Fort Lauderdale attorney denies Ponzi scheme-like conduct and misappropriating $40,000
A suspended Fort Lauderdale attorney admits to telling a client an action had been filed in a foreclosure matter when it hadn't and not fully complying with a subpoena in an ensuing Florida Bar investigation.
But, Marc Brown denies misappropriating $40,027 and that the money movement in his accounts was "similar to that of a Ponzi scheme."
The Ponzi comparison came from the Florida Bar's petition for emergency suspension of Brown, which the state Supreme Court granted on Oct. 1.
"Moreover, [Brown] has engaged in a pattern of misrepresentation designed to conceal his conversion of client funds," the Florida Bar stated. "Finally, (he) has failed to fully comply with a duly issued subpoena for required trust account records, the result of which has been to thwart certain aspects of the bar's investigation."
Brown made his admissions and denials in his response to the Bar's petition.
Brown was admitted to the Bar in 2006. This is the first disciplinary action against him.
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A filing that wasn't filed
There's no dispute between the Bar and Brown that Ronald Pemberton, the lienholder in a foreclosure case, hired Brown to represent him. As settlement negotiations began, Pemberton agreed that Brown would hold money in trust as an escrow agent. They had an agreement that if Pemberton and the borrower couldn't come to an agreement about the money in escrow, Brown would file what's called an "interpleader action."
An interpleader action, as explained by Jacksonville attorney Austin Hamilton on the Jimerson Burr website, is a lawsuit filed by the escrow agent allowing the agent to put the money in the court's registry.
"The holder of the binder deposit will name both the buyer and the seller in that lawsuit and then will ask the court to allow the escrow agent to get out of the lawsuit," Hamilton wrote. "Provided the escrow agent does not have any other liability to the buyer or seller, the court generally allows the escrow agent out of the lawsuit.
"The buyer and seller will remain in the lawsuit and generally make crossclaims against each other, each explaining why they are entitled to the binder deposit," he continues. "From that point, the buyer and seller will litigate the issue of who is entitled to the binder deposit."
When it came time for Brown to file the interpleader action, on Jan. 30, he went Pemberton a copy of an interpleader complaint with the note "Here is a copy of what was filed..."
But when Pemberton checked with the Broward clerk of courts, he learned the action hadn't been filed. Pemberton filed a Florida Bar grievance on April 2. Brown filed the interpleader action on July 9.
Brown's answer to the Florida Bar's suspension filing admits all of the above, but denies this was "conduct involving dishonesty, fraud, deceit or misrepresentation."
Brown also denied what the Bar said its auditor found concerning Pemberton's money, which is what follows.
Money movement
The Bar said, on Nov. 2, 2023, $55,164 "pertaining to Pemberton" was wired into the escrow account of Brown's MEB Title Company, which operates as All Florida Title Company, $40,027 of which was meant for the interpleader action.
But from Nov. 2, 2023, through April 17, 2024, "funds identified as pertaining to Pemberton's legal matter" were among $93,500 that left Brown's trust account in nine transactions. None of those, the Bar said, had to do with the interpleader action.
In fact, the Bar said, $78,364 of that $93,500 was deposited into All Florida Title Company's operating account over seven transactions starting from Dec. 15, 2023, and left the operating account by May 20.
"Consequently, [Brown] had misappropriated at least $40,027 of funds pertaining to the Pemberton matter by removing them from the title company escrow account," the Bar petition said, "transferring them to the title company operating account and then using the funds for purposes unrelated to the matter for which they were entrusted."
On July 16, from another firm account, the Bar auditor said, there was a $40,027 wire transfer described as "Pemberton" between two other Brown-controlled accounts.
"In fact, these funds were unrelated to the Pemberton matter, but were transferred in order to have funds available for the Pemberton interpleaser action for which [Brown] previously had misappropriated the designated funds," the petition said. "[Brown's] forgoing conduct is similar to that of a Ponzi scheme..."
