Wednesday, May 24, 2017

Ethics complaint arising out of 2007 transaction filed against New Brunswick attorney in 2017.

A New Brunswick attorney is facing ethics charges for allegedly misleading a judge during a September 17, 2007 hearing regarding the identity of the payee of a $160,000 settlement check.  The attorney is claiming that his "constitutional right to due process is compromised" because length of time that has passed since the hearing and because of malfunctions of the tape recorder that recorded the hearing.

Frank J. Shamy, who maintains an office at 22 Kirkpatrick Street, New Brunswick, is the subject of March 29, 2017 complaint being prosecuted on behalf of the District VI Ethics Committee by attorney Daniel P. D'Alessandro of the Newark law firm of McCarter & English, LLP.  According to the complaint, Shamy successfully negotiated a $240,000 settlement in July 2007 that resolved his client's lawsuit against its insurance carrier.  Although the policyholder was Belov Technology, a dormant corporation that was founded by Dr. Valery Belov, Shamy allegedly remitted $160,000 of the settlement to Dr. Belov personally, rather than the corporation, after having retained his $80,000, one-third share. 

The underlying lawsuit was not initiated by Shamy.  Rather, it was filed by another attorney named Robert Kenny who, according to the complaint, filed the lawsuit but withdrew as counsel in 2006.  The complaint was brought in the name of Sunstone, Inc., another dormant corporation founded by Dr. Belov.

Despite having withdrawn from the matter, Kenny believed that he was entitled to be paid for the work he put into the case.  In order to collect for his work, he filed suit against Dr. Belov, Belov's son and the two corporations (Sunstone and Belov Technology) in February 2007--prior to the $240,000 settlement being negotiated.  Shamy represented the defendants in the fee lawsuit and claimed that Kenny was due nothing because of he withdrew from the case.

Shamy's alleged ethics infraction arose out of what he said and did not say during a September 17, 2007 hearing where Kenny sought to prevent Shamy from distributing the settlement so that Kenny could collect his fee, as determined by the court, from the settlement proceeds.  Even though Shamy had already disbursed the settlement funds to Belov personally, the complaint, referring to the hearing's transcript, quotes Shamy as having told the judge that he disbursed the funds "to the corporations."  This, according to the complaint, misled the court into believing that an order preventing the corporations from disbursing the funds would benefit Kenny when in fact the corporations were merely empty shells with no assets. 

The crux of the complaint against Shamy is that he did not "correct the Court or clarify any confusion that may have been caused by [Shamy's] statement that the settlement proceeds were disbursed to Belov Technology or Sunstone and not Dr. Belov."  D'Alessandro claimed that Shamy's alleged concealment was a "knowing and intentional misrepresentation" that violated several of the Rules of Professional Conduct.

Shamy, in his answer (at the link above, following the complaint), admitted that he disbursed the $160,000 to Dr. Belov personally rather than the corporations and that the transcripts did record him saying "Judge, it was disbursed to the corporations."  But, he noted that immediately prior to his statement to the judge, the transcript reflects that "Tape begins to malfunction."  Shamy wrote that he "had misspoken" but that he never intended to mislead the Court or Kenny.

In his defense, Shamy wrote that he went into the September 17th hearing believing that the critical issue for the court to determine was whether he still had the money in his trust account or whether he disbursed it.  He wrote that he "did not believe whether the check was written to Dr. Belov or the corporations was material to" the hearing.  Since the Court dissolved all restraints that protected the settlement funds at the conclusion of the hearing, Shamy argued, "I don't understand how my statement could have materially misled the Court." "The Court lifted all restraints," he wrote. "Therefore, even if I had written the check to the corporations, at the conclusion of the hearing, those entities were free to disburse the monies as they saw fit."

Shamy is being represented by Donald M. Lomurro of Freehold.

On April 15, 2008, Shamy was admonished by ethics authorities in a separate matter for signing his client's name to a release and for making small, interest-free loans to three clients without first advising them to consult with independent counsel.

What is written above is just a summary and the complaint and Shamy's answer, should be read in their entirety in order to obtain the best understanding of the case.  The ethics charges are only allegations--nothing has been proven. Shamy has a right to a hearing and the burden of proof is on disciplinary officials to prove that he violated the Rules of Professional Conduct.

Since 1995, attorney disciplinary hearings have been open to the public. Anyone who is interested in being notified in advance of any hearings on Shamy's matter may complete and send a hearing request form to the District VI Ethics Committee Secretary Jack Jay Wind via fax to 201-333-1110.