Balt. Co. attorney disbarred for misusing escrow funds

A Baltimore County attorney has been immediately disbarred for depositing his personal money into his escrow account in order to avoid having to pay a federal tax debt.

The Court of Appeals disbarred Joseph Lee Friedman in a per curiam order issued Wednesday.

According to findings of fact in a case that went before the Baltimore County Circuit Court last year, Friedman kept his personal funds in an attorney escrow account in order to avoid the federal government garnishing the money pay for a $70,000 tax liability he and his brother owed in connection with the family business.

The Attorney Grievance Commission of Maryland filed a petition for disciplinary action against Friedman in October 2012, and his case went before the circuit court in May 2013.

Friedman, who was admitted to the Maryland Bar in 1973, had served as the general counsel for his father’s company, Crown Service Inc., a vending machine company, according to the circuit court’s findings.

Phone numbers for Friedman and Crown Service Inc. had been disconnected. Glenn M. Grossman, bar counsel for the Attorney Grievance Commission, declined to comment on the case.

Friedman and his brother, Stephen, took over the business after their father died in 2004. Friedman gave up his side of the business in 2010, selling his interest to his brother.

At the time Friedman left, the company owed more than $70,000 in federal taxes. The brothers agreed Stephen would be liable for the taxes. Under federal law, however, the Treasury Department could still hold Joseph liable for the taxes.

Friedman began the private practice of law in 2010. He opened an escrow account at PNC Bank and deposited only a few of his clients’ fees into the escrow account.

Friedman began depositing his personal funds into his escrow account in order to avoid having his money garnished to pay the federal tax liability.

In January 2011, Friedman wrote a check for $325 on his escrow account that resulted in an overdraft of $7.55. Friedman claimed no client funds were in the account at the time and immediately deposited money back into the account.

In its findings of fact, the circuit court found that Friedman had violated the Maryland Rules of Professional Conduct, which only allow an attorney to deposit personal funds into an escrow account to pay bank charges, maintain a minimum balance or hold funds that an attorney and client both have claims on.

The circuit court also held that Friedman behaved dishonestly by hiding his money in an escrow account in order to avoid paying a federal tax liability.

Friedman’s case went before the Court of Appeals Tuesday, but he did not appear before the court.

WHAT THE COURT HELD

Case:

Attorney Grievance Commission of Maryland v. Joseph Lee Friedman, AG No. 49, September Term 2012, Argued Feb. 11, 2014. Decided Feb. 12, 2014. Per Curiam Order.

Issue:

What is the proper sanction for an attorney who keeps his personal funds in his attorney trust account in order to avoid paying a federal tax debt?

Holding:

The Court of Appeals held the proper sanction is immediate disbarment.

Counsel:

Lydia E. Lawless, Attorney Grievance Commission of Maryland, for petitioner; Joseph Lee Friedman, for himself.

Record Fax #14-0212-20 (3 pages)

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