The Florida Bar v. Jeremy W. Alters

Supreme Court of Florida
____________
No. SC14-100
____________
THE FLORIDA BAR,
Complainant,
vs.
JEREMY W. ALTERS,
Respondent.
November 21, 2018
PER CURIAM.
We have for review a referee’s report recommending that Respondent,
Jeremy W. Alters, be found guilty of professional misconduct and not disciplined.
We have jurisdiction. See art. V, § 15, Fla. Const. As discussed below, after
having considered the referee’s report, the record in this case, the parties’ briefs,
and oral arguments, we approve in part the referee’s findings of fact. However, we
additionally find that Alters engaged in dishonest and deceitful conduct by using
one client’s funds to pay obligations owed to another client. Therefore, we
approve in part and disapprove in part the referee’s recommendations as to guilt,
and find Alters guilty of two additional rule violations. We also approve the
referee’s findings in aggravation, and approve in part the findings in mitigation.
However, we find that two of the referee’s findings in mitigation are unsupported
by the record, and disapprove those findings. Last, we disapprove the referee’s
recommendations as to discipline and costs. We instead disbar Alters and award
The Florida Bar its costs, as set forth below. We also direct that no further
proceedings in this case shall be held before Circuit Judge Marcia B. Caballero as
referee.
BACKGROUND
On December 22, 2011, The Florida Bar (Bar) filed with the Court a Petition
for Emergency Suspension alleging that, under Alters’ supervision, his law firm
made improper transfers from its trust account to its operating account. The Bar
alleged that forty-nine such transfers occurred, totaling approximately
$2,051,474.32, between September 2009 and December 2010. The Court
approved the Bar’s Petition for Emergency Suspension and suspended Alters from
the practice of law on December 28, 2011. See Fla. Bar v. Alters, 79 So. 3d 745
(Fla. 2011) (table). Alters filed a Motion for Dissolution and, following a hearing
before a referee, the referee filed with the Court her report finding that there was
no basis to conclude that Alters had made or authorized the improper transfers, and
that no clients had been injured by the improper transfers. She recommended that
Alters be reinstated to the practice of law. The Court approved the referee’s
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findings and recommendation and reinstated Alters to the practice of law on
January 25, 2012. See Fla. Bar v. Alters, 81 So. 3d 416 (Fla. 2012) (table).
Thereafter, on January 22, 2014, the Bar filed its complaint in this case
alleging that, based on the same misconduct alleged in the Petition for Emergency
Suspension, Alters had violated six Rules Regulating the Florida Bar (Bar Rules):
rules 3-4.3 (Misconduct and Minor Misconduct); 4-1.15 (Safekeeping Property);
4-8.1(a) (a lawyer in connection with a disciplinary matter shall not knowingly
make a false statement of material fact); 4-8.4(c) (a lawyer shall not engage in
conduct involving dishonesty, fraud, deceit, or misrepresentation); 5-1.1(a) (Nature
of Money or Property Entrusted to Attorney); and 5-1.1(b) (Application of Trust
Funds or Property to Specific Purpose). The complaint did not allege any
misconduct occurring subsequent to Alters’ January 25, 2012, reinstatement to the
practice of law. The matter was referred to the same referee that considered the
Petition for Emergency Suspension, and the referee filed her report with the Court.
The referee made the following limited findings of fact in this case.
Numerous improper transfers from Alters’ firm’s trust account to its operating
account were made beginning in September 2009. Alters first became aware of
these transfers on February 9, 2010. Although Alters eventually learned that there
were other improper transfers made, he did not become aware of those until
December 2010. He did not report the improper transfers to the Bar or to his
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partners at the firm, and failed to implement any safeguards to prevent further
improper transfers from occurring. Additionally, Alters failed to put into place
measures to ensure compliance with the rules governing trust account
management.
Alters and a former partner in the firm, who was the firm’s managing partner
when some of the improper transfers from the trust account occurred, were
investigated by the Bar and subject to disciplinary proceedings for this trust
account misconduct. However, despite the fact that Alters’ former partner was
charged with the same misconduct, the Bar cooperated with her and she was
permitted to enter into a consent judgment. The former managing partner then
provided testimony in this matter against Alters, which the referee found not to be
credible. Nevertheless, Alters demonstrated a cooperative attitude throughout his
own disciplinary proceedings.
The referee found that, of the twenty-four witnesses called at the disciplinary
hearings, only the former comptroller of the firm testified that Alters made, or
ordered, the improper transfers; however, the referee found the comptroller’s
testimony not credible. The comptroller admitted to meticulously altering bank
documents to obscure the improper transfers and to “pushing the button” on each
improper transfer that was made, though he contended that each transfer was made
at Alters’ direction. The comptroller provided text messages that he allegedly
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backed up from his phone to prove that Alters directed him to make the improper
transfers. However, the referee concluded that the text messages, which were
heavily relied upon by the Bar’s auditor in making his report to the Bar and
testimony before the referee, were unreliable as a result of the manner in which the
comptroller saved them. Further, the referee found that it is undisputed that each
of the transfers was made by the comptroller, despite that another witness testified
at the final hearing that the firm’s former managing partner admitted to having
authorized the initial transfers.
Based on these scant findings, the referee recommends that Alters only be
found guilty of having violated Bar Rules 4-1.15 (Safekeeping Property) and
5-1.1(b) (Application of Trust Funds or Property to Specific Purpose). The referee
recommends that Alters be found not guilty of the four other alleged rule
violations. Below we discuss only the two not guilty recommendations challenged
by the Bar.
The referee recommends that Alters be found not to have violated Bar Rule
4-8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit,
or misrepresentation) because she found no evidence that Alters engaged in
conduct involving dishonesty, fraud, deceit, or misrepresentation. The referee
explained that she so found because there was no evidence that Alters created, or
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directed anyone to create, any false documentation in connection with these
proceedings.
The referee also recommends that Alters be found not to have violated Bar
Rule 5-1.1(a) (Nature of Money or Property Entrusted to Attorney) for having
failed to self-report the improper trust account transfers to the Bar. She also found
that Alters’ attempt to replenish the trust account with his own funds did not
amount to impermissible commingling in violation of Bar Rule 5-1.1(a) in light of
a subsequent version of the rule. 1 The referee explains in her report that Alters’
actions would have been encouraged under the amendment to the rule, and thus it
would be “inequitable” to find him guilty of having violated the rule.
In determining the recommended sanction, the referee considered Alters’
personal history, prior discipline, and the existence of aggravating and mitigating
factors pursuant to the Florida Standards for Imposing Lawyer Sanctions
(Standards). The referee found two aggravating factors in this case: Standards
(1) 9.22(d) (multiple offenses); and (2) 9.22(i) (substantial experience in the
1. In In re Amendments to Rules Regulating the Florida Bar (Biennial
Petition), 167 So. 3d 412 (Fla. 2015), the Court amended Bar Rule 5-1.1(a) to add
subdivision (1)(B). That subdivision provides that “[a] lawyer may deposit the
lawyer’s own funds into trust to replenish a shortage in the lawyer’s trust account,”
that such replenishments must be no more than any trust account shortage, and that
the shortage and replenishment must be reported to the Bar immediately. 167 So.
3d at 439.
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practice of law). She found ten mitigating factors: Standards (1) 9.32(a) (absence
of a prior disciplinary record); (2) 9.32(b) (absence of a dishonest or selfish
motive); (3) 9.32(c) (personal or emotional problems); (4) 9.32(d) (timely good
faith effort to make restitution or to rectify consequences of his misconduct); (5)
9.32(e) (full and free disclosure to disciplinary board or cooperative attitude
toward proceedings); (6) 9.32(g) (character or reputation); (7) 9.32(h) (physical or
mental disability or impairment); (8) 9.32(i) (unreasonable delay in disciplinary
proceedings provided that the respondent did not substantially contribute to the
delay and provided further that the respondent has demonstrated specific prejudice
resulting from that delay); (9) 9.32(k) (imposition of other penalties or sanctions);
and (10) 9.32(l) (remorse).
Based on her findings of fact, recommendations as to guilt, and findings in
aggravation and mitigation, the referee recommends that Alters not be further
sanctioned. The referee explains that her recommendation is made in light of the
manner in which this case was prosecuted in the media even before
the complaint was filed . . . ; the length of time it took to bring the
complaint formally against [Alters] . . . ; the impact that this bar
complaint has had on his legal standing and reputation; and the
disproportionate treatment in the handling of the bar complaint against
[Alters’ former managing partner] and [Alters].
Report of Referee at 67-68. The referee suggests that, while the two rule violations
that she recommends Alters be found to have committed may warrant a public
reprimand or suspension, Alters “has already been subjected to a 5 year
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involuntary suspension,” 2 and suffered the effects of a public reprimand through
negative media attention received as a result of the Bar’s apparent violation of its
own confidentiality rules.3
Because the referee found that the Bar proved only two of the six alleged
Bar Rule violations, she recommends that Alters be assessed the Bar’s
administrative costs in the amount of $1250, and that the Bar be assessed Alters’
costs for his defense against the charges concerning his authorization and
knowledge of the improper transfers, in the amount of $143,913.35.
Shortly after oral argument was held in this case, the Court issued an order
on its own motion suspending Alters from the practice of law until further order of
the Court. See Fla. Bar v. Alters, No. SC14-100, 2018 WL 2304233 (Fla. May 21,
2018).
2. It is not clear why the referee found that Alters had been involuntarily
suspended for five years. He was suspended in Florida Bar v. Alters, 79 So. 3d
745 (Fla. 2011) (table), from December 28, 2011, to January 25, 2012. However,
he was not suspended in this case until May 21, 2018. See Fla. Bar v. Alters, No.
SC14-100, 2018 WL 2304233 (Fla. May 21, 2018).
3. After the Bar inquiry was filed against Alters in September 2011, the Bar
confirmed to Daily Business Review that Alters was being investigated for possible
trust account misappropriation. Daily Business Review published several stories
that Alters claims cost him a lead counsel position and over $30,000,000 in fees.
Alters moved to dismiss the charges against him due to the alleged breach of
confidentiality by the Bar; his motion was denied by the referee.
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The Bar has now filed a notice of intent to seek review of the report of
referee, challenging an evidentiary ruling of the referee, the referee’s findings of
fact and recommendations as to guilt, findings in aggravation and mitigation,
recommended sanction, and recommended imposition of costs. Ultimately, the Bar
asks the Court to disbar Alters and award its costs incurred in connection with the
case. We address each of these in turn below.
ANALYSIS
Referee’s Exclusion of Evidence
The Bar argues that the referee erred by excluding evidence regarding
Alters’ tax status with the Internal Revenue Service (IRS). The record
demonstrates that much of Alters’ defense in this case centered on his efforts
subsequent to February 9, 2010, to keep the firm operational and replenish the
firm’s trust account. Part of his efforts involved securing a co-counsel agreement
with Searcy Denney Scarola Barnhart and Shipley, P.A. (the Searcy firm).
Through discovery the Bar learned that, in securing the co-counsel agreement,
Alters affirmatively misrepresented his personal tax status to the Searcy firm.
Alters represented to the Searcy firm that he had no outstanding tax obligations,
when he owed substantial sums in unpaid taxes to the IRS at the time. The Bar
sought to introduce evidence of Alters’ misrepresentation, arguing that it was
material because Alters’ character trait of dishonesty was at issue since he was
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charged with having violated Bar Rule 4-8.4(c) (a lawyer shall not engage in
conduct involving dishonesty, fraud, deceit, or misrepresentation). The Bar argued
that Alters’ dishonest behavior in obtaining financial assistance from outside
sources allowed him to keep the firm operational.
Alters filed a motion to exclude the evidence and, at a hearing on the
motion, argued that the evidence was irrelevant and constituted inadmissible
character evidence. The referee concluded that Alters’ personal tax status was
irrelevant to the allegations in the Bar’s complaint. Accordingly, she prohibited
the Bar from making any reference to Alters’ personal tax status at the final
hearing.
The Court reviews referees’ actions regarding the admissibility of evidence
in Bar discipline cases for an abuse of discretion. See Fla. Bar v. Hollander, 607
So. 2d 412, 414 (Fla. 1992); Fla. Bar v. Rendina, 583 So. 2d 314, 315 (Fla. 1991).
Additionally, because “bar disciplinary proceedings are quasi-judicial rather than
civil or criminal, the referee is not bound by technical rules of evidence.” Fla. Bar
v. Rotstein, 835 So. 2d 241, 244 (Fla. 2002) (quoting Rendina, 583 So. 2d at 315);
see Fla. Bar v. Tobkin, 944 So. 2d 219, 224 (Fla. 2006).
We find that the referee abused her discretion by excluding evidence relating
to Alters’ personal tax status because such evidence was relevant to the allegations
in the Bar’s complaint. The Bar’s complaint clearly alleged that Alters
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misappropriated trust account funds, falsely certified trust account compliance to
the Bar, and violated Bar Rule 4-8.4(c) (a lawyer shall not engage in conduct
involving dishonesty, fraud, deceit, or misrepresentation). Dishonesty, fraud,
deceit, and misrepresentation are each alternative essential elements of a violation
of Bar Rule 4-8.4(c). Part of Alters’ defense in this case involved his attempts to
obtain financial assistance for his firm shortly after having discovered the improper
transfers from the trust account. Just as Alters’ attempts to stabilize the firm’s
financial situation in the midst of the improper transfers is relevant to these
proceedings, so is evidence of Alters’ misrepresentations regarding his tax liability
made in the course of those attempts. Accordingly, we find that the referee abused
her discretion in excluding the evidence.
Findings of Fact and Rule Violations
The Bar next challenges the referee’s recommendations that Alters be found
not guilty of having violated Bar Rules 4-8.4(c) (a lawyer shall not engage in
conduct involving dishonesty, fraud, deceit, or misrepresentation) and 5-1.1(a)
(Nature of Money or Property Entrusted to Attorney), and her failure to make
factual findings to support those violations despite there being unrefuted evidence
thereof in the record. To the extent that the Bar challenges the referee’s findings of
fact, this Court’s review of such matters is limited, and if a referee’s findings of
fact are supported by competent, substantial evidence in the record, this Court will
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not reweigh the evidence and substitute its judgment for that of the referee. Fla.
Bar v. Frederick, 756 So. 2d 79, 86 (Fla. 2000); see Fla. Bar v. Jordan, 705 So. 2d
1387, 1390 (Fla. 1998). However, where a referee’s failure to make a particular
factual finding is clearly erroneous in light of the evidence before her, this Court
can make such a finding. See, e.g., Fla. Bar v. Sweeney, 730 So. 2d 1269, 1271
(Fla. 1998) (“[W]e find that the referee’s factual finding that the Bar failed to
prove an intent to defraud is clearly erroneous.”).
Moreover, to the extent the Bar challenges the referee’s recommendations as
to guilt, this Court has repeatedly stated that the referee’s factual findings must be
sufficient under the applicable rules to support the recommendations regarding
guilt. See Fla. Bar v. Shoureas, 913 So. 2d 554, 557-58 (Fla. 2005); Fla. Bar v.
Spear, 887 So. 2d 1242, 1245 (Fla. 2004). The party challenging the referee’s
findings of fact and recommendations as to guilt has the burden to demonstrate that
the record is devoid of evidence supporting, or clearly contradicts, the
recommendations. Fla. Bar v. Germain, 957 So. 2d 613, 620 (Fla. 2007); Fla. Bar
v. Spann, 682 So. 2d 1070, 1073 (Fla. 1996).
Before addressing the referee’s challenged recommendations as to guilt, we
note that the referee’s report in this case is inadequate. We do not question that the
referee put significant time and effort into preparing the report, particularly in
summarizing the testimony of each of the witnesses at the final hearing. However,
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the referee has drawn only the most basic conclusions from the summarized
testimony, and oftentimes has failed to make any findings regarding undisputed
evidence in the case. This fails to comply with the basic requirements for the
contents of the referee’s report contained in the Rules Regulating the Florida Bar.
See R. Regulating Fla. Bar 3-7.6(m)(1)(A) (stating that a referee’s report shall
include “a finding of fact as to each item of misconduct of which the respondent is
charged”). In all, the referee’s findings of fact span less than four pages of the 71-
page, mostly single-spaced report. It is inconceivable that the facts of such a
complicated case, which has taken years to litigate and the record of which spans
thousands of pages, could be reduced to four pages. Thus, we find the referee’s
findings of fact to be incomplete.
Turning to the referee’s findings and recommendations in this case, the
record clearly supports a finding that Alters violated Bar Rule 4-8.4(c), and the
referee’s recommendation to the contrary is unsupported. 4 The record evidence
demonstrates that Alters engaged in dishonest and deceitful conduct in violation of
Bar Rule 4-8.4(c) by using one client’s funds to pay obligations owed to another
4. Without further discussion, we approve the referee’s undisputed
recommendations that Alters be found to have violated Bar Rules 4-1.15
(Safekeeping Property) and 5-1.1(b) (Application of Trust Funds or Property to
Specific Purpose), and that he be found not to have violated Bar Rules 3-4.3
(Misconduct and Minor Misconduct) and 4-8.1(a) (a lawyer in connection with a
disciplinary matter shall not knowingly make a false statement of material fact).
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client and failing to implement reasonable remedial measures once he was on
notice of the trust account shortages. The referee’s recommendation to the
contrary because she found that Alters did not create, or direct anyone to create,
false documents in connection with this proceeding is erroneous because Bar Rule
4-8.4(c)’s application is not limited to creating false documents.
There is no question in this case that Alters’ conduct in managing the trust
account was negligent at best. There is unrefuted evidence that at least ten
improper transfers from the firm’s trust account were applied to cover operating
account checks issued to Alters and deposited into his personal bank account, for
which there would have been insufficient funds in the operating account without
the improper transfers. Inexplicably, the referee made no findings regarding these
transfers. The referee also failed to make any findings concerning the improper
transfers that occurred between July and October 2010, when Alters’ former
managing partner was no longer with the firm and Alters himself was responsible
for managing the trust account. Additionally, the referee failed to make findings
concerning a December 2010 transaction where Alters used one client’s funds,
without that client’s consent, to pay monies owed to another client. There is no
dispute that Alters was the managing partner in charge of the trust account at the
time of the December 2010 improper transfer, there is no evidence in the record
rebutting the conclusion that only Alters could have issued the December 2010
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check, and Alters does not deny having made the improper transfer. We find the
referee’s failure to make any findings in these regards to be clearly erroneous in
light of the undisputed record evidence.
Although Alters argues that intent is required for a violation of Bar Rule
4-8.4(c), this Court’s jurisprudence is clear that “[k]nowingly or negligently
engaging in sloppy bookkeeping amounts to intent under rule 4-8.4(c).” Fla. Bar
v. Riggs, 944 So. 2d 167, 171 (Fla. 2006) (suspending attorney for three years after
he knowingly assigned his trust account responsibilities to his paralegal and then
failed to manage her activities); Fla. Bar v. Smith, 866 So. 2d 41, 46 (Fla. 2004)
(holding that “extraordinary sloppiness and negligence” satisfy the intent element
for finding a violation of rule 4-8.4(c)); Fla. Bar v. Fredericks, 731 So. 2d 1249,
1252 (Fla. 1999) (holding that the determinative factor to prove a rule 4-8.4(c)
violation was whether the attorney deliberately or knowingly engaged in the
activity in question, rather than the motive behind the attorney’s action).
As the person in charge of managing the trust account and authorizing the
transfers, it was Alters’ responsibility to know from where the funds were coming.
See generally Fla. Bar v. Rousso, 117 So. 3d 756 (Fla. 2013). Alters admitted that
he knew since February 9, 2010, of the existence of improper transfers in the trust
account. Accordingly, regardless of whether Alters actually knew from which
client the funds were taken, the record demonstrates that Alters knew or should
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have known that there was a strong likelihood that client funds were being
misappropriated. Having received funds from a client, it is an attorney’s obligation
to ensure that those funds are properly preserved and used only for the purposes
intended by the client, and not for any other unauthorized purpose. See R.
Regulating Fla. Bar 5-1.1(b); Fla. Bar v. Miller, 548 So. 2d 219, 220 (Fla. 1989).
Further, the referee specifically found that Alters failed to notify any other
partners at the firm or the Bar after he discovered several of the improper transfers.
While Alters attempts to blame his former managing partner and the firm’s
comptroller for the trust account deficit, the record demonstrates, and the referee’s
limited factual findings confirm, that he ultimately turned over responsibility to the
former managing partner at a time he knew the firm was experiencing severe
financial difficulties. He subsequently left her in charge of the trust account.
Alters neither hired an outside consultant nor reported the trust account issues to
the Bar, even after learning of the trust account shortages and being advised by
counsel of measures the firm needed to implement to prevent future improper
transfers. As a result of Alters’ choices, and the knowledge he possessed at the
time he made those choices, we find that he ultimately bears responsibility for the
improper transfers and misappropriation of client funds. Accordingly, in light of
the undisputed record evidence, we conclude that the referee erred in failing to find
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that Alters misused client funds and we now so find. Thus, we find Alters guilty of
having violated Bar Rule 4-8.4(c).
We also disapprove the referee’s recommendation that Alters be found not to
have violated Bar Rule 5-1.1(a) (Nature of Money or Property Entrusted to
Attorney), and now find him guilty of having violated that rule. The referee
recommends that Alters be found not to have violated Bar Rule 5-1.1(a) because
the version of Bar Rule 5-1.1(a) in effect at the time of his misconduct did not
require Alters to report the improper transfers from the trust account to the Bar.
The referee further found that the funds Alters put into the trust account did not
amount to commingling in violation of the rule because the rule was later amended
to encourage attorneys to replenish trust account shortages with their own funds.
We disagree that Alters’ actions did not amount to impermissible commingling
under the Bar Rules.
The rule as amended after Alters’ misconduct is irrelevant. The rule to be
applied is the rule in effect at the time of the alleged violations. Fla. Bar v. Calvo,
630 So. 2d 548, 550 (Fla. 1993). Accordingly, we conclude that the testimony,
evidence, and the referee’s findings all plainly demonstrate that Alters deposited
personal funds and funds from loans and a co-counsel agreement into the firm’s
trust account in violation of the applicable version of Bar Rule 5-1.1(a). Such a
conclusion is consistent with this Court’s prior holdings. See Rousso, 117 So. 3d at
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764 (finding attorneys guilty of having violated Bar Rule 5-1.1 for depositing their
own money into their firm’s trust account to cover account shortages resulting
from an employee’s theft of trust property, despite the referee’s recommendation to
the contrary finding that the attorneys’ “sense of personal honor” to correct the
shortages justified the commingling); Fla. Bar v. Brownstein, 953 So. 2d 502 (Fla.
2007) (finding attorney guilty of having violated Bar Rule 5-1.1(a) for depositing
funds from his operating account into his trust account after he bounced several
checks from his trust account); Fla. Bar v. Cox, 718 So. 2d 788 (Fla. 1998)
(finding attorney guilty of having violated Bar Rule 5-1.1(a) for depositing funds
he received from a business loan into his trust account).
Findings in Aggravation and Mitigation
Because we find that Alters is guilty of having violated Bar Rules 4-1.15,
4-8.4(c), 5-1.1(a), and 5-1.1(b), we turn now to discipline. “Like other factual
findings, a referee’s findings in mitigation and aggravation carry a presumption of
correctness and will be upheld unless clearly erroneous or without support in the
record.” Germain, 957 So. 2d at 621. As discussed herein, we disapprove as
unsupported two of the referee’s findings in mitigation: (1) Standard 9.32(b)
(absence of a dishonest or selfish motive); and (2) Standard 9.32(i) (unreasonable
delay in disciplinary proceeding provided that the respondent did not substantially
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contribute to the delay and provided further that the respondent has demonstrated
specific prejudice resulting from that delay). 5
First, we disapprove the referee’s finding in mitigation of absence of a
dishonest or selfish motive pursuant to Standard 9.32(b). Alters acknowledges that
he knew of the existence of improper trust account transfers since February 9,
2010. The record demonstrates that Alters, despite knowing of the improper
transfers, failed to actively manage the trust account or implement proper
accounting procedures to ensure that client property held in trust was not
improperly transferred to the firm’s operating account. Instead, through the
improper transfers, Alters replenished the firm’s operating account and kept the
firm afloat despite severe financial troubles. The record also demonstrates that
during this time, and for a year after he became aware of the improper transfers,
Alters also received substantial amounts of money from the firm and deposited it
into his personal bank account—in the amount of over $1,000,000 from February
2010 to February 2011 alone. 6
5. Without further discussion we approve the referee’s findings in
aggravation as well as the remaining findings in mitigation.
6. The Bar’s auditor testified at the final hearing before the referee that in
addition to funds disbursed directly to Alters, he had improperly used trust funds to
cover firm expenses and overdrafts, as well as for personal expenses such as
Miami Heat tickets.
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Although Alters allegedly did not know that trust funds were improperly
flowing into his personal account, he remains responsible in light of his failure to
take meaningful steps to address the trust account issues. Moreover, though Alters
disputed signing the checks, the Bar’s auditor testified at the final hearing before
the referee that “the funds went into [Alters’] personal account. For this reason,
[the Bar’s auditor] interpreted all of the checks as legitimate checks [and] . . .
under these circumstances [Alters] had derived a benefit from the improper
transfers.” Although the referee made no finding in this regard, the Court finds
this unrefuted testimony persuasive. Alters’ conduct clearly exhibits a selfish
motive. See, e.g., Fla. Bar v. Tauler, 775 So. 2d 944 (Fla. 2000) (approving
referee’s finding in aggravation of selfish motive when attorney issued checks
from the firm’s trust account to satisfy personal and business obligations, even
though attorney replenished the trust account and disbursed the funds to the clients
before the Bar initiated its investigation). We therefore disapprove the referee’s
finding in mitigation of an absence of a dishonest or selfish motive as clearly
erroneous and without support in the record.
We also disapprove the referee’s finding in mitigation of an unreasonable
delay in the disciplinary proceeding pursuant to Standard 9.32(i). The record
demonstrates that, in total, thirty-eight months of delay occurred as a result of the
time the Bar took to file its complaint, the referee’s development of the report, and
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resolution of a petition for writ of certiorari filed with this Court by Alters’ former
managing partner.7 However, Standard 9.32(i) requires that, in addition to
demonstrating that disciplinary proceedings were “unreasonabl[y] delay[ed],” a
respondent must prove that he “did not substantially contribute to the delay and . . .
has demonstrated specific prejudice resulting from that delay.” See Fla. Bar v.
Lehrman, 485 So. 2d 1276, 1278 (Fla. 1986) (“[T]he respondent here has failed to
demonstrate any discernible prejudice resulting from this delay. Without such a
showing, we do not feel the delay warrants finding the report invalid.”). Because
the referee made no finding in this regard and our review of the record shows that
Alters failed to demonstrate before the referee any specific prejudice he suffered
resulting from the delay, we hereby find that Standard 9.32(i) does not apply in this
case. See, e.g., Fla. Bar v. Brakefield, 679 So. 2d 766, 770 (Fla. 1996) (finding
that attorney failed to present evidence of prejudice caused by any alleged delay in
the disciplinary proceedings); Lehrman, 485 So. 2d at 1278. Accordingly, we
disapprove as unsupported and clearly erroneous the referee’s finding in mitigation
of unreasonable delay in Alters’ disciplinary proceedings.
7. The petition was filed with the Court in this case on April 15, 2015. All
parties agreed not to proceed pending the disposition of that petition. The petition
was denied on September 25, 2015. See Fla. Bar v. Alters, No. SC14-100 (Fla.
order issued Sept. 25, 2015).
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Sanction
The Bar next challenges the referee’s recommendation that Alters receive no
discipline. In reviewing a referee’s recommendation as to discipline, the Court’s
scope of review is broader than that afforded to the referee’s findings of fact,
because it is ultimately the Court’s responsibility to determine the appropriate
discipline. Fla. Bar v. Anderson, 538 So. 2d 852, 854 (Fla. 1989); see art. V, § 15,
Fla. Const. However, the Court will generally not second-guess the referee’s
recommended discipline as long as it has a reasonable basis in existing case law
and the Florida Standards for Imposing Lawyer Sanctions. Fla. Bar v. De La
Torre, 994 So. 2d 1032, 1036 (Fla. 2008).
We disapprove the referee’s recommendation to not further discipline Alters
as entirely without support in her findings, this Court’s case law, the Standards, or
the Bar Rules. In fact, the referee recommends that “no further sanctions are
warranted” despite finding two substantial Bar Rule violations; inexplicably she
fails to cite any authority supporting her recommendation. Considering the
referee’s recommendations as to guilt that we approve, the referee’s findings in
aggravation and mitigation that we approve, as well as our additional findings that
Alters misappropriated client funds, violated Bar Rules 4-8.4(c) and 5-1.1(a), and
that the mitigating factors in Standards 9.32(b) (absence of dishonest or selfish
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motive) and 9.32(i) (unreasonable delay in the disciplinary proceedings) do not
apply in this case, we conclude that Alters must be disbarred.
The Court has long held that the misuse of client funds “is one of the most
serious offenses a lawyer can commit.” Fla. Bar v. Schiller, 537 So. 2d 992, 993
(Fla. 1989) (citing Fla. Bar v. Newman, 513 So. 2d 656 (Fla. 1987), and Fla. Bar v.
Breed, 378 So. 2d 783 (Fla. 1979)). Disbarment is the presumptively appropriate
sanction, under both the Standards and existing case law, when a lawyer
intentionally misappropriates trust funds. Fla. Stds. Imposing Law. Sancs. 4.11
(“Disbarment is appropriate when a lawyer intentionally or knowingly converts
client property regardless of injury or potential injury.”); see Fla. Bar v. Valentine-
Miller, 974 So. 2d 333, 338 (Fla. 2008); Brownstein, 953 So. 2d at 511. Indeed,
the overwhelming majority of cases involving the misuse of trust funds has
resulted in disbarment, regardless of mitigation. See Valentine-Miller, 974 So. 2d
at 338-39 (listing cases in which the Court “has disbarred attorneys who
misappropriated funds or abandoned their clients, despite the referee’s findings of
substance abuse and rehabilitation, concluding that the mitigation was insufficient
to overcome the seriousness of the misconduct”); Fla. Bar v. Spear, 887 So. 2d
1242, 1247 (Fla. 2004) (citing Fla. Bar v. Massari, 832 So. 2d 701, 706 (Fla.
2002)); Fla. Bar v. Shanzer, 572 So. 2d 1382, 1383 (Fla. 1991) (listing examples
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of cases in which the Court disbarred attorneys for misappropriation of funds
notwithstanding the mitigating evidence presented in those cases).
Alters urges this Court to approve the referee’s recommendation that
disbarment is inappropriate in this case and that he not be disciplined for his
misconduct. Essentially, he argues for leniency in the face of the presumption of
disbarment for misappropriation of client funds. To be sure, in limited instances a
respondent may overcome the presumption; but only upon a showing of substantial
mitigating circumstances that demonstrate that disbarment would be unfair and
inappropriate in a particular case. However, these cases are exceptional and
generally involve relatively isolated instances of misconduct made in the face of
dire circumstances. See, e.g., Fla. Bar v. McFall, 863 So. 2d 303 (Fla. 2003)
(imposing a three-year suspension followed by a three-year probation for attorney
who misappropriated a client’s funds over a three-month period because he
suffered impaired judgment due to medications and mental health); Tauler, 775 So.
2d 944 (imposing a three-year suspension followed by a one-year probation for
attorney who misappropriated funds over a five-month period due to personal and
emotional distress caused by her husband’s severe health problems and personal
bankruptcy). Such leniency is not warranted in a case involving an attorney’s
systemic failure to protect property held in trust for his clients.
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Alters also argues that he did not have the intent requisite for the Court to
disbar him for the improper trust account transfers. However, the Court has
disbarred attorneys even for gross negligence in maintaining a trust account. For
instance, in Florida Bar v. Rousso the Court disbarred two attorneys for gross
negligence in maintaining their trust account. 117 So. 3d at 767. The attorneys in
that case claimed that their nonlawyer bookkeeper embezzled more than
$4,000,000 from the firm’s trust account. Id. at 759-60. The referee in the case
found no clear and convincing evidence that the attorneys intentionally
misappropriated the money or received any direct benefit from the missing funds.
Id. at 760. Nevertheless, on review the Court found that the attorneys engaged in
several ethical violations, including failing to meet and maintain minimum trust
accounting requirements, commingling personal and client funds, and creating a
conflict of interest by borrowing money from a client to cover a portion of the trust
account shortage. Id. at 761-62. The Court concluded that the attorneys had
“abandoned their professional duty to safeguard their clients’ funds.” Id. at 767.
Given their egregious misconduct, the Court held that disbarment was appropriate.
Id.
Similarly, in Florida Bar v. Johnson, 132 So. 3d 32, 34-35 (Fla. 2013), the
Court found that Johnson improperly delegated significant responsibilities with
regard to his trust account to an inadequately supervised nonlawyer employee. The
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employee stole money from Johnson’s operating account and used funds from the
trust account to cover up the theft, ultimately resulting in two client checks being
returned for insufficient funds. Id. In light of the specific circumstances of the
case, namely the referee’s finding that Johnson’s employee had, without Johnson’s
knowledge, stolen money from the firm, the Court found there to be insufficient
evidence that Johnson intentionally misappropriated client money to support a
violation of Bar Rule 4-8.4(c). Id. at 37. The Court grappled with whether
Johnson’s misappropriation of client trust funds called for a lengthy rehabilitative
suspension or disbarment. Id. at 38-40. Ultimately, the Court held that his gross
negligence—when considered together with other conduct, including holding
himself out as an attorney in violation of the Court’s order imposing an emergency
suspension, which led to the filing of two contempt petitions—warranted
disbarment. Id. at 40.
Considering Rousso and Johnson, Alters’ Bar Rule violations, and the
aggravating and mitigating factors, we conclude that Alters’ actions warrant
disbarment. After Alters discovered that client funds were misappropriated under
his former partner’s direction, he continued to leave that person in charge of the
trust account without putting in place any safeguards to prevent further
misappropriation. Further, client funds continued to be misappropriated under
Alters’ direction even after the former partner left the firm. Because this case is
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not one in which an employee stole funds from an unwitting attorney, it involves
more severe conduct than that at issue in Johnson. Unlike Johnson, there is no
finding by the referee in this case that Alters’ firm’s trust funds were stolen
without Alters’ knowledge. To the contrary, improper transfers continued to occur
even after Alters became aware of them. He could have stopped further improper
transfers from occurring by taking active control of the trust account himself and
putting in place procedures that would prevent further improper transfers; the
record is clear that Alters chose to do neither, and that improper transfers
continued to occur under his supervision. Like the attorneys in Rousso, Alters
entirely abandoned his duty to protect client funds held in trust. This Court will
not allow attorneys to abdicate their responsibility to protect clients’ property and
enjoy the privilege of practicing law. Therefore, Alters must be disbarred.
Costs
Last, the Bar challenges the referee’s recommendation as to costs. The
Court has the final discretionary authority to assess costs in Bar proceedings. See
Fla. Bar re Dunagan, 775 So. 2d 959, 962 (Fla. 2000) (citing Fla. Bar v. Lechtner,
666 So. 2d 892, 894 (Fla. 1996)). The Court, as a matter of policy, may levy
against a respondent the costs incurred by the Bar in prosecuting the misconduct he
or she has committed. Lechtner, 666 So. 2d at 894; see Fla. Bar v. Miele, 605 So.
2d 866, 868 (Fla. 1992); Fla. Bar v. Gold, 526 So. 2d 51, 52 (Fla. 1988).
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The referee in this case recommended that the Bar be awarded only its
administrative costs of $1250, and that Alters be awarded his costs in the amount
of $143,913.35, despite recommending that Alters be found guilty of having
violated two Bar Rules. However, all costs sought by the Bar in this case are
specifically allowed by Bar Rule 3-7.6(q), which states that the Bar may recover,
among other costs, investigative costs, court reporter costs, witness costs, and an
administrative fee. Further, Alters’ extensive misconduct and failure to have
complied with the trust accounting rules warranted the Bar’s equally extensive
computer forensics investigation, audit, witness depositions, and associated costs;
ultimately these amount to $305,360.03. In light of the referee’s recommendations
as to guilt that we approve, and the additional rule violations that we find, we see
no reason the Bar should be made to bear these costs. Accordingly, we find that
the referee abused her discretion; we disapprove the referee’s recommended award
of costs, award the Bar its costs of $305,360.03, and award Alters nothing.
CONCLUSION
We find that the referee abused her discretion by excluding relevant
evidence regarding Alters’ personal tax status with the IRS. The referee also erred
in failing to find that Alters misused client funds. We approve the referee’s
recommendations that Alters be found guilty of having violated Bar Rules 4-1.15
(Safekeeping Property) and 5-1.1(b) (Application of Trust Funds or Property to
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Specific Purpose). We also approve the referee’s recommendations that Alters be
found not to have violated Bar Rule 3-4.3 (Misconduct and Minor Misconduct) and
4-8.1(a) (a lawyer in connection with a disciplinary matter shall not knowingly
make a false statement of material fact). However, because we now find that
Alters misused client funds, we disapprove the referee’s recommendation that
Alters be found not to have violated Bar Rule 4-8.4(c) (a lawyer shall not engage
in conduct involving dishonesty, fraud, deceit, or misrepresentation). Moreover,
we disapprove the referee’s recommendation that Alters be found not to have
violated Bar Rule 5-1.1(a) (Nature of Money or Property Entrusted to Attorney).
Accordingly, we now find Alters guilty of having violated Bar Rules 4-8.4(c) and
5-1.1(a).
We approve the referee’s findings in aggravation. However, we disapprove
the findings in mitigation of absence of a dishonest or selfish motive pursuant to
Standard 9.32(b) and unreasonable delay in the disciplinary proceedings pursuant
to Standard 9.32(i), as they are unsupported by evidence in the record. We
approve the referee’s remaining findings in mitigation.
Based on these findings of fact as to guilt and in aggravation and mitigation,
we disapprove the referee’s recommendation that Alters not be disciplined. In
light of the seriousness of his conduct, Respondent Jeremy W. Alters is hereby
disbarred. Because Alters is currently suspended, the disbarment is effective
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immediately. Alters shall fully comply with Rule Regulating the Florida Bar
3-5.1(h).
Finally, we disapprove the referee’s recommendation as to costs. Judgment
is entered for The Florida Bar, 651 East Jefferson Street, Tallahassee, Florida
32399-2300, for recovery of costs from Jeremy W. Alters in the amount of
$305,360.03, for which sum let execution issue.
No further proceedings that may be necessary in this case shall be held
before Circuit Judge Marcia B. Caballero as referee.
It is so ordered.
CANADY, C.J., and PARIENTE, LEWIS, QUINCE, POLSTON, LABARGA,
and LAWSON, JJ., concur.
THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER THE
EFFECTIVE DATE OF THIS DISBARMENT.
Original Proceeding – The Florida Bar
Joshua E. Doyle, Executive Director, Tallahassee, Florida, William Mulligan, Bar
Counsel, Miami, Florida, and Adria E. Quintela, Staff Counsel, The Florida Bar,
Sunrise, Florida,
for Complainant
Jamie Leigh Webner and Andrew Scott Berman of Young, Berman, Karpf &
Gonzalez, P.A., Miami, Florida,
for Respondent
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