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Appellate Court Details A Wholesale Abandonment Of Fiduciary Responsibilities
The Spring Valley-based attorney Joseph Kunstlinger was suspended from the practice of law for 5 years based mishandling money entrusted to him from a series of real estate closings.
The heart of the investigation and complaint against him stems from what may seem like sloppy accounting, but the Appellate Division of the Second Judicial Department found a pattern of behavior it said “showed a wholesale abandonment of his fiduciary responsibilities and a failure to abide by the rules governing the maintenance of an attorney escrow account for several years.“
The court also said, “The amount of client and/or third-party funds misappropriated in this matter is staggering and the respondent’s testimony is replete with attempts to shift blame to others despite his fiduciary duty to safeguard his clients’ and/or third party funds and ensure proper escrow account management.”
An aggravating factor in the Court’s view was that Kunstlinger had previously been warned in a Letter of Advisement of deficiencies in his escrow accounting.
In 28 distinct instances, Kunstlinger paid out money from an escrow account when there were no correlating funds on account – meaning the money disbursed was either not in the account or was not yet available for disbursement at the time checks were written against those funds.
In one instance, two checks issued from Kunstlinger’s escrow account, totaling $11,176.30, were presented for payment when no correlating funds were on deposit. Both checks were dishonored.
A referee’s report and the court opinion detail 28 cases where Kunstlinger misappropriated or mishandled funds entrusted to him as a fiduciary incident to his practice of law in 28 client real estate/refinance matters.
Kunstlinger was charged with engaging in conduct that adversely reflects on his fitness as a lawyer, commingling personal funds with funds entrusted to him as a fiduciary, failing to maintain the required bookkeeping records for his escrow account and failing to make accurate and timely entries of all financial transactions in his escrow account, and failing to regularly reconcile his escrow account.
Other charges include failing to maintain the proper title for an escrow account, failing to enter into written retainer agreements with seven clients where his fee was greater than $3,000, and failing to secure written conflict waivers where he represented more than one side in a transaction.
The Grievance Committee found that Kunstlinger had a practice of commingling his legal fees with fiduciary funds in more than 30 matters for as few as 22 days to as many as 912 days.
Kunstlinger said that he began his law firm in 1996 and focused his law practice in the areas of real estate closings, bank closings, transactional work, and lender work. By 2023, his law firm was handling 60 to 70 closings a month.
He attributed the errors to the volume of real estate closings his firm undertook and to human error, saying that given the fast-paced nature of his work and the pressure, “sometimes you just make—make human errors.”
He characterized the charges of misappropriation as “outlier” cases where “it was Friday afternoon or my secretary who was supposed to transfer it didn’t.” He also blamed his bookkeeper.
In his defense, Kunstlinger called one witness to testify about the remedial measures taken and three character witnesses. He provided 18 character letters in support of his honesty, diligence, and integrity.
To support his good character and community involvement, Kunstlinger testified that he is actively involved in his synagogue, served as a board member of a Hatzoloh, and served as a board member of Tomchei Shabbos.
The Appellate Court found that Kunstlinger’s misconduct showed “a pattern of disregarding his fiduciary duties and adopting a mindset of willful ignorance until he was forced to acknowledge he had a ‘global problem’ during the Grievance Committee’s extensive investigation.”
It found that under the totality of the circumstances, Kunstlinger’s conduct warranted a suspension from the practice of law for a period of five years.
Kunstlinger is eligible to apply for reinstatement after February 28, 2031.
