Florida Supreme Court Justices appear to be weighing disbarment or a “substantial suspension” for former complex litigation rainmaker Jeremy Alters in disciplinary proceedings.

A court-appointed referee concluded the Florida Bar ”stridently pursued the wrong lawyer” for five years over $1 million misappropriated from his law firm's trust account and recommended no sanctions for Alters.

But the high court seems to be leaning in the opposite direction.

More than once during oral arguments Tuesday, Justice Barbara J. Pariente made it clear the Supreme Court was considering only the degree of Alters' punishment — not whether to discipline him. She asked why Alters should not “at the very least be required to serve a substantial suspension, if not disbarment.”

Alters is a Dania Beach lawyer who provided $2.5 million to launch Alters Boldt Brown Rash & Culmo in 2007, according to information presented in court. Once a prolific Democratic fundraiser and high-stakes class action litigator, he is now a personal injury attorney with Morelli Alters.

The Florida Bar claimed he directed 49 improper transactions from 2009 to 2010 that funneled $1 million from his firm's trust account to pay operating expenses and Alters' personal bills.

The bar appealed to the Supreme Court to review the referee's report that cleared Alters of four major charges but found him guilty of failing to prevent recurring problems created by others at his firm. It asked the court to disbar Alters.

“One thing is clear: Jeremy Alters violated three of the most fundamental and sacrosanct principles of the Florida Bar,” bar counsel William Mulligan told the high court. “This is a garden-variety misappropriation case.”

Several justices seemed to agree.

“There's no question there is a significant trust account violation,” Pariente said. “I find the referee's report somewhat baffling.”

Later, she questioned the defense's argument that Alters was more involved in litigation than in overseeing the firm's daily operations and was not responsible for trust account deficits.

“There was no way he could not have known that his firm, that he founded, was not making money,” Pariente said. “And therefore, how could he have taken $1 million to pay himself?”

The high court has the final word on attorney discipline and can accept or reject a referee's recommendation.

In this case, the referee, Miami-Dade Circuit Judge Marcia Caballero, issued a scathing report that concluded the bar ignored evidence, disregarded credible witnesses and seemed intent on prosecuting Alters. She recommended the bar pay the attorney $143,000 for years of litigation.

But the justices' questions and animated comments were critical of Alters' law firm operations.

“Is there a conceivable universe in which you could imagine this court writing an opinion saying that it's OK to use your trust account as a line of credit to keep your firm afloat as long as you successfully restore everything by hiding the problem?” Justice C. Alan Lawson asked Alters' attorney Andrew S. Berman, who was clearly under fire during the oral arguments.

The justices also noted Alters' annual membership statement claimed he was in compliance with bar rules when the firm knew about and failed to disclose the seven-figure deficit.

Mulligan said a disclosure would have triggered a bar investigation and perhaps “serious repercussions” for the firm.

“The only reason he was able to keep things afloat and continue to borrow money from his trust account to operate his firm, and ultimately pay this money back — which was a good thing — was because he misrepresented on his form that he was in compliance with the trust rules when he was in violation,” Lawson said.

Mulligan did not respond to a request for comment following the hearing.

Berman noted the firm replenished the trust account.

“We have faith that the court will give due deference to the referee's factual findings in Mr. Alters' favor and also recognize that he took responsibility for ensuring that the trust account became properly reconciled so that neither clients nor the bar's client security fund suffered any loss,” said Berman, a senior partner at Young Berman Karpf & Gonzalez in Miami.