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N.Y. Attorney Suspended for Funding More Than 200 Loans to Clients
New York Law Journal
June 15, 2007
A prominent Rochester, N.Y., personal injury attorney has been suspended for 18 months for a series of disciplinary violations centering primarily on the 200-plus loans he made via intermediaries to his own clients.
A unanimous New York Appellate Division, 4th Department, panel found that James J. Moran made more than 200 loans totaling more than $700,000. The panel said that the loans through third parties for non-litigation-related expenses did not "directly" violate the Code of Professional Responsibility, but that Moran's actions nonetheless "circumvented" the code, which in itself is a violation.
According to the ruling, Moran conceded that he knew his conduct violated disciplinary rules, but "he stated that he provided the financial assistance so that his clients would not be required to borrow funds from lending companies at exorbitant rates of interest."
The panel found six other violations, including engaging in conduct involving dishonesty, fraud, deceit or misrepresentation and engaging in conduct prejudicial to the administration of justice.
Moran, 58, was admitted to the New York bar in 1973. His firm, Moran & Kufta, specialized in personal injury and medical malpractice. (Wednesday, the firm's Web site was out of commission, and a receptionist said the firm had recently changed its name to Valerio & Kufta.)
The 7th Judicial District Grievance Committee filed a petition charging Moran with misconduct concerning loans he funded between 1997 and 2005. The committee also claimed that Moran violated the disciplinary code by posting on his firm's Web site information about a confidential disciplinary investigation of a rival personal injury firm, Cellino & Barnes (now known as The Barnes Firm).
A referee conducted a hearing and submitted a report, which the 4th Department confirmed in part last week.
"We agree with the conclusion of the Referee that, by loaning money to clients through intermediaries, respondent circumvented [the] Code of Professional Responsibility ... which prohibits a lawyer, while representing a client in connection with contemplated or pending litigation, from advancing or guaranteeing financial assistance to a client beyond the expenses of litigation," the panel held in Matter of Moran, P-06-008.
The panel also found that Moran violated disciplinary rules by failing to disclose the existence of one such loan during a client's bankruptcy proceeding and by failing to include a required disclaimer when referring to himself as a trial specialist on his Web site.
The panel ruled that any mitigating factors -- such as Moran's cooperation and the absence of harm to any specific client -- were outweighed by aggravating factors.
"Respondent, with full knowledge of the prohibition, funded loans to clients for more than eight years and engaged in deceptive and deceitful conduct to conceal his role as lender," the panel wrote.
"Respondent has expressed a shocking lack of remorse for his misconduct. He conceded that he loaned money through intermediaries in order to circumvent the disciplinary rules, and he continued to represent clients who had obtained loans funded by him until as late as the commencement of the hearing conducted by the Referee in this matter."
The panel however rejected the referee's findings that loaning money via intermediaries directly violated the disciplinary rules, that Moran loaned money directly to clients, that it was improper for Moran to compare the quality of his firm to others' on his Web site or that he engaged in "misleading" conduct by posting information about the rival firm.
Justices Robert G. Hurlbutt, Salvatore R. Martoche, Nancy E. Smith, John V. Centra, and Erin M. Peradotto sat on the panel.
Philip G. Spellane of Harris Beach in Rochester represented Moran. Spellane said that his client had not decided what to do next.
