Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
A. GAIL PRUDENTI, P.J., WILLIAM F. MASTRO, REINALDO E. RIVERA, STEVEN W. FISHER and HOWARD MILLER, JJ.
DISCIPLINARY proceeding instituted by the Grievance Committee for the Ninth Judicial District. The respondent was admitted to the Bar at a term of the Appellate Division of the Supreme Court in the Second Judicial Department on September 24, 1986. By decision and order on motion dated July 24, 2007, this Court denied that branch of the Grievance Committee's motion which sought the respondent's interim suspension pursuant to 22 NYCRR 691.4(l)(1)(i), (ii), and (iii), and granted that branch of the motion which was for leave to institute and prosecute a disciplinary proceeding against the respondent, and referred the issues raised to Steven C. Krane, as Special Referee to hear and report.
The Grievance Committee for the Ninth Judicial District (hereinafter the Grievance Committee) served the respondent with a petition dated April 30, 2007, which contains five charges of professional misconduct. The charges against a co-respondent, Tara Anne Laudonio, are substantively identical, and a joint hearing was conducted before Special Referee Steven C. Krane on November 6, 2008.
The Special Referee sustained all five charges against the respondent and Laudonio. The Grievance Committee now moves to confirm the report of the Special Referee with respect to the respondent, and to impose such discipline as the Court deems just and proper. The respondent cross-moves to disaffirm the Special Referee's report on the ground that the findings are not supported by the record or, in the alternative, to impose a sanction no more severe than public censure should the Court confirm the Special Referee's report.
Charge one alleges that the respondent was guilty of a breach of fiduciary duty and a failure to safeguard and ensure the transactional integrity of funds entrusted to him, incident to his practice of law in his attorney special account(s), in violation of Code of Professional Responsibility DR 9-102(a) (22 NYCRR 1200.46[a]).
Fonte became a partner in the law firm of Bellettieri & Fonte in March 2004. The firm became known as Bellettieri, Fonte and Laudonio (hereinafter BF & L) in or about April 2004, when Laudonio joined the partnership. Fonte was a partner in the firm until November 17, 2006.
BF & L engaged almost exclusively in a transactional real estate practice, representing buyers, sellers, and lenders at residential and commercial real estate closings. From sometime on or before the date of its inception, BF & L maintained one or more attorney special accounts at J.P. Morgan Chase Bank. All of the named partners as well as Peter Dengler, an associate, were fully authorized signatories on one or more of those attorney special accounts at all times between March 1, 2005, and November 17, 2006.
Beginning in or about March 2005 and continuing through November 2006, partner Anthony Bellettieri engaged in a pattern of dishonest and fraudulent manipulation of BF & L's attorney special accounts which resulted in the misappropriation, larceny, and/or conversion of more than $17 million from those accounts. The respondent failed to make an adequate effort to review or supervise the operations of those accounts during this period and failed to discover Belletieri's fraud and larceny at a time when it could have been either mitigated or prevented.
Charge two alleges that the respondent failed to promptly pay or deliver funds, which were placed in his possession by clients for disbursement to third parties, to the clients or to third parties entitled to receive them, in violation of Code of Professional Responsibility DR 9-102(c)(4) (22 NYCRR 1200.46[c]), based on the factual specifications of charge one. The respondent's failure to discover Belletieri's escrow fund theft resulted in the dishonorment of numerous checks issued from the attorney special accounts of BF & L.
As a result of the Bellettieri's larceny and fraud and the respondent's failure to timely prevent or mitigate it, more than $3 million in checks issued between approximately October 1, 2006, and November 17, 2006, on one or more of BF & L's attorney special accounts, were dishonored by the bank when presented for payment.
Charge three alleges that the respondent failed to make reasonable efforts to adequately supervise Belletieri's work and to ensure that all lawyers in BF & L were conforming to the Disciplinary Rules, in violation of Code of Professional Responsibility DR 1-104(a), (b), (c), and (d)(2) (22 NYCRR 1200.5[a], [b], [c], [d]), by failing to adequately oversee the transactional activity of ...