through its representatives, indicated that it was induced to enter into the deal with Imusol in part based on the representations that Respondent was an attorney in good standing and that the funds would presumably be safely held in his trust account. However, when Six Star Properties demanded accountings of the funds, Respondent refused to provide information on the disbursements, or to return Six Star s phone calls enquiring of same. Based on Respondent s immediate disbursal of all but $ of Six Star s funds, no funds remained in the trust account to reimburse the victim when the deal did not materialize, and the victim has not received any restitution in this matter. The Complaint of Matt Thompson The second victim of the fraud with Imusol was Lawson S. Triplett, Jr. On March 11, 2010, Mr. Triplett and Imusol Trading, S.A, represented by James E. Burke, entered into an escrow agreement with Respondent. The Escrow Agreement directed Gregory Martin to disburse the Escrow Funds to Imusol only upon one of the following events: (1) If the Escrow Agent received proof of funds or availability of funds in the amount of $16,550,000.00; or (2) if the Real Estate Contract did not close within thirty days as a result of the inability of the seller to provide good title. If, instead, the closing did not occur because the 6

7 $16,550, in closing funds was not received within 30 banking days, then the Escrow Agreement directed Gregory Martin to immediately transmit the Escrow Funds back to Triplett. On March 15, 2010, Respondent received a wire transfer in the amount of $500, from the Board of Trustees of NC, (Mr. Triplett) into his trust account identified as Gregory Martin IOTA account #XXXXXXXXX1343. This was the deposit of escrow funds required by the contract. Again, as in the Six Star Property s transaction, Respondent immediately disbursed the bulk of the funds, and none of the funds were actually disbursed to the entity identified in the contract. The funds were disbursed for purposes other than that for which they were entrusted: On the following day, March 16, 2010, Respondent made the following disbursements from the Triplett funds: a wire transfer in the amount of $4, to Lucy F. Burke; a wire transfer in the amount of $6, to Armstrong Relocation Company; a wire transfer in the amount of $10, to Fraser Schuh, the lawyer who represents Respondent in The Florida Bar matters currently pending before this Court; a wire transfer in the amount of $15, to Kathryn G. Burke; a wire transfer in the amount of $27, to Lee Rank Attorney Escrow Account; and a wire transfer in the amount of $410, to Banco Santander in Spain, on behalf of James Edgar Burke. Additionally, on 7

8 March 17, 2010, Respondent issued a wire transfer in the amount of $7, to Alina Schuh, and on April 1, 2010, Respondent issued a wire transfer in the amount of $5, to Laszlo H. Lehdvay. On April 1, 2010, the balance in the trust account was $ The deal between Mr. Triplett and Imusol Trading did not come to fruition, and Mr. Triplett did not receive any benefit from this transaction. When Mr. Triplett demanded accountings of the funds, Respondent refused to provide information on the disbursements, or to respond to specific inquiries. When he did finally make a substantive reply, Respondent implied in his written correspondence that he was still holding the funds, and stated that the funds would be returned. Despite direct inquiry, Respondent did not inform Triplett or his representatives that he had long ago disbursed the funds. Based on Respondent s immediate disbursal of Triplett s deposit, no funds remained in the trust account to reimburse the victim when the deal did not materialize, and the victim has not received any restitution in this matter. The Complaint of Bernt Egil Ohna The third victim in a similar fraudulent transaction is an individual identified as Bernt Egli Ohna, who lives in Norway. The pattern is the same as above. Respondent was the Escrow Agent in the transaction between a company identified as Intensa Group, Ltd., and Mr. Ohna. The director of Intensa is Allan 8

9 Duprey, a long time associate of Respondent and James E. Burke, and an active participant in, and one of the recipients of the funds, in the Imusol transactions described above. The contract required Mr. Ohna to deposit 200,000 euros, the equivalent of $297, USD, into Respondent s trust account, which were not to be disbursed until conditions precedent had been met. On October 21, 2009, Respondent received a wire transfer in the amount of $297,680.00, into his trust account #XXXXXXXXX1343, from Mr. Bernt Egli Ohna. Again, as in the other transactions, the funds were immediately disbursed, and were disbursed for purposes other than that for which they were entrusted. On the following day, October 22, 2009, Respondent personally withdrew $5,000.00; issued a wire transfer in the amount of $104, to his cohort Allan Duprey; and issued another wire transfer to bank Caixa Catalunya in Spain, for the benefit of Inversiones Dalport, S.A. Additionally, he issued checks totaling $11, On November 11, 2009, the balance in the trust account was $8, The deal between Mr. Ohna and Intensa Group, Ltd did not come to fruition, and Mr. Ohna did not receive any benefit from this transaction. Respondent advertised his status as an attorney in good standing in order to make Mr. Ohna feel secure in depositing his funds. Based on Respondent s immediate 9

10 disbursal of Mr. Ohna s funds, no funds remained in the trust account to reimburse the victim when the deal did not materialize, and the victim has not received any restitution in this matter. C. Findings and Conclusions of Law: I find by clear and convincing evidence that Respondent engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of Rule 4-8.4(c) of the Rules Regulating the Florida Bar. Respondent refused to respond to inquiries regarding the status of the funds he was to hold in escrow. Further, in at least one of the cases, he implied that he was still holding the funds following numerous attempts by the victims to ascertain the status of the funds. Finally, Respondent s actions in immediately disbursing the funds to his colleagues, prior to the conditions precedent being met, and to entities other than those specified in the contract, and for purposes other than those for which the funds were deposited into escrow, facilitated and assisted his colleagues in perpetrating the fraudulent transactions, and was itself dishonest and deceitful. I do not find credible Respondent s explanations for why he believed it was acceptable for him to disburse the funds in this manner. I further find by clear and convincing evidence that Respondent s conduct in these matters violated Rule 5-1.1(b) of the Rules Regulating Trust Accounts. Respondent and his cohorts used Respondent s status as an attorney, 10

11 and the fact that the funds would presumably be held safely in his attorney trust account, as a means to lull the prospective victims into a sense of security, and induce them to participate in the proposed transactions, and therefore the Rules Regulating Trust Accounts are directly implicated by his misconduct. Respondent s immediate disbursement of the funds prior to the conditions precedent being met, to entities other than those described in the contract, and for purposes clearly unrelated to the deals at issue, constitutes clear violation of this Rule. For purposes of Rule 4-8.4(c) and 5-1.1(b), Respondent s motive for engaging in the above referenced conduct is immaterial. Rather, it is sufficient that I find his conduct was deliberate. The Florida Bar v. Fredericks, 731 So.2d 1249, 1252 (Fla. 1999); The Florida Bar v. Riggs, 944 So. 2d 167, 171 (Fla. 2006). Thus, Respondent s conduct in deliberately distributing the escrowed funds as described above is sufficient to satisfy the element of intentional or knowing conduct. Further, Respondent s refusal to truthfully relay the status of the funds upon inquiry and demand for confirmation was likewise intentional and knowing conduct. III. RECOMMENDATION AS TO GUILT: Based on the foregoing, I recommend that Respondent be found guilty of violating Rule 4-8.4(c) (engage in conduct involving dishonesty, fraud, deceit, or 11

12 misrepresentation) of the Rules of Professional Conduct; and Rule 5-1.1(b) (misappropriation of trust account funds) of the Rules Regulating Trust Accounts. IV. STANDARDS FOR IMPOSING LAWYER SANCTIONS: I considered the following Standards prior to recommending discipline: 5.11(f) - Disbarment is appropriate when a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer s fitness to practice; and Disbarment is appropriate when a lawyer intentionally engages in conduct that is a violation of a duty owed as a professional with the intent to obtain a benefit for the lawyer or another, and causes serious or potentially serious injury to a client, the public, or the legal system. V. CASE LAW: I considered the following case law prior to recommending discipline: The Florida Bar v. Travis, 765 So.2d 689 (Fla. 2000), holds that the misuse of client s funds held in trust is one of the most serious offenses a lawyer can commit, and disbarment is presumed to be the appropriate remedy; The Florida Bar v. Martinez-Genova, 959 So.2d 241 (Fla. 2007), holds that disbarment may be appropriate when a lawyer misappropriates third party funds; 12

13 The Florida Bar v. Watson, Slip Copy, 2012 WL (Table)(Fla. 2012), and the accompanying Report of Referee, holds permanent disbarment appropriate for an attorney s failure to hold third party funds in trust and using them for unintended purposes, and for misleading the prospective third party investors; The Florida Bar v. Watson, 76 So.3d 915 (Fla. 2011), the Supreme Court held that an attorney's deliberate, knowing, and repeated refusal to provide investors in client's development project with forthright information regarding their funds, which investors understood would be held in attorney's trust account and not disbursed, violated rule of professional conduct prohibiting lawyers from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; lawyer owed a fiduciary duty to investors, and, thus, was required to hold their invested funds with the care required of a professional fiduciary; and The Florida Bar v. Williams, 753 So. 2d 1258 (Fla. 2000), holds that in assessing discipline, the Supreme Court considers prior misconduct and cumulative misconduct as relevant factors, and deals more severely with cumulative misconduct than with isolated misconduct. Cumulative misconduct of a similar nature should warrant an even more severe discipline that might dissimilar conduct. 13

14 VI. RECOMMENDATION AS TO DISCIPLINARY MEASURES TO BE APPLIED: I recommend that Respondent be found guilty of misconduct justifying disciplinary measures, and that he be disciplined by: A. Disbarment B. Payment of The Florida Bar s costs in these proceedings. VII. PERSONAL HISTORY AND PAST DISCIPLINARY RECORD: Prior to recommending discipline pursuant to Rule 3-7.6(k)(l), I considered the following: A. Personal History of Respondent: Age: 58 Date admitted to The Florida Bar: November 23, 1981 Prior Discipline: In Supreme Court Case No. SC , The Florida Bar File No ,478(11D-MES), Respondent was emergency suspended by court order dated December 13, 2010 as a result of allegations relative to this proceeding. B. Factors Considered in Aggravation: 9.22(b) (c) (d) (f) (g) (i) - dishonest or selfish motive; a pattern of misconduct; multiple offenses; submission of false statements or evidence in the disciplinary proceeding; refusal to acknowledge wrongful nature of conduct; and substantial experience in the practice of law. 14

15 C. Factors Considered in Mitigation: None VIII. STATEMENT OF COSTS AND MANNER IN WHICH COSTS SHOULD BE TAXED: The Florida Bar shall be awarded their necessary taxable costs of this proceeding and shall submit their statement of costs, as well as a request for payment of same. Dated this 7 th day of June, Hon. BERNARD S. SHAPIRO, Referee Circuit Court Judge Eleventh Judicial Circuit Lawson E. Thomas Courthouse Center 175 N.W. 1st Avenue Room 1915 Miami, Florida

16 CERTIFICATE OF SERVICE I HEREBY CERTIFY that the original Report of Referee was mailed to the Honorable Thomas D. Hall, Clerk, Supreme Court of Florida, 500 South Duval Street, Tallahassee, Florida ; and at true and correct copy was mailed to Niles Fraser Schuh, III, Attorney for Respondent, 704 S.E. 3rd Avenue Ext., Hallandale, Florida 33009; and to Jennifer R. Falcone Moore, Bar Counsel, The Florida Bar, 444 Brickell Avenue, Suite M-100, Miami, Florida 33131; and to Kenneth L. Marvin, Staff Counsel, The Florida Bar, 651 East Jefferson Street, Tallahassee, Florida , on this 7 th day of June, Hon. BERNARD S. SHAPIRO, Referee Circuit Court Judge 16