Attorney Grievance Commission v. Sabghir

BELL, Chief Judge. The issue that this attorney grievance matter presents is whether a respondent who has been sanctioned in disciplinary proceedings in one state may collaterally attack the factual findings made in those proceedings by way of his or her defense in reciprocal discipline proceedings instituted in this state. Our response is “no.” ⁶⁹ I The Attorney Grievance Commission of Maryland (the “Commission” or the “petitioner”), through Bar Counsel, filed a Petition for Disciplinary Action against David Shammai Sabghir, the respondent, alleging misconduct arising out of disciplinary proceedings in New York. 1 Specifically, according to the petition, the respondent was disbarred by the Appellate Division of the Supreme Court of the State of New York after he had been found, by a special referee, to have violated ten of the Disciplinary Rules of the Code of Professional Responsibility. The petitioner sought a determination by this Court that the respondent, by those acts and omissions, violated the following Disciplinary Rules of the Maryland Code of Professional Responsibility (former Maryland Rule 1230, Appendix F): DR 1-102(A)(4)(6); 2 DR 5-101(A); 3 DR 5-104(A); 4 DR ⁷⁰ 9-102(A) and (B), 5 and Rules 1.7(b) 6 and 8.4(c) of the Maryland Rules of Professional Conduct.

Maryland Rule 12S0. 7 We referred the matter to the Honorable Clayton Greene, Jr. of the Circuit Court for Anne Arundel County to make findings of fact and conclusions of law pursuant to Maryland Rule 16-711(a). 8 Following a hearing, at which testimony and ⁷¹ exhibits were received, Judge Greene rejected the respondent’s argument that he had proven by a preponderance of the evidence that he did not engage in the misconduct found by the Appellate Division of the Supreme Court of New York. The respondent’s argument was premised on his testimony and that of a Rabbi testifying as an expert witness. In his testimony, the respondent denied that there ever existed an attorney client relationship between him and Benchemoun and Moradi, the complainants, or that he derived any benefit from the investments that resulted in his disbarment and are the subject of these proceedings. More specifically, as it relates to the Benchemoun matter and will be more fully explained infra, the respondent disclaimed responsibility for the diversion of the funds from a joint account in their names.

To substantiate that point, he offered the affidavit of Timothy Rafferty, in which Mr. Rafferty accepted full responsibility. The Rabbi’s testimony related to a business arrangement called an “iska.” He testified that such a transaction is inconsistent with an attorney client relationship. The testimony of both the respondent and the rabbi was offered, Judge Greene stated, “in an attempt to establish mitigating circumstances, rebut New York’s findings, and explain why the Respondent should not be disciplined.” Judge Greene made findings of fact as follows: “The Court finds that New York’s final judgment is conclusive proof of Respondent’s misconduct. Petitioner submitted the Supreme Court of New York’s decision of June 19, 1995, Exhibit 2, and the Court finds this is clear and convincing evidence of a final judgment by a judicial tribunal.

See Attorney Grievance Commission v. Miller, 310 Md. 163, 168 , 528 A.2d 481, 484 (1987). Respondent’s evidence amounts to less than a preponderance of evidence to establish mitigating circumstances, rebut New York’s findings or explain why ⁷² Respondent should not be disciplined. Therefore, the Court accepts New York’s final adjudication as conclusive proof of Respondent’s misconduct and accepts the following facts as found by the Supreme Court of New York: “1. On or about May 16, 1985, Eric Benchemoun delivered $10,000.00 to the Respondent for the purpose of investing in Nutribevco, a company which was marketing a diet product.

The Respondent, who had a financial relationship with Nutribevco and its principals, was seeking investors for the company. “2. On or about June 27, 1985, a stock certificate representing 28,000 shares of Nutribevco was issued. The certificate bore the endorsement of ‘David Sabghir and Yehyda Ben Chem Houn (sic) JTWROS.’ The certificate remained under the Respondent’s dominion and control until about September 24, 1985, at which time it was delivered to the brokerage house of Bear Stearns and Company. Along with that certificate, an executed bond power, bearing the Respondent’s signature and the purported signature of ‘Yehyda Benchemoun’ (sic), was delivered to Bear Stearns and Company. “3.

Mr. Benchemoun never signed the bond power and was unaware that the stock certificate was being negotiated by the Respondent. As a result of that transaction, a $14,-000.00 credit was applied to account number 459-00361 in the names of ‘David Sabghir and Yehyda Den [sic] Chem Houn JTWROS’ (sic) at the brokerage house of Rooney Pace, Inc. On or about October 2, 1985, the Respondent’s own account at Providence Securities received a $14,000.00 credit. That credit was used to purchase Nutribevco securities in the Respondent’s name alone. “4. On or about December 1986, Esagh Moradi retained Respondent to review a commercial lease.

Respondent advised Mr. Moradi against that transaction and instead suggested that Mr. Moradi invest in Nutribevco. “5. Respondent never disclosed his relationship with Nutribevco or its principals to Mr. Benchemoun or Mr. Moradi. ⁷³ “6. Respondent maintained an attorney escrow account at the Bank of Commerce which he used for personal business purposes. Respondent deposited in that account funds entrusted to him incident to his practice of law.

Between approximately August and September 1985, while Respondent was holding escrow funds entrusted to him as a fiduciary, that account was overdrawn on at least nine occasions. “7. Respondent failed to maintain and produce for inspection his escrow account records by the New York Grievance Commission, as required by the New York Grievance Commission.” The respondent had also argued that Maryland should not accept the New York findings because New York, unlike Maryland, which requires clear and convincing evidence, see Maryland Rule 16-710 d. 9 , requires that an attorney’s misconduct be proven by only a preponderance of the evidence. The hearing court similarly rejected that argument. Judge Greene concluded from the facts found: “As Respondent’s acts and omissions occurred before January 1, 1987, Respondent’s misconduct is defined by Rule BVlj and the Disciplinary Rules of the Code of Professional Responsibility. “Under Disciplinary Rule 1-102(A)(4), it is professional misconduct to engage in conduct involving dishonesty, fraud, deceit or misrepresentation.

Respondent’s conduct with Mr Benchemoun and Mr. Moradi involving Nutribevco in the previously mentioned facts involve dishonesty, .l aud, deceit and misrepresentation. Additionally, Respondent’s use of his escrow account for Nutribevco stock transactions, and failure to maintain escrow records involve dishonesty, fraud, ⁷⁴ deceit and misrepresentation. Therefore, Respondent violated Rule 1-102(A)(4). “Under Disciplinary Rule 1-102(A)(6), 10 it is professional misconduct to engage in conduct that adversely reflects on fitness to practice law. As described in the facts, Respondent’s conduct with Mr. Benchemoun and Mr. Moradi involving Nutribevco adversely reflects upon Respondent’s fitness to practice law.

Also, Respondent’s conduct in maintaining his escrow account adversely reflected on his ability to practice law. Therefore, Respondent violated Disciplinary Rule 1—102(A) (6). “Under Disciplinary Rule 5-101 (A), it is professional misconduct for an attorney to accept employment if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by his own financial, business, property or personal interests except with the consent of the client and after full disclosure by the attorney. Since Mr. Benchemoun and Mr. Moradi were Respondent’s clients, Respondent allowed personal financial interests to impair his professional judgment on behalf of his clients. Therefore, Respondent violated Disciplinary Rule 5-101(A). “Under Disciplinary Rule 5-104(A), it is professional misconduct to enter into a business transaction with a client if they have differing interests therein for the protection of the client, unless the client has consented after full disclosure.

Since Mr. Bennchemoun and Mr. Moradi were Respondent’s clients, and Respondent’s interests differed, Respondent’s business transactions, as previously described in the facts, were improper. Therefore, Respondent violated Disciplinary Rule 5-104(A). ⁷⁵ “Under Disciplinary Rule 9-102, it is professional misconduct for an attorney to abuse his fiduciary responsibility of preserving the identity of funds and the property of a client. Disciplinary Rule 9-102(A) prohibits a lawyer’s funds from being deposited into an escrow account. Disciplinary Rule 9-102(B) requires a lawyer to maintain complete records of all client funds coming into the possession of the lawyer.

Respondent’s transactions with Mr. Benchemoun and Mr. Moradi was an abuse of his fiduciary responsibility. Similarly, Respondent’s commingling escrow account funds with personal and or business funds and failing to maintain escrow account records also constitutes an abuse of his fiduciary responsibility. Therefore, Respondent violated Disciplinary Rule 9-102(A) and (B).” II Aggrieved by the hearing court’s findings of fact and conclusions of law, the respondent has filed exceptions. Citing Selling v. Radford, 243 U.S. 46, 51 , 37 S.Ct. 377, 379 , 61 L.Ed. 585, 587-88 (1917) and Nevada v. Hall, 440 U.S. 410, 414 , 99 S.Ct. 1182, 1185 , 59 L.Ed.2d 416, 420-21 (1979), the respondent proceeds on the premise that, “in a disciplinary proceeding, the court of the receiving state (here Maryland) is obligated to give effect to the fact that in the other State (here New York) the Respondent is no longer free to practice law in the other State.

However, it is not bound by the result reached, and may reach its own conclusions with respect to the propriety of the procedure used, the findings of fact made and the remedy to be imposed ... given the regulatory nature of the Code of Professional Conduct and its predecessor the Canons of Ethics, this Court is not constitutionally bound to follow the findings or conclusions of the New York courts in this proceeding.” (Footnote omitted). Thus, he challenges the hearing court’s acceptance of the New York court’s findings that he violated the charged disciplinary rules in his interaction with both Mr. Benchemoun and Mr. Moradi, arguing that the New York judgment in that regard is not conclusive proof, binding on the hearing court, of his misconduct. The respon ⁷⁶ dent also does not accept the hearing court’s conclusion that the testimony of his witnesses did not provide proof by a preponderance of the evidence of mitigating circumstances or to rebut the finding of misconduct by the New York court. As he sees it, four infirmities exist in the New York proceedings which require this Court to refuse to give those proceedings, the facts found or the sanctions imposed therein, any weight.

The first infirmity the respondent identifies is the difference in the standard of proof required in Maryland and New York disciplinary proceedings. Citing Attorney Grievance Commission v. Powell, 328 Md. 276, 287 , 614 A.2d 102, 108 (1992) and Attorney Grievance Commission v. Clements, 319 Md. 289, 298 , 572 A.2d 174, 179 (1990), he points out that, in Maryland, as in the majority of states, misconduct must be proven by “clear and convincing” evidence. New York, on the other hand, has a lower standard of proof—it requires only a “fair preponderance of the evidence.” (Citing In re Capoccia, 59 N.Y.2d 549 , 466 N.Y.S.2d 268, 269 , 453 N.E.2d 497, 498 (1983)). Maintaining that, “given the regulatory nature of the Code of Professional Conduct and its predecessor the Canons of Ethics, this Court is not constitutionally bound to follow the findings or conclusions of the New York courts in this proceeding,” and that “the rules in Title 16 of the Maryland Rules governing reciprocal discipline obviously are based on notions of comity and convenience,” the respondent argues that this Court, at a minimum, consistent with its obligation to do so independently, Powell, 328 Md. at 287 , 614 A.2d at 108 , should review the record of the New York proceedings to determine if there is clear and convincing evidence of misconduct.

The second infirmity of the New York proceedings is, the respondent asserts, its admission, and use, of hearsay evidence to prove some of the misconduct. The respondent contends that the only evidence of his misconduct with respect to the Moradi matter was a letter that Mr. Moradi’s attorney sent to the New York disciplinary authorities. Because Mr. Moradi was out of the country and, thus, did not testify in the proceedings, he continues, the only evidence against him was hearsay. Argues the respondent, Maryland Rule 16-710 d. ⁷⁷ provides that attorney disciplinary hearings are governed by the same rules of law, evidence and procedure as are applicable to the trial of civil proceedings in equity.

Since attorney disciplinary proceedings are not exempted from Maryland Rule of Evidence 5-101’s requirement that the rules of evidence apply to all actions or proceedings in the courts of this State—such proceedings are not among the actions or proceedings in which the rules of evidence do not apply—the respondent earnestly maintains that “the findings of unprofessional, unethical and dishonest behavior regarding the Moradi matter must be rejected because the findings are based on hearsay.” The real culprit in this case is, according to the respondent, Timothy Rafferty. Mr. Rafferty refused to testify in the New York proceedings. Rather than with that aspect of the New York proceedings, the respondent’s complaint is with the hearing court’s refusal to admit into evidence Mr. Rafferty’s affidavit, in which he accepted full responsibility for the actions attributed to the respondent. He argues that, had the affidavit been admitted, it would have been clearly shown by a preponderance of the evidence that he had not engaged in any misconduct.

Moreover, the respondent insists that the affidavit was admissible pursuant to Maryland Rule of Evidence 5-804(b)(3) 11 and (5) 12 . He also observes: ⁷⁸ “... [T]he Circuit Court rejected the proffer of the affidavit on the grounds that it was inadmissible hearsay. The irony here, of course, is that [the respondent] was found to have acted improperly in New York in the Moradi matter on the basis of hearsay evidence which he could not cross examine, but he was unable to clear his name in Maryland by úse of hearsay evidence which the Attorney Grievance Commission was unable to cross-examine. Thus, [the respondent] has been whipsawed by evidentiary rules which in each case have been used to his disadvantage.” The final infirmity the respondent identifies relates to the trial referee’s conduct of the hearing.

The respondent contends that the trial referee denied him due process by interfering with his cross-examination of a key witness, a Securities and Exchange Commission investigator. In particular, he maintains that the referee restricted cross-examination on the basis of a non-existent privilege, the “government privilege.” The respondent’s purpose in raising each of the “infirmities” he identifies is to collaterally attack the factual findings made in the New York proceedings; he seeks to relitigate, in the Maryland proceedings, the issue of whether his conduct constituted misconduct. Ill This case is a reciprocal discipline case. See Attorney Grievance Commission v. Gittens, 346 Md. 316, 324 , 697 A.2d 83, 87 (1997); Attorney Griev.

Comm’n v. Willcher, 340 Md. ⁷⁹ 217, 221-22, 665 A.2d 1059, 1061 (1995); Attorney Griev. Comm’n v. Saul, 337 Md. 258, 267-68 , 653 A.2d 430, 434 (1995); Attorney Griev. Comm’n v. Hopp, 330 Md. 177, 185-86 , 623 A.2d 193, 197 (1993); Attorney Griev. Comm’n v. Sparrow, 314 Md. 421, 425-26 , 550 A.2d 1150, 1152 (1988); Attorney Griev.

Comm’n v. Parsons, 310 Md. 132, 142-43 , 527 A.2d 325, 330 (1987); Attorney Griev. Comm’n v. Haupt, 306 Md. 612, 614-15 , 510 A.2d 590, 591-92 (1986); Attorney Griev. Comm’n v. Bettis, 305 Md. 452, 455 , 505 A.2d 492, 493 (1986); Attorney Griev. Comm’n v. Moore, 301 Md. 169, 171 , 482 A.2d 497, 498 (1984); Attorney Griev.

Comm’n v. Rosen, 301 Md. 37, 39 , 481 A.2d 799, 800 (1984). The conduct that is the subject of the proceedings sub judice occurred in New York where the respondent practiced law. As we have seen, following disciplinary proceedings in that court, at which the respondent received notice and had the opportunity to, and did, participate, the Supreme Court of New York, Appellate Division, disbarred the respondent and, thereafter, the New York Court of Appeals denied the respondent’s motion for leave to appeal. Matter of Sabghir, 211 A.D.2d 337 , 628 N.Y.S.2d 381 , leave to appeal denied, 86 N.Y.2d 709 , 634 N.Y.S.2d 442 , 658 N.E.2d 220 (1995).

Consequently, the New York adjudication was final. Maryland Rule 16-710 e., “Conviction of crime—Adjudication of misconduct,” provides: “1. Proof of guilt.-In a hearing of charges pursuant to this Rule, a final judgment by a judicial tribunal in another proceeding convicting an attorney of a crime shall be conclusive proof of the guilt of the attorney of that crime. A plea or verdict of guilty, or a plea of nolo contendere followed by a fine or sentence, is a conviction within the meaning of this Rule.

A final adjudication in a disciplinary proceeding by a judicial tribunal or a disciplinary agency appointed by or acting at the direction of a judicial tribunal that an attorney has been guilty of misconduct is conclusive proof of the misconduct in the hearing of charges pursuant to this Rule. “2. Additional evidence.-The introduction of evidence in a proceeding pursuant to this Rule of an attorney’s conviction ⁸⁰ of a crime in a judicial tribunal or adjudication of misconduct by a judicial tribunal, does not preclude the Commission from introducing additional evidence nor does it preclude the attorney from introducing evidence or otherwise showing cause why he should not be disciplined.” As we have seen, the respondent was disbarred in New York pursuant to an order of the Supreme Court of New York, Appellate Division. That order was issued only after disciplinary proceedings had been initiated and a hearing had been held to adjudicate the charges preferred. Moreover,