Respondent has not engaged in conduct that defeats the administration ofjustice

Transcription

1 BEFORE THE HEARING BOARD OF THE ILLINOIS ATTORNEY REGISTRATION AND DISCIPLINARY COMMISSION In the Matter of: DANIEL ROZENSTRAUCH, Attorney-Respondent, Commission No. 2012PR00166 No ANSWER TO THE SECOND AMENDED COMPLAINT Respondent Daniel Rozenstrauch by his attorney, Sheldon Sorosky, answers that Respondent has not engaged in conduct that defeats the administration ofjustice or brings the courts or the legal profession into disrepute and that Respondent should not be subject to discipline pursuant to Supreme Court Rule 770, and furthermore, Respondent answers each allegation in this complaint (in printed words after each paragraph of said complaint). DEC ATTY REG &DISC COMM CHICAGO

2 COUNTI (Misappropriation andfailure to holdclientfunds separatefrom the lawyer's ownproperty- Jan Zyskowski) 1. On January 21,2005, while exiting achicago Transit Authority ("CTA") bus, Jan Zyskowski ("Zyskowski") was struck by a school bus belonging to First Baptist Church of Hammond ("First Baptist"). admit 2. On or about June 7, 2005, the law firm of Sandman, Levy and Petrich agreed to represent Zyskowski in claims arising from the incident referred to in paragraph one, above. Sandman, Levy and Petrich filed a notice of attorney's lien with First Baptist and Kevin Leonard, the driver ofthe school bus.

3 3. On July 5, 2005, the Sandman, Levy and Petrich firm filed a complaint in the Circuit Court of Cook County on behalf of Zyskowki, related to the incident described in paragraph one, above. The matter was captioned as Jan Zyskowski v. First Baptist Church of Hammond, City Baptist High School, Kevin D. Leonard and Chicago Transit Authority and James E Bell, and assigned the case number 05 L 7339 by the clerk ofthecourt 4. On or about November 14, 2007, the Sandman, Levy and Petrich firm withdrew as Zyskowski's attorneys. 5. In November 2007, Respondent agreed to represent Zyskowski in matters relating to case number 05 L On November 28, 2007, Respondent filed his appearance as counsel forzyskowski in case number 05 L In November 2007, Zyskowski tendered to Respondent amounts totaling $1,200, which was to be applied towards the anticipated costs related to Zyskowski's claims in case number 05 L On June 10, 2008, the court allowed Respondent's motion to voluntarily dismiss case number 05 L In May 2009, Zyskowski gave Respondent an additional $3,000 to be used towards the costs to resolve his claims, bringing the total amount of funds paid by Zyskowski for anticipated costs to $4,200. On June 4,2009, Respondent filed a new complaint against the same defendants in case number 05 L 7339 in the Circuit Court of Cook County. The clerk assigned that matter case number 09 L Sometime before July 30, 2009, First Baptist agreed to settle Zyskowski's claim related to the incident described in paragraph one, above, for the amount of $60,000, minus defense costs of $2,

4 10. On or about August 11, 2009, Scottsdale Insurance Company issued check number inthe amount of $57, made payable to"jan Zyskowski and his attorneys Daniel Rozenstrauch and Sandman, Levy and Petrich," and mailed the check to Respondent. Respondent received the check shortly thereafter...._ 11. On or about August 18, 2009, Respondent, on behalf of himself, Zyskowski, and purportedly on behalf of Sandman, Levy and Petrich, endorsed check number and deposited the check into an account Respondent maintained at National City that ended in the four digits That account was entitled "Daniel Rozenstrauch dba Daniel Rozenstrauch & Assoc. Client Fund Account" (hereafter "client fund account"), and was used by Respondent to deposit funds belonging to clients, third parties and possibly himself. deny 12. At no time did anyone authorized to act for the Sandman, Levy and Petrich firm give Respondent authority to endorse checknumber on the firm's behalf. 13. Sometime beforeseptember 1,2009, the CTA agreed to settle Zyskowski's claim in exchange for payment of$13, On or about September 1, 2009, the CTA issued check numbers and 62403, payable respectively to Jan Zyskowski and Respondent in the amount of $11,849, and to Jan Zyskowski, Respondent and the Illinois Department of Healthcare and Family Services, which had a lien on the proceeds ofzyskowski's claim, in the amount of$2,000, and mailed the checks to Respondent. Respondent received the checksshortly thereafter. admit 15. On or about September 1, 2009, Respondent, on behalf ofhimself, Zyskowski and purportedly on behalf of the Illinois Department of Healthcare and Family Services, endorsed check number on behalf of the Illinois Department of Healthcare and Family Services and

5 subsequently deposited check numbers and 62403, in the total amount of $13,849, into his client fund account 16. At no time did Illinois Department of Healthcare and Family Services give Respondent authority to endorse check number on behalf of that agency. 17. As of November 19, 2009, Respondent had made no distribution to or for the benefit ofzyskowski. deny 18. Between September 1, 2009, and November 19, 2009, Respondent drew checks and made withdrawals from his client fund account in payment ofrespondent's own business or personal obligations. As ofnovember 19, 2009, Respondent's activities had drawn the balance ofhis client fund account to $3, As a result, as of November 19,2009, Respondent had used, without authority, at least $44, that belonged to Zyskowski or Zyskowki's third party lienholders and thereby engaged in conversion of those funds. 20. In or around January, 2010, Respondent prepared a settlement statement in which he outlined the distributions made from Zyskowski's total settlement. The settlement statement reflected that a total of$4, from Zyskowski's settlement was paid towards costs in matter. The settlement statement did not credit Zyskowski for the $4,200 that previous paid towards costs, referenced in paragraphs six and eight, above. 21. The settlement statement prepared by Respondent was false and intended to mislead in that, as a result ofthe payments referenced in paragraphs six and eight, Zyskowski did not owe any additional payments for costs and therefore, no costs should have been deducted from his settlement proceeds. Respondent was aware that his settlement statement was false.

6 22. By reason of the conduct described above that occurred before January 1, 2010, Respondent has engaged in the following misconduct: a. failure to hold property (the proceeds of Zyskowski's settlements) of clients or third persons (Zyskowski or persons with liens against the settlements) that is in the lawyer's possession in connection with a representation separate from the lawyer's own property, by converting those funds by drawing the balance in his client trust account below the amount he received in connection with the representation, thereby converting that property to his own use, in violationofrule 1.15(a) ofthe Illinois Rules of Professional Conduct(1990); and b. conduct involving dishonesty, fraud, deceit or misrepresentation, by virtue of conduct that includes endorsing, without authority, settlement checks on behalf of the IDHFLS and the Sandman law firm, failing tocredit Zyskowski with the $4,200 advance cost payment, deducting costs from Zyskowski's settlement, conversion and unauthorized use of Zyskowski's settlement proceeds for his own purposes and affixing unauthorized endorsement to settlement checks, in violation of Rule 8.4(aX4) of the Illinois Rules of Professional Conduct (1990) n7ny 23. Byreason of the conduct outlined above that occurred onor after January 1,2010, Respondent hasengaged in the following misconduct: a. conduct involving dishonesty, fraud, deceit or misrepresentation, by virtue of conduct conversion, including failing to credit Zyskowski with the $4,200 advance cost payment, deducting costs from Zyskowski's, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010) COUNT II (Misappropriation ofclientfiinds andfailure to hold clientfunds separatefrom own property) 24. In the course of Respondent's deposit, maintenance and disbursement of client funds in his National City client trust fund account ending in numben 1616 [subsequently PNC Bank account number ending in 7215] ("client fund account"), Respondent converted funds

7 belonging to the following clients and third parties, as more specifically set forth inthe following subparagraphs: a. On or about February 25,2009, Respondent received and depositedinto his client fund account State Farm Insurance Company check number , which had been made payable to Respondent, Alina Siemczyk and Alexian Brothersin the amount of$3,000, and from the proceeds of which Siemczyk or Alexian Brothers were entitled to at least $2, On March 19, 2009, prior to any disbursement to Siemczyk and Alexian Brothers, the balance of Respondent's client fund account fell to $1,276.37, as Respondent drew checks on the client fund account, or made other withdrawals, without authority, for his business or personal purposes. As a result, as ofmarch 19,2009, Respondent had converted at least $ of funds belonging to Siemczyk or AlexianBrothers for his own business and personal purposes. deny b. On or about March 16, 2009, Respondent received and deposited into his client fund account State Farm Insurance Company check number , which had been made payable to Respondent, Jozef Urbanski and Albert Pawlusiewicz in the amount of$4,800, and from the proceeds ofwhich Urbanski and Dr. Pawlusiewicz were entitled to at least $3,209. On March 19, 2009, prior to any disbursement to Urbanski or Dr. Pawlusiewicz, the balance of Respondent's client fund account fell to $1,276.37, as Respondent drew checks on the client fund account, or made other withdrawals, without authority, for his business or personal purposes. As a result, as of March 19, 2009, Respondent had converted at least $1, of funds belonging to Urbanski and Dr. Pawlusiewicz for his own business and personal purposes, c. On or about March 30, 2009, Respondent received and deposited into his client fund account C. R. England, Inc. Insurance Company check number , which had been made payable to Respondent and Wieslaw Filimowicz d/b/atwo Tigers Transport in the amount

8 of$15,500, and from the proceeds ofwhich Filimowicz was entitled to at least $10, On May 19,2009, prior to any disbursement to Filimowicz, the balance of Respondent's client fund account number fell to $5,288.75, as Respondent drew checks on the client fund account, or made other withdrawals, without authority, for his business or personal purposes. As aresult, as ofmay 19, 2009, Respondent had converted at least $5, of funds belonging to Filimowicz for his own business and personal purposes. deny d. On or about December 1, 2009, Respondent received and deposited into his client fund account Crestwood Terrace Condo Association check number , which had been made payable to Respondent and Joseph Wrobel and U.S. Department of Labor in the amount of $60,000, and from the proceeds ofwhich Wrobel was entitled to at least $40,000. On January 22, 2010, prior to any disbursement to Wrobel, the balance of Respondent's client fund account fell to $56.85, as Respondent drew checks on the client funds account, or made other withdrawals, without authority, for his business or personal purposes. As aresult, as ofjanuary 22, 2010, Respondent had converted at least $39, of funds belonging to Wrobel for his own businessand personal purposes. e. On or about February 8,2010, Respondent, who was representing Piotra Grzywcz in divorce proceedings from Bozenna Grzywacz, received and deposited into his client fund account attorney Robert Dlugajczyk's check number 1333, which had been made payable to Respondent "as escrowee" for "distribution of escrowed funds Grzywacz v. ofgrzywacz" in the amount of $170,396.80, and from the proceeds of which Bozenna Grzywacz was entitled to at least $85, and Piotr Grzywacz was entitled to at least $73,500. On February 22, 2010, Respondent paid Bozenna Grzywacz $85, As of June 11,2010, Respondent had made no disbursements to Piotr Grzywacz and therefore should have been holding at least $73,500 that

9 belonged to Piotr Grzywacz. On June 11, 2010, prior to any disbursements to Piotr Grzywacz, the balance of Respondent's client fund account fell to $66.67, as Respondent drew checks on the client fund account, or made other withdrawals, without authority, for his business or personal purposes. As a result, as of June 11, 2010, Respondent had converted at least $73, offunds belonging to Piotr Grzywacz for his own business and personal purposes. f. In August, 2010, Respondent and Christopher Dymon agreed that Respondent would represent Dymon in relation to Dymon's desire to purchase ahome. On or about August 27, 2010, Dymon gave Respondent Liberty Bank check number in the amount of $7,500, which was payable to Christopher Dymon, but was signed over to Respondent Respondent was to hold the entire proceeds from check in escrow to be applied toward the purchase of Dymon's home. On September 27, 2010, prior to any disbursement to Dymon or on behalf of Dymon, the balance of Respondent's client fund account number fell to $4,091.89, as Respondent drew checks on the client fund account, or made other withdrawals, without authority, for his business or personal purposes. As a result, as of September 27, 2010, Respondent had converted at least $3, of funds belonging to Dymon for his own business TYFNY and personal purposes. g. In November, 2010 Respondent and Anna Mravec agreed that Respondent would represent Mravec in matters relating to a dispute regarding the estate of Ann Novosedlik, to which Mravec was an heir. Between November, 2010, and November 7, 2011, Respondent received at least $116,791.82, which included $70,000 that he deposited on or about December 17, 2010, into his client fund account after receiving Vito Evola's check number 3549, which had been made payable to Respondent as "Escrowee for Novosedlik Estate" in the amount of $70,000. On March 7, 2011, prior to any disbursement to or on behalf of the Estate of Anne

10 Novosedlik, the balance of Respondent's client fund account fell to $1,625.98, as Respondent drew checks on the client fund account, or made other withdrawals, without authority, for his business or penonal purposes. As a result, as of March 7, 2011, Respondent had converted at least $115, of funds belonging to the Estate of Novosedlik, its heirs, or its third party creditors. 25. By reason of the conduct outlined above that occurred before January 1, 2010, Respondent has engaged in the following misconduct: a. failure to hold property (funds received from or on behalf of Siemczyk; Urbanski; and Filimowicz/Two Tigers Transport) ofclients or third persons (Siemczyk; Urbanski; and Filimowicz/Two Tigers Transport) that is in the lawyer's possession in connection with a representation separate from the lawyer's own property, by converting those funds by drawing the balance in his client trust account below the amount he received in connection with the representation, thereby converting that property to his own use, in violation of Rule 1.15(a)ofthe Illinois Rules of Professional Conduct (1990); and b. conduct involving dishonesty, fraud, deceit or misrepresentation by virtue of his conduct including the conversion and unauthorized use of funds belonging to Siemczyk; Urbanski; and Filimowicz/Two Tigers Transport, clients or third persons, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (l990> 26. By reason ofthe conduct outlined above that occurred on or after January 1,2010, Respondent has engaged in the following misconduct: a. failure to hold property (funds received on behalf of Wrobel; Grzywacz; Dymon; and the Estate of Ann Novosedlik) ofclients or third parties (Wrobel; Grzywacz; Dymon; and the Estate of Ann Novosedlik) that is in the lawyer's possession in connection with a representation separate from the lawyer's own property, by converting those funds by drawing the balance in his client trust

11 account below the amount he received in connection with the representation, thereby converting that property to his own use, in violation ofrule 1.15(a) ofthe Illinois Rules of Professional Conduct (2010); and b. conduct involving dishonesty, fraud, deceit or misrepresentation, by virtue of his conduct including the conversion and unauthorized use of funds belonging to Wrobel; Grzywacz; Dymon; and the Estate of Ann Novosedlik, clients or third persons, received in connection with Respondent's representation, in violation of Rule 8.4(c) ofthe Illinois Rules of Professional Conduct (2010) deny COUNT III (Misappropriation ofclientfunds andfailure to hold$69,908 belonging Gillespie estate separate from the lawyer's ownproperty) 27. On October 24,2011, Cornelius Gillespie ("Gillespie") died intestate. At the time of Gillespie's death, his assets included a six-unit apartment building located at 1942 W. Touhy in Chicago, that generated rental income ('Touhy property"); a Citibank account ending in the four digits 5532 (which held a money account with a balance of $20,384.86, six-month certificate of deposit valued at $20,239.54; and a one-year certificate of deposit valued at $505.11); and Chase bank account ending in the four digits 3927 that held a balance of$15,000. Gillespie was survived by seven siblings, including Joseph Gillespie, hisbrother. 28. Shortly thereafter, Respondent met with Joseph Gillespie and agreed to represent the Estate of Cornelius Gillespie in matters that included the initiation of probate proceedings and the management ofthe estate's assets. 29. On November 2,2011, Respondent wrote letters to the four tenants residing in the Touhy property, advising them ofgillespie's death and stating that all monthly rent payments, which were between $475 and $800, were to be remitted to Respondent's law office made payable to either to "The Estate of Cornelius Gillespie" or "Joseph Gillespie, Independent Administrator". AnMTT

12 30. On November 14, 2011, Respondent initiated probate proceedings for Gillespie's estate by filing a notice to heirs and petition for letters of administration in the Circuit Court of Cook County. The matter was entitled In re the Estate of Cornelius C. Gillespie, case number 2011 P On December 14, 2011, the court appointed Joseph Gillespie, who was 79, to serve as independent administrator for the Cornelius Gillespie estate. 32. On December 16, 2011, Respondent withdrew the entire balance of $20, from the Citibank money market account ending in 5532, (referred to in paragraph 27, above) and the entire balance of $20,239.54, (minus a $7.48 penalty), from the Citibank six-month certificate of deposit (also referred to in paragraph 23, above). Respondent used the proceeds of those withdrawals to purchase cashier's check number which was made payable to Joseph Gillespie in the amount of$40, On December 16,2011, Respondent withdrew the entire balance of$ from the Citibank one-year certificate of deposit, referred to in paragraph 27, above. Respondent used the proceeds ofthat withdrawal to purchase cashier's checknumber made payable to Joseph Gillespie in the amount of$ On December 16, 2011, Respondent deposited checks number and , totaling $41,130.17, into a PNC Bank account ending in the four digits (formally doing business as National City Bank account ending in the four digits 1891). That account was entitled, "Daniel Rozenstrauch DBA Daniel Rozenstrauch & Associates Client Trust Account" (hereinafter "client trust account"), and was used by Respondent as the depository of funds belonging to Respondent's clients, to third persons, and, presently or potentially, to Respondent AD

13 32. On January 28, 2012, Respondent drew check number 1220 on the client trust account in the amount of $16, The check was made payable to"tohle Funeral Home" as payment for Gillespie's funeral expenses. 33. On February 1, 2012, Joseph Gillespie executed a durable power of attorney authorizing Respondent to "receive information, exchange communication, close bank accounts, endorse checks, and sign any documents with regards of Chase Bank accounts bearing the name ofcornelius Gillespie or Joseph Gillespie." 34. On February 3, 2012, Respondent withdrew $15,098.95, the entire balance, from Chase account ending in the four digits 3927, referred to in paragraph 27, above. On that same date, Respondent deposited the $15, into PNC Bank account ending in the four digits That account was entitled, "Daniel Rozenstrauch DBA Daniel Rozenstrauch &. Associates," (hereinafter "business account") and was used by Respondent for business and personal purposes. The PNC Bank account ending in the four digits 0909 was not a separate identifiable account for the maintenance of funds belonging to clients orthird parties, nor did the account title refer to the Gillespie estate or in any other way indicate that funds on deposit were held in a fiduciary or escrow capacity. 35. During the summer of2012, Joseph Gillespie became ill while visiting Ireland, 36. On September 14, 2012, Joseph Gillespie resigned as administrator of his brother's estate. He designated Brian J. Krajewski to become administrator of Cornelius Gillespie's estate. 37. Between November, 2011, and January 13, 2013, Respondent collected amounts totaling at least $30,475 in rents for theapartments in the Touhy property. Respondent deposited the proceeds from the rent payments into his client trust account and business account

14 38. As ofnovember 12, 2012, Respondent had deposited at least $6,425 ofthe funds that he collected for rent on the Touhy property into his client trust account. admit 39. Between November 1,2011 and December 21,2012, Respondent drew checks or made other withdrawals from his client trust account in payment ofrespondent's own business or personal obligations. As of December 21, 2012, Respondent's activities had drawn the... balance in his client trust account to $1, As January 13, 2013, Respondent had deposited at least $24,050 of the funds that hecollected for rent onthe Touhy property into his business account 41. Between November, 2011 and January 1, 2013, Respondent issued checks and made disbursements from his business account totaling $8, to pay estate bills, including utilitybills for thetouhy property. 42. Between November, 2011 and January 1,2013, Respondent drew checks or made other withdrawals from his business account in payment of Respondent's own business or personal obligations. As of January 1, 2013, Respondent's activities had drawn the balance in the business account to $ As a result of the action alleged in paragraphs 39 and 42, above, between November 1,2011 and January 1,2013, Respondent had used, without authority, at least $59,798 ofassets belonging to the Gillespie estate or its beneficiaries and thereby converted those funds. 44. On January 14, 2013, Brian J. Krajewski was appointed to serve as Independent Administrator of the Estate of Cornelius Gillespie. 45. On February 14, 2013, Respondent met with Krajewski to turn over the property and records belong to the Gillespie estate. At that time, Respondent gave Krajewski a check for

15 $21,248.16, which Respondent indicated were the remaining funds that Respondent was holding on behalfof thegillespie estate. 46. At that time, Respondent provided Krajewski with no information regarding the funds from Chase bank account ending in the four digits Respondent told Krajewski that Respondent had no involvement with the Chase account and that Joseph Gillespie likely handled that account himself. 47. Respondent's statements to Krajewski, referred to in paragraphs 43 and 44, above, were false and intended to mislead Krajewski, in that Respondent had previously withdrawn all the funds from Chase account ending 3927, a total of $15,098.95, and deposited those funds in his business account, which he later used for his own purposes. 48. By reason of the conduct described above, that occurred after January 1,2010, Respondent hasengaged in the following misconduct: a. failure to hold property (funds belonging to the Estate of Cornelius Gillespie and its heirs), of a client orthird persons (Estate of Cornelius Gillespie and its heirs) that is in the lawyer's possession in connection with a representation in a client trust account separate from the lawyer's own property by depositing the funds in a money-market or business account and later converting those funds by drawing the balance in the money market and business accounts below the amount he received in connection the representation, thereby converting the that property, and failure to maintain complete records ofthe client trust account funds, in violation of Rule 1.15(a) of the Illinois Rules of Professional Conduct (2010); and b. conduct involving dishonesty, fraud, deceit or misrepresentation, by virtue of his conversion and unauthorized use of the Estate of Cornelius Gillespie's assets for his own purposes, and for falsely telling Brian Krajewski that Respondent had not handled the Gillespie estate funds in Chase bank

16 account ending in 3927 in violation of Rule 8.4(c) ofthe Illinois Rules ofprofessional Conduct (2010). IELDDN SBRDSKY ATTORNEY FOR RESPONDI DANIEL ROZENSTRAUCH