Helping Client Hide Assets, Misusing Them Brings Lawyer Disbarment
A special master, Bernard Shihar, deemed it unclear whether the funds were transferred under a legitimate attorney-client relationship and urged a one-year suspension.
The OAE pushed for disbarment, but five of the DRB's eight members recommended a three-year suspension. The other three voted for disbarment.
Malvone "was guilty of theft from the [money's] true owner, but not of knowing misappropriation," the DRB majority said. "The difference between knowing misappropriation and theft is critical because not every theft committed by attorneys results in disbarment."
The OAE sought Supreme Court review. When the case was argued last February, both the OAE and the court focused on the harm to King's wife and the fraud on the divorce court, according to the attorneys who argued.
The divided court issued no opinion. Justices Barry Albin and Helen Hoens and Judges Mary Cuff and Ariel Rodriguez were for disbarment, while Chief Justice Stuart Rabner and Justices Jaynee LaVecchia and Anne Patterson favored suspension.
"Tough cases make bad law," says Marc Garfinkle, a Morristown lawyer not involved in the case, whose practice focuses on professional discipline.
"The lesson going forward is…misappropriation is going to be broadly construed when attorneys have custody of a client's asset," Garfinkle adds.
"There was a nefarious scheme going on, but it wasn't to steal the money. The troubling part is, there wasn't clear…evidence about what he was supposed to do with the money in the interim."
Malvone did not return a call.
"He shouldn't have done it and he knows it," says his lawyer, Milltown solo James Curran. "Lawyers should not get involved in any unscrupulous activity, because you're going to get disbarred," Curran says, adding that whether or not pilfered funds are held in trust or a personal account makes no difference.