Matter of Baumgarten

Citation: 2019 NY Slip Op 6879

Court: Appellate Division of the Supreme Court of the State of New York; September 26, 2019; New York; State Appellate Court

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Sidney Baumgarten, an attorney admitted to practice in New York since March 30, 1961, faced disciplinary proceedings initiated by the Attorney Grievance Committee (AGC) for the First Judicial Department. Previously, Baumgarten had been suspended in 1994 for misusing client escrow funds and disbarred in 1997 for intentional conversion of client funds. He was reinstated in 2005. The AGC sought his immediate suspension due to new evidence of misconduct that threatened public interest, stemming from an investigation into a dishonored check from his escrow account.

The investigation revealed that Baumgarten received an $8,000 down payment for a cooperative apartment sale in June 2014, which he deposited into his escrow account. However, he later indicated uncertainty about holding additional funds for the buyer. Although he refunded the down payment in July 2017, records showed that his escrow account balance fell below $8,000 multiple times during the three years between the deposit and the refund. The first occurrence was in November 2014, when a check for $5,000 reduced the balance to $6,306.63. Baumgarten could not satisfactorily explain the check's purpose or its issuance from the escrow account during his deposition.

On April 22, 2019, the respondent communicated with the Committee regarding a $5,000 check (Check No. 356), asserting it was not meant for him or any obligations and expressing confusion over its issuance. He acknowledged a lack of due diligence in monitoring his escrow account, where he made improper cash withdrawals of $200 and $500 in late 2015 and issued a $500 certified check to an attorney for a different client. By February 4, 2015, the escrow account balance had decreased to $5,106.63, despite some deposits temporarily raising it above $8,000. 

In June 2015, the respondent made several disbursements from the account, including a $10,000 payment to a client, a $920 payment for investigative work, a $136 Verizon payment, and a $169 check to A.S.A. College, for which he provided unclear justifications. By June 11, 2015, the balance dropped to $3,881.61, further reduced after a $500 ATM withdrawal in August 2015. 

On April 11, 2017, the respondent improperly transferred $12,500 from his operating account to the escrow account, violating rule 1.15(a) of the Rules of Professional Conduct by commingling personal and client funds. The buyer's $8,000 deposit was refunded on July 7, 2017, after the property sale failed to close, and additional commingling occurred when he transferred $600 into the escrow account on August 15, 2017. 

The Attorney Grievance Committee (AGC) asserts that the respondent's actions constitute conversion or misappropriation of third-party funds, as the buyer did not authorize the use of her funds for unrelated expenses. They argue that his misconduct threatens public interest, warranting interim suspension. Respondent's counsel indicated no objection to a hearing, while the respondent admitted to not properly monitoring his account but contended that a suspension was unwarranted since no client suffered a loss or complaint. He remains uncertain about the $5,000 check's payee or reason for issuance.

Respondent asserts entitlement to legal fees from the seller-estate and states he had adequate funds to return an $8,000 down payment when the sale was canceled. He requests the Court consider his public service, military background, and health issues stemming from a contentious separation with his former law partner, who is suing him. He lacks a pension or savings, and an interim suspension would financially jeopardize him and his wife, who has health problems. He emphasizes the urgency of pending legal matters with deadlines. Despite this, the AGC's motion for interim suspension is granted due to evidence of professional misconduct, including conversion and misappropriation of funds from his escrow account. The Court determines that the return of the down payment does not negate the need for suspension, nor do personal circumstances mitigate the misconduct. The respondent's claims of financial hardship and client prejudice are dismissed as inherent to any suspension. The suspension is effective immediately and remains until the conclusion of pending disciplinary matters. He may request a post-suspension hearing within 20 days.