Motion List released on: September 16, 2020
By Scheinkman, P.J., Mastro, Rivera, Dillon, Balkin, JJ. IN THE MATTER OF PAUL X. LIMA, ADMITTED AS PAUL XAVIER LIMA, AN ATTORNEY AND COUNSELOR-AT-LAW. GRIEVANCE COMMITTEE FOR THE SECOND, ELEVENTH, AND THIRTEENTH JUDICIAL DISTRICTS, pet; PAUL X. LIMA, res — (Attorney Registration No. 2343846) — Motion by the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts to suspend the respondent from the practice of law, pursuant to 22 NYCRR 1240.9(a)(2) and (5), upon a finding that he is guilty of professional misconduct immediately threatening the public interest, and to appoint a Special Referee, to hear and report. The Grievance Committee served and filed a notice of petition and a verified petition, both dated January 8, 2020, and the respondent served and filed a verified answer dated February 27, 2020. Subsequently, the Grievance Committee served and filed a statement of disputed and undisputed facts dated July 1, 2020, which was not challenged by the respondent. The respondent was admitted to the Bar at a term of the Appellate Division of the Supreme Court in the Second Judicial Department on June 20, 1990, under the name Paul Xavier Lima. Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is ORDERED that the motion is granted; and it is further, ORDERED that pursuant to 22 NYCRR 1240.9(a)(2) and (5), Paul X. Lima, admitted as Paul Xavier Lima, is immediately suspended from the practice of law in the State of New York, pending further order of this Court; and it is further, ORDERED that the respondent, Paul X. Lima, admitted as Paul Xavier Lima, shall promptly comply with the rules governing the conduct of disbarred or suspended attorneys (see 22 NYCRR 1240.15); and it is further, ORDERED that pursuant to Judiciary Law §90, during the period of suspension and until further order of this Court, the respondent, Paul X. Lima, admitted as Paul Xavier Lima, is commanded to desist and refrain from (1) practicing law in any form, either as principal or agent, clerk, or employee of another, (2) appearing as an attorney or counselor-at-law before any court, Judge, Justice, board, commission, or other public authority, (3) giving to another an opinion as to the law or its application or any advice in relation thereto, and (4) holding himself out in any way as an attorney and counselor-at-law; and it is further, ORDERED that if the respondent, Paul X. Lima, admitted as Paul Xavier Lima, has been issued a secure pass by the Office of Court Administration, it shall be returned forthwith to the issuing agency and the respondent shall certify to the same in his affidavit of compliance pursuant to 22 NYCRR 1240.15(f); and it is further, ORDERED that the issues raised are referred to Roger Bennet Adler, c/o Roger Bennet Adler, P.C., 233 Broadway, Ste. 1800, New York, NY 10279, as Special Referee to hear and report, with the hearing to be completed within 60 days of the date of this decision and order on motion, or as soon thereafter as practicable, and the report, which contains his findings on the issues and charges, to be submitted within 60 days after the conclusion of the hearing or the submission of post-hearing memoranda. Introduction We find, prima facie, that the respondent is guilty of professional misconduct immediately threatening the public interest based on the uncontroverted evidence that he misappropriated client funds entrusted to him, failed to maintain sufficient funds on deposit in his escrow account, and failed to maintain required bookkeeping records for his escrow account. Between March 2018 and May 2018, the Grievance Committee for the Second, Eleventh, and Thirteenth Judicial Districts commenced four sua sponte investigations against the respondent based upon reports received from the Lawyers’ Fund for Client Protection, which stated that seven checks issued from the respondent’s escrow account at JP Morgan Chase Bank (hereinafter Chase), entitled “Paul X. Lima Esquire, IOLA Account, Attorney Trust Account IOLA,” account number ending 8324, were dishonored for insufficient funds. The respondent submitted a written answer in response to the four sua sponte investigations, in which he admitted the misappropriation of escrow funds related to the seven dishonored checks. Additionally, the respondent admitted the misappropriation of escrow funds during an examination under oath (hereinafter EUO), at the Grievance Committee’s office, on July 1, 2019. As set forth below, throughout 2017, the respondent deposited real estate down payment checks into his escrow account, and, subsequently, over the course of days to weeks, transferred those funds into a personal account at Chase bank entitled “Paul Lima,” account number ending 8019 (hereafter the personal account). Thereafter, the respondent used those funds for personal purposes, leaving minimal or negative balances in the escrow account. Idiogenis Martinez At the EUO, the respondent testified that in November 2017, he represented Idiogenis Martinez in the sale of 37-58 100th Street, Corona, NY. The respondent received a $50,000 down payment from the buyer’s attorney and deposited those funds into his escrow account on November 6, 2017. He then transferred all of those funds to his personal account. Thereafter, the respondent used the funds to cover $43,000 in personal expenses. In late January, 2018, on the day of the closing, the respondent issued check no. 1106 in the sum of $7,000 to the buyer, check no. 1107 in the sum of $5,004.13 to real estate broker, and check no. 1109 in the sum of $1,599.13 to Wells Fargo Bank. The respondent admitted that at the time he issued the checks he knew he had insufficient funds but thought he had no other choice. The checks were dishonored for insufficient funds and the respondent ultimately re-issued the checks to the payees, who received their funds in February and March 2018. Victor Bautista During the EUO, the respondent further testified that he represented Victor Bautista in the sale of 2066 Arthur Avenue, Bronx, NY, and received money at the closing to hold in escrow. After depositing the money, the respondent admittedly transferred said funds to his personal account. In February 2018, the respondent was required to provide the buyer with the funds, and he issued check no. 1113 in the sum of $7,100 to the buyer despite knowing that he had insufficient funds in his escrow account. The check was dishonored for insufficient funds and the respondent returned the funds to the buyer in March 2018. Hillcrest Court Sale The respondent represented the seller in the sale of property known as 49 Hillcrest Court. He received a $20,000 down payment from the buyer, and deposited the funds in his escrow account. The respondent testified that there were issues with the property, such as liens and violations, that caused the sale to be delayed and eventually cancelled. In March 2018, the attorney for the buyer asked the respondent to return the down payment. However, the respondent had misappropriated the funds months earlier. The respondent issued check no. 1114 payable to the buyer with the knowledge that he had insufficient funds in his escrow account and the check was dishonored for insufficient funds. He returned the down payment in late March 2018. Susan Lowerre The respondent represented Susan Lowerre in the sale of 24 Chestnut Street. The respondent received a $5,000 down payment from a potential buyer, which he deposited into his escrow account. The respondent admitted he used the funds for personal use. After transferring $5,000 from the personal account into his escrow account on September 15, 2017, the respondent returned the funds to the potential buyer. In the Fall 2017, a new potential buyer, gave the respondent a $10,000 down payment check, which the respondent deposited into his escrow account. The respondent admitted that he subsequently transferred all those funds to his personal account, and used the funds to cover personal expenses. When the second sale was cancelled, and the respondent was obligated to return the $10,000 down payment, he no longer held the funds in escrow. Nevertheless, he issued check no. 1126 to the new potential buyer and the check was dishonored for insufficient funds. Client Wong In November 2017, the respondent represented seller, Mr. Wong, in the sale of real property in Elmhurst, NY. The respondent received a $5,000 down payment from the buyer, Mr. Aung, which he deposited into his escrow account. On the same day, the respondent returned the $5,000 down payment he previously misappropriated in connection with a prior transaction leaving him with an escrow balance insufficient to cover the Aung down payment. At the closing, Wong and Aung agreed that the respondent would retain $3,500 in escrow pending Wong’s completion of certain repairs to the property. Although the respondent could not provide records of the $3,500 check and its deposit, he testified that the check was deposited into his escrow account. In April 2018, the respondent was contacted by Aung’s attorney, who requested the return of the funds to Aung. Despite not having sufficient funds on deposit in his escrow account, the respondent issued check no. 1127 to Aung and it was dishonored. During the EUO, the respondent testified that he had planned to return the funds to Aung, but had not done so. Client Jacobs In July 2017, the respondent received a $10,000 down payment in connection with 157 Warburton Avenue, which he deposited into his escrow account. The respondent issued checks pursuant to that matter, which cleared and left a balance of approximately $5,400. Although the respondent claimed that the remaining funds were distributed, he admitted that his escrow records do not reflect any further payments in this matter prior to his escrow balance falling to $10 on August 10, 2017. Sale of 32-42 78th Street, Jackson Heights, NY In August 2017, the respondent represented a client in the sale of 32-42 78th Street, Jackson Heights, NY. The buyer provided the respondent with a $5,000 down payment, which he deposited into his escrow account. He admitted that after the deposit, he transferred the funds to his personal account, which had a negative balance at the time. Sale of 19 Bridal Path, Roslyn, NY In September 2017, the respondent deposited the buyer’s $5,000 down payment for 19 Bridal Path, Roslyn, NY, into his escrow account. Thereafter, the respondent transferred the funds into his personal account and used them to pay personal expenses. Sale of 6221 Burchell Road, Far Rockaway, NY The respondent represented the seller in the sale of 6221 Burchell Road, Far Rockaway, NY, and after the closing, was required to maintain $2,500 in his escrow account, for the real estate broker. However, the respondent admitted that he used those escrowed funds for other purposes, and subsequently used unrelated funds to pay the real estate broker. Client Roseanne Graffia On March 27, 2018, the respondent deposited a $60,000 personal injury settlement check into his escrow account on behalf of client Roseanne Graffia. The respondent was required to maintain $40,108 on deposit for Graffia. However, he admitted that after issuing checks on unrelated matters, his escrow balance on March 28, 2018 was only $31,720. The respondent issued a check for $30,708 to Graffia from his escrow account, which cleared in April 2018. He testified that he returned the remaining funds sometime thereafter. Sale of 1551 Parker Street, Bronx, NY In August 2019, Yakov Basmanov filed a complaint with the Grievance Committee. Basmanov asserted that he entered into a contract for the purchase of property at 1551 Parker Street, Bronx, NY, in January 2017, and gave the respondent, who represented the seller, a $76,000 down payment, which the respondent was required to deposit into his escrow account and maintain until the closing. When the transaction was cancelled, Basmanov alleged that his attorney asked the respondent to return the funds. Basmanov claims that the respondent failed to do so and even admitted to Mr. Vozza that he no longer possessed the funds. In an answer to the Basmanov complaint, the respondent stated that he would be willing to return the misappropriated down payment. The escrow account statements show that after depositing Basmanov’s $76,000 check, the respondent issued several checks for unrelated matters and made a number of electronic transfers to his personal account, reducing the balance in the escrow account below $10,000 on January 31, 2017. Conclusion The respondent opposes that branch of the motion which is to immediately suspend him from the practice of law, arguing that he is not a threat to the public interest and therefore should be permitted to continue practicing law until a final determination with respect to discipline has been rendered. We find that the Grievance Committee has sufficiently demonstrated that the respondent poses an immediate threat to the public interest based on the uncontroverted evidence that he has misappropriated client funds, failed to maintain sufficient funds on deposit in his escrow account, and failed to maintain required bookkeeping records for his escrow account. Based on the foregoing, the motion is granted, the respondent is immediately suspended from the practice of law, pursuant to 22 NYCRR 1240.9(a)(2) and (5), pending further order of this Court, and the matter is referred to a Special Referee, to hear and report. SCHEINKMAN, P.J., MASTRO, RIVERA, DILLON and BALKIN, JJ., concur.
