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Commonwealth of Massachusetts

NO. BD-2004-052

IN RE: BARRY B. TEICHOLZ

S.J.C. Judgment of Disbarment entered by Justice Cordy on June 15, 2004.1

SUMMARY2

In the winter of 2001, the owners of a small hotel in Miami Beach, Florida, retained the respondent to represent them in the threatened foreclosure of the first mortgage on their property. In early 2002, the clients obtained a $390,000.00 disaster relief loan from the Small Business Administration (“SBA”), secured by a third mortgage on the hotel. On January 7, 2002, the clients wire-transferred the $390,000.00 to the respondent’s IOLTA account with instructions to use the funds to attempt to reinstate the first mortgage, pay the hotel’s and the clients’ own costs and expenses when required, and make monthly loan payments to the SBA. On January 29, 2002, the respondent transferred $389,200.00 of these funds to an interest-bearing account that he had opened for the clients.

The first mortgagee refused to reinstate the loan, and, on June 1, 2002, the hotel was sold at a foreclosure sale. The proceeds from the sale were sufficient to satisfy the obligations to the first and second mortgagees. The loan to the SBA remained outstanding, but was unsecured.

Between July 2002 and June 2003, the respondent made payments to the SBA totaling $25,077.00. In addition, the respondent used a portion of the proceeds from the SBA loan to pay the clients’ personal expenses. Between February 2002 and October 2003, the respondent converted the remaining loan funds amounting to at least $60,000.00 to his own use. The respondent misappropriated these funds with the intent to deprive the clients of those funds at least temporarily. The clients were actually deprived of the funds as, in July 2003, the respondent stopped making loan payments to the SBA. The clients did not learn that payments were not being made to the SBA until October 2003, when they received a notice that they were in default on the loan.

On or about October 15, 2003, one of the clients contacted the respondent and demanded that he provide the bank records showing the receipt and maintenance of the SBA loan funds and account for his disposition of the $390,000.00. On October 29, 2003, the respondent sent the clients an accounting falsely showing that the funds converted by the respondent had been used instead to pay the SBA and the hotel’s and the clients’ costs and expenses. The respondent did not make restitution to the clients of the funds he converted.

The respondent’s conversion of the loan proceeds to his own use and his failure to turn over the funds promptly to the persons or entity entitled to them violated Mass. R. Prof. C. 1.15(a) and (b) (a lawyer shall hold property of clients or third persons separate and apart from the lawyer’s own property and shall promptly deliver funds to a third person entitled to receive those funds) and Mass. R. Prof. C. 8.4(c) and (h) (a lawyer shall not engage in conduct involving dishonestly, fraud, deceit, or misrepresentation, or any other conduct that adversely reflects on his fitness to practice law). The respondent’s failure to make the required payments to the SBA violated Mass. R. Prof. C. 1.2(a) (a lawyer shall not fail to seek a client’s lawful objectives) and Mass. R. Prof. C. 1.3. (a lawyer shall act diligently in his representation of a client). The respondent’s false accounting to the complainants violated Mass. R. Prof. C. 1.15(b) and Mass. R. Prof. C. 8.4(c) and (h).

On April 13, 2004, the respondent submitted his affidavit of resignation to the Board of Bar Overseers. On June 4, 2004, the Board of Bar Overseers voted to recommend to the Supreme Judicial Court that the respondent’s affidavit of resignation be accepted and that an order of disbarment be entered.

On June 15, 2004, the Supreme Judicial Court for Suffolk County entered a judgment of disbarment.

1 The complete Order of the Court is available by contacting the Clerk of the Supreme Judicial Court for Suffolk County.

2 Compiled by the Board of Bar Overseers based on the record before the Court.



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