Lawyer Disbarred After Ex-Con He Made CFO Stole $5M

A lawyer was disbarred for hiring and not supervising a convicted felon who embezzled nearly $5 million from the lawyer’s trust account over four years, the Florida Supreme Court said Mar. 22.

Florida lawyer Randall Lawrence Gilbert hired Steven Sacks after he got out of jail for wire fraud, the court said. The court’s opinion outlined how Gilbert ignored warnings from Sacks’ probation officer about Sacks working in a law firm and even gave him access to his firm’s trust account. Sacks stole $20,000 from Gilbert, was fired and then rehired by Gilbert and promoted to the firm’s CFO, the court said. Sacks then proceeded to embezzle almost $5 million from Gilbert’s trust account over a four-year period, the court found. Gilbert was disbarred for his failure to supervise, dishonesty, and trust account violations.

Although this is an extreme case, lawyers must be careful when hiring new employees and must diligently supervise them, especially those who have access to the firm’s trust account.

‘Curiously Uncurious’

Sacks went to prison for wire fraud after embezzling roughly $8 million, the court said. Upon release Sacks was referred to Gilbert for a job. The court said Sacks told Gilbert he was a CPA and lawyer who was disbarred in New York. Sacks was neither, the court noted.

Despite warnings from Sacks’ probation officer, the court said, Gilbert hired Sacks and failed to conduct any kind of investigation into his criminal conviction or professional credentials. The probation officer called Gilbert “curiously uncurious.” Sacks identified himself on business cards and firm emails as a CPA and lawyer, the court said, but Sacks worked as a bookkeeper for the firm.

Within five months, Sacks forged a check from the firm’s operating account for over $20,000 for his girlfriend’s cosmetic surgery, the court said. Gilbert fired him, the court said, but refused to tell Sacks’ probation officer why. Gilbert then re-hired Sacks and elevated him to CFO, but didn’t tell the probation officer about the promotion.

Gilbert gave Sacks “full rein” over his real estate closing practice, the court said. Sacks diverted trust account money deposited from clients’ real estate closings to Sacks’ shell company, SQWERTY, the court noted.

Gilbert allowed Sacks to administer the firm’s trust account and coordinate with the title insurance underwriter, Old Republic, along the firm’s CPA, all with little to no oversight by Gilbert, the court found. Sacks prepared monthly financial documents for Gilbert’s review, but Gilbert spent only a few minutes reviewing them.

When Sacks’ lifestyle “improved significantly,” Gilbert attributed it to Sacks’ girlfriend’s trust and Sacks’ own real estate holdings, the court said.

The court said that in February 2014, Gilbert received a call asking why a mortgage that should have been paid off was still active. Gilbert investigated but didn’t close the firm’s trust account until about two weeks later, after Sacks stole an additional $95,000, the court said.

All told, from February 2010 to March 2014, Sacks stole $4,750,708.70 from the trust account, the court said. And the court noted that Gilbert personally lost $1million in Sacks’ scheme.

‘Bright Red Flags’

The referee said Sacks’ resume raised “a number of bright red flags,” but Gilbert failed to “exercise even a modicum of due diligence.” The referee found Gilbert violated numerous Rules Regulating the Florida Bar-3-4.3 (minor misconduct), 4-1.3 (diligence), 4-5.3(b) & (c) (supervising nonlawyers), 4-8.4(c) (misconduct involving fraud, deceit), 5-1.1(a)-(b) (trust accounts), and 5-1.2(b)(6), (c)(1)-(2), (d) (trust accounting records).

The referee recommended a two-year suspension, with two years of probation upon reinstatement, along with other conditions such as payment of costs to the Florida bar.

The bar filed a petition arguing that disbarment was appropriate. Gilbert cross-petitioned and challenged the sanction as “excessive.” Gilbert argued for a six-month to one-year suspension and contested the referee’s finding that heviolated rules 3-4.3, 4-1.3, 4-8.4(c), 5-1.2(b)(6), and 5-1.2(c)(1).

‘Extreme Neglect’

The court rejected “without further discussion” Gilbert’s arguments challenging the referee’s finding he violated the rules.

The court agreed with the referee that Gilbert’s failure to supervise his trust account was the “most serious and damaging aspect of [Gilbert’s] lack of supervision.” But under Florida’s Standards for Imposing Lawyer Sanctions4.41(c), disbarment is warranted when there is a “pattern of neglect” that seriously injures a client. Here, the court said Gilbert had a “pattern of extreme neglect” over four years.

And Standards 6.11(b) and 5.11(f) say disbarment is appropriate for “improperly withhold[ing] material information” and for engaging in dishonesty, fraud or deceit. The court said dishonesty “is a serious flaw, which cannot be tolerated.”

The court highlighted the referee’s findings regarding Gilbert’s refusal to tell Sacks’ probation officer about why Sacks was fired. The referee rejected Gilbert’s argument that he didn’t need to be honest with the probation officer because Gilbert “had accepted the responsibility of being in a formal fiduciary relationship concerning the safeguarding of others’ property.”

In deciding that disbarment was appropriate, the court considered a case that the referee said was not controlling. InRousso , a lawyer was disbarred after a bookkeeper embezzled $4.38 million from a lawyer’s trust account. The court found Gilbert’s conduct to be “equally, if not more, egregious.”

The court also rejected Gilbert’s proposed sanction because “there were more than 190 thefts, which took place over a four-year period, that totaled almost $5 million, and the largest creditor has yet to be made whole.” While the court considered the mitigating factors found by the referee-such as a clean record, timely and good faith attempt to make restitution, and cooperation-it said they did “not outweigh the egregiousness of Gilbert’s conduct.”

Ultimately, the court said disbarment was fair to society and to Gilbert, and is severe enough to deter others from making the same mistake.

Chief Justice Jorge Labarga and Justices Barbara J. Pariente, R. Fred Lewis, Peggy A. Quince, Charles T. Canday, Ricky Polston, and C. Alan Lawson all participated in the per curiam opinion.

The Florida Bar was represented by Joshua E. Doyle, Tallahassee, Florida. Gilbert was represented by Rothman & Associates, P.A.

The case is Fla. Bar v. Gilbert , 2018 BL 97910, Fla., SC15-2004, 3/22/18.