Matter of Thomas

Citation: 2022 NY Slip Op 06251Docket: 2018-11989

Court: Appellate Division of the Supreme Court of the State of New York; November 8, 2022; New York; State Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The disciplinary proceeding against Audrey A. Thomas, an attorney, was initiated by the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts due to allegations of professional misconduct. The process began with a verified petition and notice served on October 9, 2018, to which Thomas responded on December 6, 2018. Following the submission of a statement of disputed and undisputed facts in January 2019, which went unchallenged by Thomas, the case was referred to Special Referee Roger Bennet Adler for hearings.

The hearings occurred over 15 sessions from July 2019 to December 2020. In April 2021, the Special Referee upheld all three charges of misconduct, including a claim that Thomas misappropriated $50,000 in down payment funds from a client, Rhea Murray, intended for the sale of real property. This misappropriation violated Rule 1.15(a) of the Rules of Professional Conduct, as she deposited the funds into her IOLA trust account, which had minimal prior funds. The Grievance Committee is seeking to confirm the Special Referee's findings and impose appropriate disciplinary action, while Thomas is requesting to contest the report and seeks either a remand for further proceedings or a lesser sanction, such as public censure, based on mitigating circumstances.

The buyer authorized the release of $25,000 from the down payment to Murray and $4,500 to the respondent for eviction proceedings against tenants of the Madison Street property. On May 23, 2013, the respondent withdrew $29,500 from the BOA escrow account, paying Murray $23,000 and retaining $6,500—$2,000 more than authorized. In June 2013, the respondent made cash withdrawals totaling $20,500, which reduced the escrow account balance to $25, far below the required amount. At the closing on November 21, 2013, the respondent received and deposited a check for $480,173.47 from Seyfarth Shaw, LLP, raising the account balance to $480,198.47. From November 22, 2013, to February 11, 2014, she disbursed $102,413.94 under Murray's direction but also withdrew $85,340.10 without authorization. After a subsequent deposit of $240,000 on February 11, 2014, the balance reached $532,444.43. Between that date and May 8, 2014, she disbursed $3,620.91 at Murray's request while withdrawing $271,181.13 without authorization. On May 8, 2014, she closed the BOA account, withdrawing the remaining funds and depositing $257,642.39 into a Chase escrow account, which had a zero balance prior. From May 9, 2014, to November 17, 2014, she disbursed $3,620.91 at Murray's direction but also withdrew $253,996.48 without authorization. By November 17, 2014, the Chase account balance was $25, significantly below the amount owed to Murray. Charge two alleges 12 improper cash withdrawals totaling $64,000 from the BOA account, violating rule 1.15(e) of the Rules of Professional Conduct. Charge three states the respondent failed to maintain required bookkeeping records for both escrow accounts, violating rule 1.15(d). The respondent admitted to representing Murray in the property sale and confirmed the deposit of approximately $770,000 in sale proceeds into her escrow account.

The respondent disbursed some sale proceeds under Murray's direction but acknowledged that over $630,000 did not remain in the escrow account. The respondent admitted to using these funds to promote herself and claimed it was authorized by Murray, based on a long-standing personal relationship, to serve as an investment and to cover legal services for Murray's family. Breanna Rochelle Coy, the respondent’s daughter, testified that she overheard Murray granting oral authorization for this use of funds. However, the respondent conceded she failed to comply with ethical rules regarding financial transactions with clients and did not obtain written authorization.

Murray denied giving any authorization for the use of the sale proceeds for investment or personal legal bills. Prior to closing on the Madison Street property, she had instructed the respondent to use the sale proceeds to pay down mortgages on three properties she and her daughters owned. The respondent did not follow these instructions, and the mortgages were not paid. After the closing, Murray did not receive a clear explanation regarding her funds. In a meeting in September 2016, Murray’s daughters confronted the respondent, who admitted to investing their mother’s money in her own name and suggested a payment plan, which started but ultimately ceased, with only $31,300 repaid by September 2017.

The findings conclude that the respondent's claims lacked merit. The substantial funds from the Madison Street property sale were deposited into the escrow account, but the respondent was not authorized to use them as claimed. The testimony from the Grievance Committee's witnesses was found credible, indicating a breach of trust. It was determined that the evidence supported the charges against the respondent, emphasizing that attorneys are fiduciaries with a heightened standard of care in handling client funds, which extends beyond mere honesty to a rigorous ethical standard.

The respondent, Audrey A. Thomas (formerly known as Audrey A. Watson), was found to have failed in her fiduciary duties and misappropriated significant funds from the sale of the Madison Street property. The Grievance Committee's motion to confirm the Special Referee's report was granted, while the respondent's motion to disaffirm it was denied. In determining discipline, the court considered the aggravating factors of substantial misappropriation from a senior citizen client, failure to make full restitution, lack of remorse, and a prior admonition in her disciplinary history. Mitigating factors included evidence of good character and community involvement. Ultimately, the court determined that disbarment was warranted. Consequently, the respondent is disbarred, her name is removed from the attorney roll, and she is ordered to comply with disbarment regulations, cease practicing law in any capacity, and return any secure passes issued by the Office of Court Administration.