IN THE SUPREME COURT OF FLORIDA (Before a Referee) The Florida Bar File Nos ,002(11D) ,357(11D) ,077(11D) REPORT OF REFEREE

Transcription

1 IN THE SUPREME COURT OF FLORIDA (Before a Referee) THE FLORIDA BAR, Complainant, vs. GREGORY A MARTIN, Supreme Court Case Nos. SC SC The Florida Bar File Nos ,002(11D) ,357(11D) ,077(11D) Respondent. / REPORT OF REFEREE Pursuant to the undersigned being duly appointed as referee to conduct disciplinary proceedings herein according to Rule 3-7.6, Rules of Discipline, the following proceedings occurred: THIS CAUSE came on to be heard before the undersigned for trial on February 18, 2010, February 19, 2010 and February 22, 2010 as well as for sentencing recommendations on March 31, After hearing testimony of the parties and their witnesses and considering their candor and demeanor, having considered all exhibits placed into evidence, having heard argument of counsel and being otherwise fully advised in the premises, the undersigned Referee finds as follows: Page 1 of 24

2 Respondent Gregory A. Martin is, and at all times mentioned during this investigation was, a member of The Florida Bar subject to the jurisdiction and Disciplinary Rules of the Supreme Court of Florida. Summary of Facts Complainant, The Florida Bar, on June 4, 2008 filed its two count complaint after a finding of probable cause by the Grievance Committee. Count I alleges that while an employee/shareholder of the Law Firm of Adorno & Yoss between August 12, 1998 and May 13, 2005 the Respondent herein, Gregory A. Martin, violated his written employment agreement with Adorno & Yoss by maintaining clients and collecting attorneys fees from those clients on the side unbeknownst to the law firm. One such client was allegedly the Landau Beneficial Trust, also known as the Landau Financial Trust. Testimony of the Adorno & Yoss named partner, George Yoss, indicated that a review of his firm s records revealed no such client. The Florida Bar s investigation into this matter revealed that Gregory A. Martin maintained two separate trust accounts through which beginning in November 2003 literally millions of dollars of Trust related funds passed. A review of Gregory Martin s personal bank accounts revealed funds received from the Landau Trust. Gregory Martin is alleged by the Florida Page 2 of 24

3 Bar to have misrepresented his relationship with the Landau Trust and while it is alleged that the Trust s representative, Michael Harmon, believed that Gregory Martin represented the Trust as an attorney with Adorno & Yoss, it is important to note that no complaint has been made by the Landua Trust or its principles or Mr. Harmon in regard to any of the services provided by the Respondent herein especially relating to the handling of trust account funds. To the contrary, Mr. Harmon has executed an affidavit herein in support of the Respondent Gregory A. Martin. Count I further alleges that while in the employ of Adorno & Yoss, Gregory Martin served as a Director of Gulf Corporation and was paid fees for said service but that he also received attorney fees of $24, from Gulf Corporation and related attorneys fee of $10, from Construction International, Inc. None of the referred to attorneys fees were shared with the Adorno & Yoss firm. It is once again important to note that no complaints have been filed against Gregory Martin by Gulf Corporation, Construction International, Inc. or any of their principles or representatives in connection with any of the services, whether legal in nature or not, provided by Gregory A. Martin. Count II of the June 4, 2008 Complaint alleges that Gregory A. Martin represented Jason Zabaleta in legal matters, including acting as the closing Page 3 of 24

4 agent for the sale of real estate property at 4424 N. Bay Road, Miami, FL. Respondent has indicated that he never acted as the closing agent in this matter but merely accompanied his client to the closing when the firm s paralegal was unavailable. There is evidence that certain tasks which were to have been performed subsequent to the closing including disbursement/transfer of funds and recording of documents were not timely completed resulting in legal proceedings against Gregory A. Martin and the Adorno & Yoss law firm. It is once again important to note that no complaint has been made against the Respondent to the Florida Bar by Jason Zabaleta relating to any services, legal or otherwise, that may been provided by Gregory A. Martin in connection with this matter. To the contrary, Jason Zabaleta has executed two affidavits herein in support of the Respondent Gregory A. Martin. Finally, in a separate Complaint against Respondent filed March 30, 2009, which was referred to throughout these proceedings as Count III, The Florida Bar alleges that Gregory A. Martin once again represented the same Jason Zabaleta, without the knowledge of the Adorno & Yoss law firm, and acted as escrow agent in connection with the development of a condominium project known as the Henry Hotel. Page 4 of 24

5 On September 17, 2005 Harvey M. Cohen and Susy E. Cohen along with Stanford Cohen and Joann Levy contracted for the purchase of a unit at the Henry Hotel with each couple tendering a reservation/deposit check of $20, made payable to Gregory Martin P.A. Trust Account. Subsequently, on July 7, 2006 as permitted in their Advance Condo Sale Reservation Agreement the purchasers demanded return of the deposit monies which didn t occur until after the filing of a lawsuit. Witnesses for The Florida Bar Interestingly, the first and the last witness for The Florida Bar was attorney George T. Yoss who actually hired Gregory A. Martin in August 1998 and also discharged him on May 13, The firm had been satisfied with the services of Mr. Martin and considered him a special lawyer who could handle many different cases. Mr. Yoss did however make reference to three lawsuits against the firm between 2000 and 2004 related to Mr. Martin and to a lack of production by Mr. Martin in 2005 prior to his discharge. Mr. Yoss found out about Mr. Martin s representation of the Landau Trust from a prospective client from South America. When confronted by Mr. Yoss, Mr. Martin denied that he represented the Landau Trust. Page 5 of 24

6 Shortly after the firing Adorno & Yoss found documents that had been purged but couldn t determine what had been in them. No funds were found in Adorno & Yoss trust accounts for the Landau Trust or Mr. Harmon and no billing records were found but the firm was contacted by Mr. Harmon and a Mr. Yao both of whom thought they were represented by the Adorno & Yoss firm. Mr. Yoss never gave permission to Mr. Martin to represent clients outside of the firm. George Yoss made the complaint to The Florida Bar. Mr. Yoss became aware of the 4424 N. Bay Road closing when he was contacted by Gary Cohen, Esq., attorney for the sellers after Mr. Cohen received no response to his inquiries to Gregory A. Martin. Mr. Yoss does acknowledge that a paralegal from the firm s real estate department did bill one-half hours time relating to this matter but further asserted that no one at Adorno & Yoss was responsible for the closing and that Mr. Martin had the ability to handle same. Certain funds withheld for the IRS were not timely received by the IRS and the deed and mortgage were not recorded after the closing but were subsequently prepared and filed by the Adorno & Yoss real estate department. When confronted Mr. Martin provided a letter purportedly confirming that the money ($365,000.00) and appropriate forms had been Page 6 of 24

7 sent by him to the IRS but he did not provide a copy of the actual check. In November 2005 the IRS received a check and a different set of forms from the copies provided by Mr. Martin to Mr. Yoss. Carlos Ruga, The Florida Bar auditor, reviewed Gregory A. Martin s bank records including two trust accounts at Mellon United Bank, the Landau Beneficial Trust at Gulf Bank and two personal accounts of Gregory and Melanie Martin. Mr. Ruga did identify checks for tens of thousands of dollars paid to Gregory A. Martin with the indication of legal fees or legal expenses noted on them. Mr. Ruga did not find a transfer of any of those funds to the Adorno & Yoss law firm. Mr. Ruga also identified tens of thousands of dollars in disbursements to Gregory Martin separate from the alleged attorneys fees described previously and large amounts of money paid to third parties. Gregory A. Martin has denied receiving attorneys fees and has indicated that payments to himself were reimbursement for expenses he had advanced and that the payments to third parties were made at the behest of the Landau Trust. The credibility of those assertions will be dealt with later herein. All of the cash out was a big concern to Mr. Ruga because the funds are not traceable. Attorney Gary P. Cohen testified as a witness for the Florida Bar in connection with the 4424 N. Bay Road closing. Mr. Cohen indicated that Page 7 of 24

8 Mr. Martin acted for as the closing agent and signed for the Adorno & Yoss firm. Because the seller was a foreign national 10% of the closing proceeds were withheld. The closing occurred on January 31, 2005 but the deed was not recorded until March 24, 2005 and the mortgage was not recorded until April 18, Mr. Cohen sensed a problem when the referred to documents hadn t been timely recorded and when he had no response to repeated telephone calls to Gregory A. Martin. Additionally, a check with the IRS by his client s accountant revealed that the withheld funds had not been forwarded. Jay Shapiro, a CPA for 24 years, and the seller s accountant explained that when a foreign national sells property in the U.S. the buyer withholds 10% of the purchase price in the closing agents Trust Account until the IRS determines tax liability. In 2005 it normally took 90 days to hear from the IRS. The closing agent did not meet the 20 day requirement after closing to submit appropriate paperwork, but as explained herein previously, in November 2005 the forms and check were supplied to the IRS. After a considerable delay the seller did receive a $260, refund with interest. Harvey Cohen testified concerning the purchase by himself and three relatives of a unit at the Henry Hotel which was contracted for on September Page 8 of 24

9 27, On July 7, 2006 a written demand was made, as allowed under the contract, by the parties for a refund of their deposits. Mr. Martin sent a letter in response to the demand for return of deposits indicating that he had nothing to do with this matter, that it was a different Greg Martin. A lawsuit followed, the deposits were returned and the lawsuit was dismissed. Also testifying briefly as witnesses for the Florida Bar were Rudy Kellerman, the real estate agent who rented 4424 N. Bay Road to Mr. Zabaleta prior to him purchasing same, Nancy Kaim the Coldwell Banker agent who sold approximately 20 units at the Henry Hotel including the one sold to the Cohens, and Fernando Garcia, Esq. of the Adorno & Yoss real estate department who indicated there was no record whatsoever of the 4424 N. Bay Road closing. Witnesses for the Respondent Gregory A. Martin has been a practicing attorney since 1977, first in the State of New York and since late 1981 in the State of Florida. His legal career in Florida began with 2-3 years at Greenberg Traurig followed by a partnership at Wallace, Ingalls, Pertnoy and Martin until Next was a partnership at Coffey, Aragon, Martin and Burlington until 1995 after which he had his own firm followed by his hiring at the Adorno & Yoss firm. Page 9 of 24

10 Since leaving the Adorno & Yoss firm in May 2005 he has once again had his own firm until present. Mr. Martin professes to specialize in commercial litigation and some bankruptcy but is quick to point out that he is not a real estate attorney and that real estate matters would be referred to real estate experts by him. He denies having been fired by the Adorno & Yoss firm but instead testified that he tendered a resignation letter. There had been mutual dissatisfaction between him and the firm. The firm was dissatisfied with his lack of business and he though that the firm interfered with his client relationships. Mr. Martin acknowledged that there were two lawsuits, not three as indicated by Mr. Yoss filed against Adorno & Yoss relating to him but that both were ultimately settled for nominal amounts. Mr. Martin denies having deleted any documents from the Adorno & Yoss processing system. Mr. Martin was introduced to Michael Harmon in late 2003 by an investment banker who described him to Mr. Martin as a whale, a person from whom considerable fees could be earned. The initial meeting took place at an Adorno & Yoss conference room. Mr. Harmon was looking for a law firm with expertise in a number of areas and familiarity with Latin American clients. The attorneys fees arrangement was to have been a flat retainer of $50, plus ¾% of funds under management in the Laudau Page 10 of 24

11 Trust. Mr. Harmon was briefly introduced to Hank Adorno and George Yoss at the time of the first meeting. Mr. Harmon returned to the Adorno & Yoss firm a couple of days later to execute the retainer agreement with Mr. Martin signing for the firm. Mr. Martin retained the original copy and claims to have submitted it to the firm for issuance of a client number which customarily would be used on all matters pertaining to the client. Mr. Yoss has denied that the firm received any such document. Mr. Harmon never paid the $50, retainer, at least not to the firm of Adorno & Yoss, and not to Mr. Martin according to his testimony and bank records reviewed by the Florida Bar auditor. In any event, after Mr. Harmon indicated a desire to establish a banking relationship in Miami he was taken to Gulf Bank by Mr. Martin. The account was opened with $5, in funds personally provided by Mr. Martin which was subsequently returned to him. Multiple checks were deposited into the Gulf Bank account with the monies to be used for investments and with Mr. Martin anticipating their partial use for payment of the $50, retainer. Unfortunately for everyone the checks had been forged and were not honored by the issuing bank. Page 11 of 24

12 Mr. Harmon also had plans to purchase a building in Miami. He provided two millions dollars for that purpose to Mr. Martin who defied credibility when testifying that said funds could not be deposited into an Adorno & Yoss trust account because he had not yet received the previously referred to client number. Conveniently, Mr. Martin still had a trust account at Mellon Bank from his own law firm so the money was deposited there. Thereafter upon instruction from Mr. Harmon numerous disbursements were made from the two million dollars by Gregory A. Martin. Checks were cashed with the proceeds going to Mr. Harmon or other people designated by him and although he was very careful not to be use the words attorney fees he acknowledged payments to himself, alleged by the Florida Bar to be close to $100,000.00, for reimbursement of expenses advanced by him. When asked if he was ever paid any monies personally Mr. Martin cautiously responded for fees.no. Much of the testimony relating to monies in and out of the described trust account was not credible. Why was the Adorno & Yoss firm never advised of the two million dollars being held? If indeed a client number was required why didn t Mr. Martin push the firm for issuance of one? Why was Mr. Martin forced to advance undocumented expenses for Mr. Harmon and/or the Landau Trust when they had two million dollars sitting in his trust Page 12 of 24

13 account? Why wasn t the still unpaid $50, retainer paid from the $2,000, sitting in Mr. Martins trust account? That although no criminal charges were brought in this matter and there is no suggestion that they should have been, undersigned saw a certain analogy to a money laundering scheme under which funds from an unknown source, possibly unclean, are run through a bank account, in this case an attorneys trust account, and exit said account clean. The Florida Bar auditor has identified tens of thousands of dollars in cash realized by Mr. Martin from cashed checks and other payments made from the trust account to benefit Mr. Martin. One glaring example being a $3,500 payment to the Cushman School in March 2004 for Mr. Martin s child s summer program. This payment is explained by Mr. Martin as are many others as reimbursement for expenses advanced by him. Mr. Martin s relationship with Michael Harmon and the Landau Trust ended in August Tens of thousands of dollars were paid for reimbursed expenses yet the Adorno & Yoss firm never received the $50, retainer and not 1 was paid in attorneys fees to the firm with Mr. Martin estimating 15 to 20 hours of time being spent on this matter for the firm. The explanations of Gregory A. Martin are not credible. Page 13 of 24

14 Additionally lacking credibility are attempts to explain away monies received from Gulf Corporation. According to Mr. Martin a $4, payment on August 31, 2004 to him, not the Adorno & Yoss firm, wasn t for legal work but instead was to determine the value of a Gulf owned property in his capacity as a Director. Deposits to Gulf Bank identified as legal fees/legal expenses on December 2, 2004 and December 31, 2004, in the amounts of $15, and $20, respectively, were described as payments for work done prior to his employment with Adorno & Yoss in August The explanation once again defied credibility since the work being paid for in December 2004 would have to have been done at least six years earlier and if indeed these monies were owed to Mr. Martin at the time of his employment with Adorno & Yoss they should have been identified both at the time of said employment and upon their receipt. A $10, check for legal fees from Construction International payable to Gregory A. Martin once again according to Mr. Martin wasn t really legal fees. Instead, in another convoluted explanation said monies were described as reimbursements. There are other examples in the record of work being done and monies being received by Mr. Martin but always the bottom line from him was that monies were never for attorneys fees. Page 14 of 24

15 Mr. Martin testified that Jason Zabaleta, a real estate investor/developer became a client of the Adorno & Yoss firm in early 2003 and that he had little involvement with the 4424 N. Bay Road closing as such, matters were customarily handled by the firm s real estate department. Mr. Martin further testified that Mr. Zaboleta deposited $156, into Gary Cohen s Trust Account and an additional $700, into the Adorno & Yoss Trust Account. The closing was initially scheduled at Adorno & Yoss, where Mr. Martin claims he would not have attended, but ultimately it occurred at Mr. Cohen s office. Due to an unavailability of Adorno & Yoss real estate personnel Mr. Martin accompanied Mr. Zabaleta to the closing after all documents were allegedly approved by the real estate department in advance. Mr. Martin claims that the closing statement was prepared by the Adorno & Yoss real estate department and that upon return from the closing all documents were forwarded by him to the real estate department for review and recording. A few weeks after the closing Mr. Schatzman with the firm advised Mr. Martin that the deed and mortgage were never recorded but they were eventually located somewhere in the real estate department and properly recorded. Page 15 of 24

16 The Henry Hotel was a project of Mr. Zabaleta for the purchase and renovation of said hotel leading to a conversion to and sale of condominium units. Also somewhat defying credibility, Mr. Martin has testified that his first knowledge of the project came upon contact from Nancy Kiam, an agent with Coldwell Banker, who indicated that someone was about to sue for their deposit back. Mr. Martin contacted Mr. Zabaleta who is said to have advised him that Ms. Kiam was never authorized to sell units. This is of course in direct contradiction with Ms. Kiam s earlier testimony of having sold 20 units at The Henry Hotel. Mr. Martin does acknowledge limited involvement related to the preparation of releases once Mr. Zaboleta agreed to refund the deposit. As for the deposit checks of the Cohens they had stamped endorsements and were not signed by Mr. Martin suggesting that he had no knowledge of them. The deposit slip was alleged to be completed in his assistant s handwriting. Summary and Findings Upon undersigned s initial review of this matter and at the time of the initial status/scheduling conference undersigned couldn t help but wonder, and actually inquired of the Florida Bar s counsel, why this wasn t merely a contract dispute between the Respondent, Gregory A. Martin, and the Page 16 of 24

17 Adorno & Yoss law firm. As it turns out, at the time of the inquiry there actually was such a lawsuit pending in the General Jurisdiction (Civil) Division of this Court and at the time of the last court appearance in the instant matter the Circuit Judge presiding over the civil matter had very recently entered judgment in favor of Adorno & Yoss and against Gregory A. Martin in the amount of $282, Counsel for Gregory A. Martin indicated that a Motion for Rehearing and/or New Trial would be filed. In his almost seven years with the Adorno & Yoss firm Gregory A. Martin has been shown in this proceeding to have violated his employment contract by maintaining clients separate from the firm in a total of three of four instances, Michael Harmon and the Landau Trust, Gulf Corporation and Jason Zabaleta (4424 closing and Henry Hotel). While it could be argued that there were others bank records reviewed do not support same. Had the Respondent from the beginning been candid and forthright and admitted both to the Adorno & Yoss firm and to the Florida Bar investigators that yes he had personally maintained clients in violation of his contract this matter may have been over with his firing and prosecution of the civil suit for damages. The most damning part of this case is the continuing denials when the evidence says otherwise. Page 17 of 24

18 The Florida Bar seeks disbarment, a penalty normally reserved for the most heinous of infractions ie. commission of criminal acts, felony convictions, theft or misappropriation of trust account funds, total dereliction of duties and responsibilities to clients. We have none of those herein and further we have not one client of the Respondent stepping forward to complain about representation provided by Gregory A. Martin or to complain of missing funds. What we do have, however, is an Officer of the Court not being truthful to the law firm that employed him, or to the Florida Bar investigators or finally to this Court during these proceedings. Recommendations as to Guilt The Complaint of the Florida Bar filed June 4, 2008 as to Count I alleges that Gregory A. Martin violated the following Rules of Professional Conduct: 1. Rule 4-4.1(a) A lawyer shall not knowingly make a false statement of material fact or law to a third person. 2. Rule 4-8.1(a) In connection with a disciplinary matter, a lawyer shall not knowingly make a false statement of material fact. 3. Rule 4-8.4(a) A lawyer shall not violate or attempt to violate the Rules of Professional Conduct. Page 18 of 24

19 4. Rule 4-8.4(c) - A lawyer shall not engage in conduct involving dishonesty, fraud, deceit or misrepresentation. Gregory A. Martin is found guilty of having violated all of the above Rules of Professional Conduct as alleged in Count I of the Complaint. The Complaint of the Florida Bar filed June 4, 2008 as to Count II alleges that Gregory A. Martin violated the following Rules of Professional Conduct: 1. Rule Competence 2. Rule Diligence 3. Rule 4-8.1(a) - In connection with a disciplinary matter, a lawyer shall not knowingly make a false statement of material fact. 4. Rule 4-8.4(c) A lawyer shall not engage in conduct involving dishonesty, fraud deceit or misrepresentation. Gregory A. Martin is found not guilty of having violated the above rules, as the Florida Bar has failed to prove the allegations within Count II by clear and convincing evidence. The Complaint of the Florida Bar filed March 30, 2009 and referred to as Count III in these proceedings alleges that Gregory A. Martin violated the following Rules of Professional Conduct: Page 19 of 24

20 1. Rule 4-8.4(c) A lawyer shall not engage in conduct involving dishonesty, fraud, deceit or misrepresentation. 2. Rule Trust Accounts Gregory A. Martin is found guilty of having violated the above Rules and Professional Conduct as alleged in the Complaint. Recommendations As To Disciplinary Measures To Be Applied During the sentencing phase of this matter two witnesses appeared on behalf of Gregory A. Martin. The first witness, Kendall Coffey, the former U.S. Attorney for the Southern District of Florida and a former law partner of Gregory A. Martin attested to Mr. Martin s professionalism, honesty and integrity. During their approximately 20 year relationship first as associates at Greenberg Traurig, next as law partners and finally as an expert witness for Mr. Coffey in attorneys fees cases all experiences were described as positive by Mr. Coffey. The second witness on behalf of Gregory A. Martin was Alireza Rezai of Construction International. The two met in Mr. Martin helped put the company together and still serves as its registered agent. Mr. Martin has Page 20 of 24

21 also represented Mr. Rezai in personal matters. Mr. Rezai has always found Mr. Martin to be ethical and trustworthy. Mr. George Yoss was recalled by the Florida Bar to describe the damages caused by Mr. Martin s actions, including lawsuits that had to be defended, monies expended on outside legal counsel, settlement payments and costs. Gregory A. Martin was also recalled to testify in the sentencing phase of the trial. As a member of the New York Bar since 1977 and the Florida Bar since 1981 until the instant Complaint(s) he has only one prior Bar Complaint and it didn t go to grievance committee. Unfortunately, he reasserted his claim that he only received reimbursements and that no attorneys fees or other monies were received by him in the instant matters. He further professed to have made full disclosure to the Florida Bar and to have fully cooperated with their investigations. He claims no intent to violate the Rules of Professional Conduct. The Respondent Gregory A. Martin having been found guilty of misconduct by violating the Rules of Professional Conduct as previously described justifies disciplinary measures as follows: A. Suspension (Rule 3-5.1(e) ) for a period of 90 days. Page 21 of 24

22 B. Payment of The Florida Bar s costs in these proceedings. I find the following costs were reasonably incurred by The Florida Bar: Administrative costs Rule 3-7.6(q)(1)(i) $ 1, Court reporter attendance fee and cost of transcript of deposition of EuroBank records custodian taken on October 16, $ Court reporter attendance fee and cost of transcript of deposition of Allen Duprey taken on November 13, $ Court reporter attendance fee for January 20, 2010 hearing $ Court reporter attendance fee for January 25, 2010 hearing $ Court reporter attendance fee for final hearing February 18, 19 and 22, $ 1, Court reporter attendance fee for March 31, 2010 hearing $ Investigator costs $ Auditor s costs $ 6, TOTAL $ 9, Page 22 of 24

23 It is recommended that such costs be charged to Respondent and that interest at the statutory rate shall accrue and be deemed delinquent 30 days after the judgment in this case becomes final unless paid in full or otherwise deferred by the Board of Governors of The Florida Bar, Respondent s Motion to Supplement Record dated April is hereby denied. Respondent s Objections to Motion to Tax Costs dated May 11, 2010 and May 14, 2010 are denied. BERNARD S. SHAPIRO Circuit Judge/Referee 175 N.W. 1 st Avenue, #1915 Miami, FL Certificate of Service I hereby that the foregoing Report of Referee was electronically filed with the Florida Supreme Court and that copies were mailed by regular U.S. Mail to Jennifer R. Falcone Moore, Bar Counsel, The Florida Bar at 444 Brickell Avenue, Suite M-100, Miami, FL and N. Fraser Schuh III, Respondent s Counsel at 704 S.E. 3 RD Avenue Ext., Hallandale, FL on this 18 th day of May, Page 23 of 24

24 BERNARD S. SHAPIRO Circuit Judge/Referee Page 24 of 24