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The Florida Bar v. Gilbert

Supreme Court of Florida

March 22, 2018

THE FLORIDA BAR, Complainant,
v.
RANDALL LAWRENCE GILBERT, Respondent.

         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, Adria E. Quintela, Staff Counsel, and Randi Klayman Lazarus, Bar Counsel, The Florida Bar, Sunrise, Florida, for Complainant

          David B. Rothman and Jeanne T. Melendez of Rothman & Associates, P.A., Miami, Florida, for Respondent

          PER CURIAM.

         We have for review a referee's report recommending that Respondent, Randall Lawrence Gilbert, be found guilty of professional misconduct and suspended from the practice of law for a period of two years. We have jurisdiction. See art. V, § 15, Fla. Const. The egregious facts, as found by the referee, demonstrate Gilbert's failure to exercise any supervision over Steven Sacks, Gilbert's employee with a known history of wire fraud and embezzlement of more than $7 million. Even after Gilbert was warned by Sacks' probation officer of the risk of financial irresponsibility and his opinion that Sacks should not be working at a law firm given his criminal past, Gilbert did nothing. In fact, shortly after hiring Sacks, when Gilbert became aware that Sacks had embezzled over $20, 000 from the law firm's operating account, Gilbert fired and then rehired Sacks, eventually delegating to Sacks all matters regarding the administration of Gilbert's firm's trust account. The details are set forth more fully below, but by the end of 2014 Sacks had embezzled nearly $5 million from the firm's trust account.

         Whether Gilbert was aware of or personally involved in the theft is not the critical inquiry. Indeed, this case gives new meaning to the phrase "turning a blind eye." Gilbert, as an attorney and fiduciary, was directly responsible for his firm's trust account and for the supervision of employees. As an attorney, he owed a duty to the public and to his clients to safeguard their money. Instead, he flouted the system by lying to a federal probation officer and allowing a nonattorney to hold himself out as a law school graduate and a certified public accountant (CPA). Sacks was neither and never had been. For the reasons that follow, we approve the referee's factual findings and recommendation as to guilt but reject the referee's recommended disciplinary sanction and, instead, impose the sanction of disbarment.

         FACTS

         In February 2005, Sacks was referred to Gilbert by a friend/client for a job at Gilbert's law office. Gilbert interviewed Sacks and learned that Sacks was then living in a halfway house, having been recently released from federal prison after being convicted of wire fraud. Sacks claimed in this interview to be a CPA and a disbarred New York attorney. With knowledge of Sacks' criminal history, Gilbert hired Sacks. However, Gilbert did not investigate Sacks' criminal history in any manner, obtain any further information about Sacks' crimes, contact the New York Board of Accountancy to confirm whether Sacks was a CPA, or contact the New York Bar in regard to the circumstances of Sacks' disbarment.

         On or about April 8, 2005, Sacks' federal probation officer, Jeffrey Feldman (Officer Feldman), met with Gilbert. During the meeting, Gilbert signed a "PROB 32" form, formally acknowledging the risk of hiring Sacks as well as some aspects of the crimes Sacks had committed. The PROB 32 form indicated that on "December 23, 2002, " Sacks was convicted of 11 counts of "wire fraud" and was sentenced to "41 months imprisonment, followed by a total of five (5) years [probation, and ordered to pay] [r]estitution in the amount of $7, 906, 332.14." Officer Feldman also told Gilbert that he felt it was inappropriate for Sacks to be working at a law firm given Sacks' history of fraud and embezzlement.

         The referee found that with respect to Sacks' past, Gilbert was "curiously uncurious." Had Gilbert investigated Sacks further, he would have discovered that Sacks was never an attorney in New York. Additionally, if Gilbert had contacted the New York Board of Accountancy, he would have learned that Sacks was not a CPA. The referee notes Gilbert's "failure to exercise even a modicum of due diligence with respect to Sacks' 'resume, ' a resume which came with a number of bright red flags attached to it." Additionally, Gilbert permitted Sacks to identify himself as holding a "J.D., " which was printed on business cards and included in his signature on firm emails.

         Five months after Gilbert hired Sacks, Sacks stole and forged Gilbert's signature on one of the firm's operating account checks, writing the check for $20, 950 to pay for Sacks' girlfriend's cosmetic surgery. Upon Gilbert's discovery of the theft, Sacks returned the check. Gilbert terminated Sacks' employment, but did not report the incident to Officer Feldman. When he learned Sacks had been terminated, Officer Feldman repeatedly reached out to both Sacks and Gilbert in an attempt to determine why Sacks was no longer employed at the firm. Gilbert refused to tell Officer Feldman why he terminated Sacks. Officer Feldman was surprised by Gilbert's refusal to cooperate, especially since Gilbert was a member of The Florida Bar.

         On October 11, 2005, Sacks called Officer Feldman and explained that he and Gilbert had reconciled and that Sacks had returned to working for Gilbert. On October 19, 2005, Officer Feldman visited Gilbert's office and expressed surprise regarding Sacks' rehiring and disappointment for Gilbert's failing to respond to his attempts at communication. When questioned about his lack of communication with Officer Feldman, Gilbert apologized but stated that "he did not discuss employee matters with anyone." Gilbert went on to tell Officer Feldman that Sacks' termination was due to "a misunderstanding." Additionally, Gilbert informed Officer Feldman that Sacks would continue working with the firm in the same capacity as he previously had, as a bookkeeper, but failed to inform Officer Feldman when he delegated more responsibility to Sacks following his return. In fact, Gilbert eventually named Sacks as the Chief Financial Officer of Gilbert's firm.

         The referee found that Gilbert refused to be truthful with Officer Feldman regarding Sacks' termination because he realized that Sacks' conduct would have probably violated Sacks' probation. Indeed, Officer Feldman testified that had Gilbert informed him of the crimes committed by Sacks, the crimes would have been reported to the presiding court to initiate revocation of Sacks' probation, resulting in Sacks' return to prison. Ultimately, the referee concluded that "[h]ad Gilbert been honest, the incidents that led to this proceeding would not have occurred."

         According to the referee's report, Sacks' thefts likely began at or around the time Sacks' federal probation ended. Gilbert's main focus of his practice before he met Sacks, and continuing thereafter, was construction litigation. The real estate closing side of Gilbert's practice began between 2006 and 2007, but did not exponentially grow until the mortgage foreclosure crisis in 2008. Sacks was the head of Gilbert's team of closers for the law firm and aggressively established relationships in the real estate community. Gilbert allowed Sacks full rein over the real estate closing side of his practice. Gilbert was not aware that Sacks was paying Gilbert's employees thousands of dollars from the firm's trust account in order to perpetuate his scheme of embezzlement. Sacks would transfer the funds that were deposited into the firm's trust account to pay off the remaining mortgages after the closings of the sales of the firm's clients' properties to a shell company, which he created, and then continue to keep the mortgages "alive" by making the monthly payments, so that no one would know of his thefts.

         Nothing in the record suggests that Gilbert engaged in any type of meaningful post-closing supervision or follow-up of Sacks' actions. Gilbert testified that he reviewed monthly three-way comparisons prepared by Sacks, which reconciled the bank account and trust account funds. He also reviewed the first and last page of the bank account statements. He testified that this review took no more than two to four minutes per month. There was also testimony presented ...


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