BEFORE THE VIRGINIA STATE BAR DISCIPLINARY BOARD
IN THE MATTERS OF CHARLES LOWENBERG PINCUS, III
VSB Docket No. 03-021-1861
VSB Docket No. 03-021-1866
VSB Docket No. 03-021-1868
VSB Docket No. 04-021-0670
VSB Docket No. 03-021-2183
VSB Docket No. 03-000-1873
These matters were certified to the Virginia State Bar Disciplinary Board ("Board") by the Second District Committee, Section I, and were set for hearing scheduled for July 23, 2004 before a duly convened panel. On July 19, 2004, these matters were presented for approval of an agreed disposition to a duly convened panel consisting of Peter A. Dingman, Esquire, Chair, Mr. Chester J. Cahoon, Jr., Lay Member, Bruce T. Clark, Esquire, Robert E. Eicher, Esquire, and Ann N. Kathan, Esquire.
Pursuant to Virginia Supreme Court Rules of Court Part 6, Section IV, ¶ 13B(5)(c), the Virginia State Bar, by Paul D. Georgiadis, Assistant Bar Counsel, and the Respondent, by counsel David Ross Rosenfeld with co-counsel Kathleen M. Uston, entered into a proposed agreed disposition and presented it to the convened panel.
The Chair polled the panel members to determine whether any member had a personal or financial interest in this matter that might affect or reasonably be perceived to affect his or her ability to be impartial in this proceeding. Each member, including the Chair, verified that they had no conflicts.
1. At all times material to these allegations, Charles Lowenberg Pincus, III, hereinafter "Respondent", has been an attorney licensed to practice law in the Commonwealth of Virginia.
2. Respondent maintained an attorney escrow account for his non-real estate matters, account number 80-155-341 at SouthTrust Bank, titled as Charles L. Pincus, III, P.C. Escrow Account.
3. On October 7, 2002, Respondent deposited a check of $1,000.00 into the Escrow Account. On October 15, 2002, more than five (5) business days after being deposited and through no fault of Respondent, the $1,000.00 check was returned, resulting in a charge on October 15, 2002 of $5.00 for a return item fee. On October 12, 2002, Respondent drew check number 1275 in the amount of $100.00 payable to the State Corporation Commission. Although SouthTrust honored the $100.00 check upon presentment on October 21, 2002, the resulting negative balance caused SouthTrust to impose an insufficient funds service charge of $30.00. Respondent's month-end escrow account statement dated, October 31, 2002, reflected a negative balance of - $109.02.
4. Upon learning of the returned $1,000.00 deposit and the resulting service charges, Respondent deposited $100.00 of his own funds into the escrow account on November 6, 2002.
5. On November 13, 2002, Respondent drew check number 1277 on his escrow account payable to the Clerk of Court, Virginia Beach Circuit Court, in the amount of $20.00 for the recordation of the Ortiz Deed of Gift.
6. Because Respondent's escrow account had a negative balance of $109.02, when check number 1277 was presented, SouthTrust Bank returned check number 1277 for insufficient funds and imposed additional service charges of $40.00.
7. During this period of time, Respondent was not maintaining a general ledger, including a cash receipts journal and a cash disbursements journal, nor a subsidiary ledger.
8. Respondent maintained a separate fiduciary trust account for the purpose of handling funds received in connection with escrow, closing, or settlement services, SouthTrust Bank account number 10-157-778, titled as Charles L. Pincus III PC Real Estate Trust Account.
9. On or before November 6, 2002, Respondent issued a pay-off check of $12,869.97 in the course of a real estate closing from Ann Hayward Rooney Walker to Troy B. Toner. When the check for $12,869.97 was presented for payment on November 6, 2002, Respondent's Real Estate Trust Account had insufficient funds, a balance of only $11,868.33.
10. Because of insufficient funds in the Real Estate Trust Account, SouthTrust did not pay the amount on November 6, 2002 or on November 14, 2002 when the check for $12,869.97 was re-presented for payment.
11. On or about December 11, 2002, Respondent paid the Walker pay-off with a cashier's check.
12. On January 16, 2003, Respondent was out of trust again when he incurred an insufficient funds charge of $30.00.
13. During this foregoing period of time, Respondent was not maintaining a general ledger, including a cash receipts journal and a cash disbursements journal, nor a subsidiary ledger.
16. During this period of time, Respondent did not establish and maintain a subsidiary ledger for Ms. Liuzzi's funds.
18. On June 13, 2003, Respondent wrote check # 1308 in the amount of $200.00 as a filing fee for the Harrington bankruptcy case. Check # 1308 was written on Respondent's attorney escrow account for his non-real estate matters, account number 80-155-341 at SouthTrust Bank, titled as Charles L. Pincus, III, P.C. Escrow Account. Respondent sent this check with a disc containing the Petition to the Bankruptcy Court for filing. Because the Court was unable to open the disc, the case was not filed and Respondent received check #1308 with the unfiled petition.
19. On August 6, 2003, Respondent re-filed the disc containing the petition along with his check #1308 for $200.00 as a filing fee. When the check was presented for payment, there was a balance of only $136.98; the bank paid the full amount, and on August 19, 2003, Respondent made an additional covering deposit.20. The subsidiary or client ledger maintained by Respondent at that time for the Harringtons, which Respondent entitled his client "transaction ledger", fails to reflect funds disbursed as reflected in the general ledger: June 6, 2003 filing fee payment of $200.00 by check # 1308; courier costs paid on June 6, 2003 by check # 1311; or August 19, 2003 legal fees of $100.00 paid apparently by an account transfer.
21. The escrow account general ledger maintained by Respondent at that time for the pertinent time period reflects a number of deficiencies. The check in question, #1308, is labeled "ADVANCED..." and does not reflect a payment on behalf of the Harringtons.
22. During the relevant time period, Respondent's escrow account was out of trust as there were negative balances reflected in the general ledger when checks were written on August 5, 2003 for a court filing fee, and on August 19, 2003 for a fee withdrawal.23. For the relevant time period, neither Respondent's general ledger nor client subsidiary ledger were reconciled.
25. Subsequent to the events outlined above, Respondent engaged the services of Jeanne Beilke, a Certified Public Accountant who has installed for the management of all of Respondent's escrow accounts, the QuickBooks Pro 2004 accounting software, has customized that system for a law practice, has implemented a system of computerized check writing, and on line banking. Additionally, Ms. Beilke has implemented accounting and bookkeeping procedures in Respondent's office which include, inter alia, customized detailed client ledgers within the QuickBooks program, and secondary proof ledgers created in Excel.26. Ms. Beilke has reconstructed and reconciled Respondent's escrow accounts for the period covering October 1, 2001 through July 5, 2004.
27. Ms. Beilke has defined and Respondent has adopted strict accounting procedures governing check writing procedures for all accounts, and reconciliation procedures comporting with Rule 1.15 of Virginia's Rules of Professional Conduct.
28. Furthermore, to insure Respondent's strict compliance with the requirements of Rule 1.15, Ms. Bielke will be preparing all required reconciliations on an on-going basis, and have responsibility for ongoing data entry for both trust accounts.
29. In addition to the above, Respondent has engaged the services of Janean S. Johnston. J.D. who has conducted an law office management review and audit of Respondent's office practices and procedures wherein Ms. Johnston has concluded that Respondent "is managing his law practice very efficiently and ethically."
RULE 1.15 Safekeeping Property
(a) All funds received or held by a lawyer or law firm on behalf of a client, other than reimbursement of advances for costs and expenses, shall be deposited in one or more identifiable escrow accounts maintained at a financial institution in the state in which the law office is situated and no funds belonging to the lawyer or law firm shall be deposited therein except as follows:(1) funds reasonably sufficient to pay service or other charges or fees imposed by the financial institution may be deposited therein; or
(c) A lawyer shall:
(3) maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to the client regarding them; and
(e) Record-Keeping Requirements, Required Books and Records. As a minimum requirement every lawyer engaged in the private practice of law in Virginia, hereinafter called "lawyer," shall maintain or cause to be maintained, on a current basis, books and records which establish compliance with Rule 1.15(a) and (c). Whether a lawyer or law firm maintains computerized records or a manual accounting system, such system must produce the records and information required by this Rule.
(1) In the case of funds held in an escrow account subject to this Rule, the required books and records include:
(i) a cash receipts journal or journals listing all funds received, the sources of the receipts and the date of receipts. Checkbook entries of receipts and deposits, if adequately detailed and bound, may constitute a journal for this purpose. If separate cash receipts journals are not maintained for escrow and non-escrow funds, then the consolidated cash receipts journal shall contain separate columns for escrow and non-escrow receipts;
(ii) a cash disbursements journal listing and identifying all disbursements from the escrow account. Checkbook entries of disbursements, if adequately detailed and bound, may constitute a journal for this purpose. If separate disbursements journals are not maintained for escrow and non-escrow disbursements then the consolidated disbursements journal shall contain separate columns for escrow and non-escrow disbursements;
(iii) subsidiary ledger. A subsidiary ledger containing a separate account for each client and for every other person or entity from whom money has been received in escrow shall be maintained. The ledger account shall by separate columns or otherwise clearly identify escrow funds disbursed, and escrow funds balance on hand. The ledger account for a client or a separate subsidiary ledger account for a client shall clearly indicate all fees paid from trust accounts;
(iv) reconciliations and supporting records required under this Rule;
(v) the records required under this paragraph shall be preserved for at least five full calendar years following the termination of the fiduciary relationship.
III. FINDINGS OF FACT
30. At all times relevant hereto, the Respondent, Charles Lowenberg Pincus, III, "Respondent", has been an attorney licensed to practice law in the Commonwealth of Virginia who has provided and offered to provide escrow, closing and or settlement services as a settlement agent with respect to real estate transactions in Virginia.
31. On October 15, 2001, the Virginia State Bar suspended Respondent's law license for failure to comply with the requirement for Mandatory Continuing Legal Education. The Virginia State Bar did not reinstate Respondent's law license to good standing until April 19, 2002.
32. As a result of Respondent's license suspension of October 15, 2001, Respondent's CRESPA registration and file were "closed" on October 17, 2001. On October 17, 2001, the Virginia State Bar issued notice to Respondent of the closing of his registration and notified Respondent that he therefore "... cannot lawfully conduct residential real estate closings after this date... If you should start performing escrow, closing, or settlement services, you must re-register as a settlement agent under CRESPA." Respondent received actual notice of the October 17, 2001 notice on November 2, 2001.
33. Respondent did not re-register and attain his CRESPA registration until July 10, 2003.
34. Notwithstanding the loss of his CRESPA registration and actual notice of the legal prohibition from serving as settlement agent for residential closings, Respondent thereafter conducted seven (7) residential real estate closings, each involving transactions involving the purchase of or lending on the security of real estate located in the Commonwealth of Virginia containing not more than four residential dwelling units:
A. On July 31, 2002, Respondent as settlement agent conducted the closing on Walker to Toner;
B. On December 23, 2002, Respondent as settlement agent conducted the closing of McDonnell to Bond;
C. On March 17, 2003, Respondent as settlement agent conducted the Siciliano closing;
D. On March 24, 2003, Respondent as settlement agent conducted the closing of Nolen.
E. On March 31, 2003, Respondent as settlement agent conducted the closing of Siegal and Dillon to Thumm;
F. On April 4, 2003, Respondent as settlement agent conducted the closing of Yaba to Davis; and
G. On July 1, 2003, Respondent as settlement agent conducted the closing of
Johnston and Kowalski to Johnson.
35. Although Respondent was not CRESPA certified, he was fully bonded and Insured Closing Protection letters had been issued to each client.
36. Respondent is now CRESPA certified.
The Board finds that such conduct on the part of the Respondent violates Virginia Code
Section 6.1-2.26A and Section 15 VAC 5-80-30 of the Regulations issued by the Virginia State Bar
pursuant to CRESPA.
The Board, having considered all evidence before it and having considered the nature of the Respondent's actions, and having considered the Respondent's disciplinary record,
ORDERS pursuant to Part 6, Sec. IV, Para. 13I 2f.(c) of the Rules of the Virginia Supreme Court that the license of the Respondent, Charles Lowenberg Pincus, III, to practice law in the Commonwealth of Virginia be, and the same is, hereby suspended for forty-five (45) days, effective August 1, 2004.
Pursuant to the terms of the parties' Agreed Disposition, it is further
ORDERED that Respondent complete the following terms:
I. Probationary/Oversight/Terms Period of EIGHTEEN (18) months commencing August 1, 2004, or such shorter period as Assistant Bar Counsel may deem appropriate, during which :
A). Mr. Pincus shall provide to Assistant Bar Counsel or his designee monthly cash receipts, cash disbursement, and reconciliation reports signed by Respondent and Ms. Beilke for all escrow and CRESPA accounts and subsidiary ledgers therein to reflect reconciled balances. Said reports will be due 30 days from the last day of the preceding month;
B). Mr. Pincus shall not cause any overdraft notices to be issued that are determined to be caused by any factor other than bank error as admitted by the bank;
C). Mr. Pincus agrees to allow an on-site inspection at his office and records of escrow accounts by Bar Counsel or his designee-to include a VSB Investigator, with 48 hours written notice to Mr. Pincus' address of record. The scope and purpose of the inspection(s) is to insure compliance with Rule 1.15; and
D.) Respondent shall remain in full compliance with Rule 1.15.
II. Respondent shall pay a CRESPA fine of $2,000 on or before October 15, 2004.
Upon satisfactory proof that such terms and conditions have been met, these matters shall be dismissed. If, however, any of the aforesaid terms are breached, the parties agree the Board shall impose a further suspension of THREE (3) years, following a show cause hearing as to the Respondent's compliance with said terms. In the allegation of such breach, the Virginia State Bar shall issue and serve upon the Respondent a Notice of Hearing to Show Cause why the alternate sanction of a three year suspension should not be imposed. The parties agree the jurisdiction for the Show Cause hearing shall be the Disciplinary Board. The sole factual issue before the Board will be whether the Respondent has violated the terms of this Agreed Disposition without legal justification or excuse. All issues concerning the Respondent's compliance with the terms of this Agreed Disposition shall be determined by the VSB Disciplinary Board. At said hearing, the burden of proof shall be on the Respondent to show timely compliance and timely Certification of such compliance by clear and convincing evidence. The Respondent also agrees his prior disciplinary record may be disclosed to the Board.
It is further ORDERED that, as directed in this Order, Respondent must comply with the requirements of Part Six, § IV, ¶ 13(M) of the Rules of the Supreme Court of Virginia. The Respondent shall forthwith give notice by certified mail, return receipt requested, of the suspension of his license to practice law in the Commonwealth of Virginia, to all clients for whom he is currently handling matters and to all opposing attorneys and presiding judges in pending litigation. The Respondent shall also make appropriate arrangements for the disposition of matters then in his care in conformity with the wishes of his client. Respondent shall give such notice within 14 days of the effective date of the suspension, and make such arrangements as are required herein within 45 days of the effective date of the suspension. The Respondent shall also furnish proof to the Bar within 60 days of the effective day of the suspension that such notices have been timely given and such arrangements made for the disposition of matters.
It is further ORDERED that if the Respondent is not handling any client matters on the effective date of suspension , he shall submit an affidavit to that effect to the Clerk of the Disciplinary System at the Virginia State Bar. All issues concerning the adequacy of the notice and arrangements required by Paragraph 13 (M) shall be determined by the Virginia State Bar Disciplinary Board, unless the Respondent makes a timely request for hearing before a three-judge court.
Pursuant to Part 6, Sec. IV, Para. 13.B.8.c. of the Rules, the Clerk of the Disciplinary System shall assess costs.
It is further ORDERED that a copy teste of this Order shall be mailed by Certified U.S. Mail, return receipt requested, to the Respondent, Charles Lowenberg Pincus, III, Suite 140, 1206 Laskin Road, Virginia Beach, Virginia 23451, his last address of record with the Virginia State Bar; by First Class U.S. Mail, postage prepaid, to his counsel of record, David Ross Rosenfeld, 118 South Royal Street, Alexandria, VA 22314, and hand delivered to Paul D. Georgiadis, Assistant Bar Counsel, Virginia State Bar, Eighth & Main Building, Suite 1500, 707 East Main Street, Richmond, Virginia 23219- 2800.
Tracy J. Stroh, Chandler and Halasz, Inc., Court Reporters, P.O. Box 9349, Richmond, Virginia 23227, 804/730-1222, was the reporter for the hearing and transcribed the proceedings.
ENTERED this __ day of July, 2004.
VIRGINIA STATE BAR DISCIPLINARY BOARD
Peter A. Dingman, 2nd Vice Chair