In the Matter of Frank J. Cozzarelli (074742) ( 2016 )


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  •                                                      SYLLABUS
    
    (This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
    convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
    interest of brevity, portions of any opinion may not have been summarized.)
    
                     In the Matter of Frank J. Cozzarelli, An Attorney at Law (D-151-13) (074742)
    
    Argued October 21, 2014 -- Remanded October 30, 2014 -- Reargued November 10, 2015 -- Decided May 2,
    2016
    
    PER CURIAM
    
             In this attorney disciplinary matter, the Court considers the appropriate level of discipline for respondent
    Frank J. Cozzarelli, who committed misconduct involving the misappropriation of client and escrow funds.
    
             Since 1998, respondent had been intermittently under investigation by the United States Attorney’s Office
    for income tax evasion. In connection with his role as treasurer of a fraudulent investment fund, respondent was
    indicted on September 21, 2004, after which he suffered a breakdown. On September 26, he was voluntarily
    admitted to an inpatient psychiatric unit, from which he was discharged on October 4, the day of his arraignment. In
    January 2005, respondent pled guilty to income tax evasion and was sentenced to four months in jail, followed by
    four months of house arrest and a probationary term. He was incarcerated from June through October 2005.
    
              Shortly before the indictment, on August 2, 2004, Office of Attorney Ethics (OAE) Auditor Mimi Lakind
    notified respondent that a random audit would occur at his office at the end of that month, encompassing a two-year
    period prior to the audit date. The audit ultimately commenced in November 2004, after respondent had been
    released from inpatient care and while he remained under psychiatric care. According to Lakind, respondent
    maintained an active practice, including many real estate transactions per month and an active chancery docket. She
    asserted that respondent initially did not provide her with any recordkeeping documents, other than some records
    prepared by a family member who was a certified public accountant. In light of the criminal matter, Lakind
    postponed the audit. Although she requested additional documents, she never received them. Respondent was
    temporarily suspended in February 2005 following his guilty plea, at which time Lakind proceeded to reconstruct
    respondent’s records based on subpoenaed bank records and other documents.
    
              A demand audit ultimately resumed on December 18, 2008, at which time respondent presented Lakind
    with “new records” he had prepared on an Excel spreadsheet. According to Lakind, these materials were not
    reflective of the records of which she was aware in November 2004. Significantly, Lakind explained that, in
    addition to respondent’s recordkeeping issues, she had uncovered “a systematic and continuing invasion of client
    trust funds for respondent’s law office and personal expenditures.” Respondent was charged with several counts of
    knowing misappropriation for: (1) misappropriating $112,728.93 in client funds for personal purposes; (2)
    improperly transferring funds from one client’s trust account to the account of another unrelated client; and (3)
    repeated occurrences of borrowing against trust accounts for personal purposes and to replenish other accounts.
    
              At the disciplinary hearing, respondent, citing In re Jacob, 
    95 N.J. 132
     (1984), maintained that, in light of
    his debilitating depression, he should be absolved of improprieties or granted mitigation in terms of the quantum of
    discipline imposed. Respondent’s psychiatrist testified that, at the time of the audit, respondent was not functioning
    efficiently and was not competent to manage the trust funds. The OAE’s expert disagreed, asserting that
    respondent’s mental state did not support a finding of legal insanity, or any of the other conditions that would satisfy
    the Jacob standard. The special master rejected respondent’s Jacob defense, concluded that he knowingly
    misappropriated client funds, and recommended disbarment. Following a de novo review, the DRB concurred that
    the proofs were sufficient to establish knowing misappropriation on four of the nine charges. Like the special
    master, the DRB rejected respondent’s Jacob defense, concluding that his major depression did not satisfy the
    requisite standard for legal insanity and noting that he continued to function both personally and professionally
    during the time he misappropriated funds. Consequently, the DRB determined that respondent should be disbarred.
    
            The Court ordered respondent to show cause on the disbarment recommendation and, following argument
    on the matter, remanded to the DRB for a more full analysis of the evidence submitted in connection with
    respondent’s Jacob defense. The Court retained jurisdiction.
    
            On April 20, 2015, the DRB reaffirmed its recommendation that respondent be disbarred for the knowing
    misappropriation of escrow and client funds. The DRB explained that the Jacob standard has been reiterated and
    applied by the Court, in In re Greenberg, 
    155 N.J. 138
    , 156-59 (1998), and other matters, functioning as the
    equivalent of the M’Naghten standard, the standard for legal insanity under criminal law. The DRB further
    explained that the Court has often referred to the Jacob standard as the inability to distinguish between right and
    wrong or to understand the nature and quality of one’s acts, and not as an impairment of judgment. With respect to
    respondent’s misconduct, the DRB noted that there was considerable evidence demonstrating that he had not
    suffered a loss of competency or will such that his knowing misconduct could be excused. Specifically, he handled
    numerous professional and personal matters while managing to conceal the federal criminal investigation from his
    wife. The DRB explained that depression does not satisfy the Jacob standard unless it deprived the attorney of the
    knowledge that he was taking funds that did not belong to him and that he was not authorized to take.
    
    HELD: There is clear and convincing evidence the respondent knowingly misappropriated client funds, and that his
    mental illness did not cause him to suffer a loss of competency, comprehension or will that excused his misconduct
    when it occurred. Respondent is not entitled to mitigation and shall be disbarred.
    
    1. In New Jersey, disbarment is permanent. R. 1:20-15A(a)(1). An attorney who knowingly misappropriates funds
    from a client is subject to disbarment without any practical prospect of consideration of mitigating factors or
    restoration upon a showing of reformation. In re Wilson, 
    81 N.J. 451
     (1979). Misappropriating attorneys claiming
    to be afflicted with identifiable disorders, such as mental illness, have not swayed the Court from imposing
    disbarment. (pp. 18-19)
    
    2. In Jacob, supra, the Court rejected the argument that an attorney’s medical condition exculpated his
    misappropriations, emphasizing that it was looking for a causal connection between the condition and the financial
    misdeed. The Court further stated that the attorney had not demonstrated that he had suffered a loss of competency,
    comprehension, or will of a magnitude that could excuse his knowing egregious misconduct. Although these
    comments reference a standard that traces language used in diminished capacity cases, several subsequent cases in
    which a so-called Jacob defense was advanced collapsed the standard into shorthand in which it is described
    essentially as an ability to discern right from wrong. In Greenberg, supra, the Court rejected an attorney’s asserted
    defense that his depression caused an impairment of judgment that should allow him to avoid disbarment for stealing
    law firm funds. The Court explained that the attorney failed to demonstrate that he could not appreciate the
    difference between right and wrong or understand the nature and quality of his acts. (pp. 19-22)
    
    3. The DRB applied Jacob, Greenberg, and other cases to the matter at hand, concluding that the Jacob standard
    requires either an inability to distinguish between right and wrong or to understand the nature and quality of one’s
    acts. Those two expressions of understanding can be likened to the standard for legal insanity, under the M’Naghten
    test, and the standard for diminished legal responsibility under principles of diminished capacity or the statutory
    defense of intoxication. While the Jacob standard may not be a model of clarity, it nevertheless expresses the
    Court’s willingness to consider defenses that would negate the mental state to act purposely. Thus, a mental illness
    that impairs the mind and deprives the attorney of the ability to act purposely or knowingly, or to appreciate the
    nature and quality of the act he was doing, or to distinguish between right and wrong, will serve as a defense to
    attorney misconduct and should be considered in connection with excusing wrongful conduct by an attorney, or
    when mitigation of a disciplinary penalty is appropriate to consider under New Jersey’s disciplinary jurisprudence.
    (pp. 22-23)
    
    4. Here, the experts agreed that respondent did not have a mental illness that met any of the aforesaid three defenses
    that negate the mental state to act knowingly. While the Court agrees with respondent that the Jacob standard is not
    restricted to making a showing that is equivalent to the M’Naghten standard for legal insanity under criminal law, it
    rejects respondent’s contention that the DRB’s decision is undermined by its focus on the legal insanity standard.
    The DRB correctly concluded that the OAE has proven knowing misappropriation by clear and convincing
    evidence, and the Court concludes that respondent’s misdeeds were not aberrational. Respondent has not proven a
    causal connection between his mental illness and his acts of misappropriation, and the Court is not persuaded that he
    is entitled to mitigation of the normal penalty of disbarment due to his severe depression. On this record, as
    amplified by the supplemental decision of the DRB, respondent committed knowing misappropriation.
    Consequently, respondent is disbarred. (pp. 23-26)
    
             So Ordered.
    
           JUSTICES LaVECCHIA, ALBIN, and PATTERSON, and JUDGES CUFF and FUENTES (both
    temporarily assigned) join in this PER CURIAM opinion. CHIEF JUSTICE RABNER and JUSTICES
    FERNANDEZ-VINA and SOLOMON did not participate.
    
    
    
                                                              2
                                          SUPREME COURT OF NEW JERSEY
                                           D-151 September Term 2013
                                                     074742
    
    
    IN THE MATTER OF
    
    FRANK J. COZZARELLI,
    
    An Attorney at Law
    
    
    
             Argued October 21, 2014 – Remanded October
             30, 2014 - Reargued November 10, 2015 –
             Decided May 2, 2016
    
             On an Order to show cause why respondent
             should not be disbarred or otherwise
             disciplined.
    
             Maureen G. Bauman, Deputy Ethics Counsel,
             argued the cause on behalf of the Office of
             Attorney Ethics.
    
             S.M. Chris Franzblau argued the cause for
             respondent (Franzblau Dratch, attorneys; Mr.
             Franzblau, Stephen N. Dratch and Frank J.
             Cozzarelli, on the briefs).
    
    
    PER CURIAM
    
        Respondent, Frank J. Cozzarelli, was recommended for
    
    disbarment in a decision by the Disciplinary Review Board (DRB).
    
    On the return date of an Order to Show Cause issued by this
    
    Court as to why he should not be disbarred for the knowing
    
    misappropriation of client and escrow funds, respondent
    
    contended that he presented mental illness evidence that had not
    
    received proper consideration by the DRB, under In re Jacob, 95
    
                                    
    1 N.J. 132
     (1984).   Because we were concerned about respondent’s
    
    assertion that his Jacob defense was not properly considered and
    
    addressed by the DRB, we extended these already lengthy
    
    proceedings by remanding the matter to the DRB for fuller
    
    examination and explanation, including but not requiring the
    
    possibility of further evidentiary proceedings.     We retained
    
    jurisdiction.
    
        This matter is presently back before us following the DRB’s
    
    issuance of a supplemental decision that, in greater detail,
    
    explains its adherence to its recommendation that respondent
    
    should be disbarred.   We have had re-briefing and re-argument
    
    following issuance of the DRB’s supplemental decision.
    
        Before this Court, respondent continues to maintain that
    
    the DRB has misapplied Jacob.   Respondent argues that he was
    
    entitled to have his Jacob defense of mental illness considered
    
    in connection with mitigation of penalty as well as for purposes
    
    of providing a defense to the charged misconduct.     For the
    
    reasons expressed herein, we conclude that respondent’s
    
    arguments have received full and fair consideration.
    
        Based on the proofs, we agree with the DRB that there is
    
    clear and convincing evidence of knowing misappropriation of
    
    client funds, that respondent’s mental illness of depression did
    
    not cause him to suffer a loss of competency, comprehension or
    
    will that excused the acts of misappropriation when they
    
    
                                     2
    occurred, and that he is not entitled to mitigation of our
    
    almost-invariable penalty of disbarment for such egregious
    
    misconduct based on the depression he undoubtedly suffered in
    
    connection with his federal investigation, indictment, plea, and
    
    sentence.   We therefore accept the DRB’s recommendations and
    
    hold that respondent shall be disbarred based on the proof of
    
    knowing misappropriation of client and escrow funds.
    
                                   I.
    
        In light of the extended history to this matter, we will
    
    summarize the salient procedural and factual aspects to this
    
    misappropriation-based disciplinary action.
    
        Following a full hearing culminating in a recommendation of
    
    disbarment by an appointed special master, the DRB unanimously
    
    recommended respondent’s disbarment for the knowing
    
    misappropriation of client and escrow funds charged in counts
    
    three, four, eight, and nine of the Office of Attorney Ethics’s
    
    (OAE) complaint, and for violation of RPC 8.4(c) (conduct
    
    involving dishonesty, fraud, deceit or misrepresentation) and
    
    RPC 8.4(d) (conduct that is prejudicial to the administration of
    
    justice).   The charges arose out of audit irregularities,
    
    including trust account shortages that were uncovered during a
    
    random audit, which turned into a demand audit, conducted by the
    
    OAE between November 22, 2004 and December 18, 2008.   The
    
    lengthy duration of that audit needs to be placed in context.
    
    
                                     3
         On August 2, 2004, OAE Auditor Mimi Lakind notified
    
    respondent that a random audit would occur at his office at the
    
    end of that month and would encompass a two-year period prior to
    
    the audit date.     The audit was rescheduled twice at respondent’s
    
    request.   The audit did not commence until November 2004 and
    
    took a long time to bring to conclusion.1
    
         According to respondent, when the audit began in November
    
    2004, he was “not functioning very well” and was under
    
    psychiatric care.     In fact, when respondent learned that an
    
    attorney ethics audit would take place, he was weeks away from
    
    being indicted by the United States Attorney’s Office for income
    
    tax evasion, for which he had been intermittently under
    
    investigation from 1998 until his indictment on September 21,
    
    2004 in connection with his role as treasurer of a fraudulent
    
    investment fund.
    
    
    
    1 In the midst of responding to the OAE auditor’s requests for
    documents and information in connection with the audit,
    respondent was temporarily suspended on September 24, 2005, and
    the audit was indefinitely postponed. That suspension from the
    practice of law was due to respondent’s entry of a guilty plea
    to one count of income tax evasion, in violation of 26 U.S.C. §
    7201. In re Cozzarelli, 
    182 N.J. 387
     (2005). On March 9, 2006,
    well before the audit was brought to conclusion, the thirteen-
    month temporary suspension from active practice that respondent
    had served was determined to constitute sufficient attorney
    discipline for the federal tax evasion offense, In re
    Cozzarelli, 
    186 N.J. 156
     (2006); thereafter, respondent was
    reinstated to practice in January 2007. See In re Cozzarelli,
    
    189 N.J. 209
     (2007). He has remained in active status
    throughout these proceedings.
    
    
                                       4
         Although not squarely germane to this matter, a brief
    
    history on what has been referred to by the DRB as “the Mallet
    
    Investment” is necessary.   The special master report described
    
    the Mallet Investment venture succinctly as follows:
    
              Through various persons, Respondent was
              contacted by an Edward Mallet, with whom
              Respondent developed a friendship. Mr. Mallet
              involved the Respondent in the development of
              schemes to create an Investment venture, and
              to that end ultimately [provided] Respondent
              with more than $10,000,000.00 ostensibly in
              order to obtain a fixed place of business for
              an “investment company” and to establish
              banking connections in the United States and
              Europe to attract investors and establish a
              “hedge fund.”   Other parties to the scheme
              were introduced by Mr. Mallet, and it is
              reasonable to infer that Mr. Mallet intended,
              and did in fact use the Respondent as a “fall
              guy” by convincing Respondent to accept and
              handle monies, the source of which has not
              been established, and to transfer those funds
              to persons designated by Mr. Mallet, in some
              way to cause their disappearance.
    
    Although the special master’s report noted that it was “clear . .
    
    . that Respondent had neither the knowledge [n]or experience to
    
    have concocted whatever scheme Mr. Mallet was engaged in,”
    
    respondent’s income tax evasion conviction arose from his
    
    failure to pay taxes on profits generated by those investments.
    
         Based on the record as presented by respondent and as
    
    supplemented by his medical expert, by September 2004,
    
    respondent had known of the potential indictment for several
    
    months, was in a state of anxiety, and ultimately suffered a
    
    
    
                                    5
    breakdown when he was informed that a federal grand jury had
    
    indicted him.    During the days spanning September 21 through
    
    September 26, 2004, respondent formulated a suicide plan and
    
    absented himself from family and friends to execute it,
    
    travelling in and around New Jersey, stopping in New York City,
    
    Atlantic City, and Philadelphia.       Eventually he abandoned his
    
    suicide plan, reconnected with family and an attorney, and
    
    determined to face the criminal charges.       Respondent had not
    
    told his family about the potential criminal charges beforehand.
    
         With familial, legal, and medical assistance,2 on September
    
    26, 2004, respondent was voluntarily admitted to an inpatient
    
    psychiatric unit in Valley Hospital.      He was discharged on
    
    October 4, 2004.   On the day of his discharge, respondent was
    
    arraigned in the United States District Court for the District
    
    of New Jersey.   He pleaded guilty in January 2005 to income tax
    
    evasion and was sentenced to four months in jail, followed by
    
    four months of house arrest and a probationary term.      He was
    
    incarcerated from June through October 2005.3
    
    
    2 Respondent’s admitting and treating psychiatrist, Dr. Steven S.
    Simring, testified in this matter as a fact witness and as
    respondent’s expert.
    
    3 In sentencing respondent, the federal district court commented
    on the number of supportive letters that were submitted on
    respondent’s behalf and recounted respondent’s professional
    success and contributions to the community. The court expressed
    hope that respondent would be restored to the practice of law
    where he could continue to contribute. Those comments were
    
                                       6
        The audit that OAE Auditor Lakind attempted to perform in
    
    November 2004 was therefore conducted after respondent had been
    
    released from inpatient care and while he remained under
    
    psychiatric care.   According to respondent, he had counsel for
    
    some period during audit preparations but was unable to pay for
    
    ongoing representation.   Assistance came from family members and
    
    others who helped to secure documents that had been requested by
    
    the OAE in advance of the audit.       In Lakind’s testimony at the
    
    hearing before the special master, she said that respondent
    
    initially did not provide her with any recordkeeping documents
    
    other than some records prepared by a family member who was a
    
    certified public accountant; those did not detail whose money
    
    was whose among the various clients and accounts for which
    
    respondent was responsible.   According to Lakind, respondent had
    
    maintained an active practice that involved many real estate
    
    
    
    
    relied upon by respondent in this matter and we give them
    favorable acknowledgment. However, they were expressed based on
    knowledge of only the federal conviction for tax evasion, which
    more likely than not results in suspensions from practice, not
    disbarment. See, e.g., In re Rakov, 
    155 N.J. 593
     (1998)
    (imposing two-year suspension for attempted income tax
    evasion); In re Gillespie, 
    124 N.J. 81
     (1991) (three-year
    suspension for aiding and assisting in presentation of false
    corporate tax returns); In re Nedick, 
    122 N.J. 96
     (1991)
    (imposing two-year suspension for tax evasion mitigated by
    cooperation with federal authorities); cf. In re Turco, 
    66 N.J. 50
     (1974) (imposing disbarment for tax fraud). The
    misappropriation charges were not yet in the picture as the
    audit had been postponed while respondent addressed his federal
    criminal charges.
    
                                       7
    transactions per month and included an active chancery docket.
    
    We also note that respondent held numerous court appointments as
    
    a fiduciary.4   Lakind testified that she also was provided with a
    
    disc that included a voluminous list purporting to identify all
    
    of the files in respondent’s office.
    
         Concerned about the level of stress that respondent was
    
    exhibiting during the November 2004 audit proceeding, Lakind
    
    informed respondent that the audit would be postponed so that
    
    respondent could focus on his federal criminal matter.   On
    
    December 10, 2004, respondent was notified that the audit would
    
    resume in February 2005.   Lakind testified that she requested
    
    additional records but never received them.   Respondent was
    
    temporarily suspended by February 2005 as a result of the guilty
    
    plea in federal district court.   Lakind testified that she
    
    proceeded to reconstruct respondent’s records, preparing
    
    spreadsheets based on subpoenaed bank records and documents
    
    received from succeeding trustees on respondent’s former
    
    fiduciary accounts, information listed on checks, and other
    
    documents.   Lakind added that, following respondent’s
    
    
    4 In connection with respondent’s inability to provide Lakind
    with any recordkeeping documents in November 2004, we note that
    shortly after his arraignment in federal court, respondent was
    removed from his many court-appointed fiduciary positions and
    was faced with the obligation to turn over and account for the
    contents of funds that he had held as a fiduciary. The absence
    of respondent’s recordkeeping files is sorely troubling and is
    discussed later.
    
                                      8
    reinstatement to the practice of law, she received a Quickbooks
    
    form from respondent’s accountant, Samuel Fisher, which
    
    substantially agreed with her reconstructed figures.   Respondent
    
    himself informed Lakind that he could not produce any additional
    
    records due to the disarray of his professional belongings while
    
    he was incarcerated.5
    
         When a demand audit resumed on the substantially later date
    
    of December 18, 2008, respondent presented Lakind with “new
    
    records” he had prepared on an Excel spreadsheet; however,
    
    according to Lakind, those materials were not reflective of the
    
    records she was aware of in November 2004.
    
         More problematic for respondent, Lakind testified that in
    
    addition to the recordkeeping issues uncovered during the audit,
    
    she uncovered “a systematic and continuing invasion of client
    
    trust funds for respondent’s law office and personal
    
    expenditures.”   Those patterns, she testified, revealed
    
    shortages in his accounts.   According to Lakind’s testimony,
    
              beginning    with    his   own    accountant’s
              reconciliation as of December 31st, 2003,
              there were shortages in the account. And then
              I found that money from the fiduciary accounts
              went into the Trust Account and were used to
              pay other clients.
    
    5 Respondent testified that his brother, who was his landlord,
    took back his office space to lease it to a new tenant.
    Respondent’s belongings were removed to accomplish the re-
    leasing. Although respondent had packed and stored his records
    in an onsite trailer, he claimed the records became disarrayed
    or destroyed following the demolition work that took place.
    
                                     9
                  The   critical   time  came   when  Mr.
             Cozzarelli had to turn over a number of
             fiduciary accounts to other attorneys or
             successor trustees or administrators, and so
             the amounts that were held in the Trust
             Account had to be paid out and there was
             insufficient money to pay them.
    
                  And I found that just before the payment
             of each matter deposits were made from
             personal funds of Respondent equal to clear
             the checks. In all that time, and with all
             those shortages, not a single check, not one,
             was presented on insufficient funds and either
             paid or dishonored by the bank, none.
    
        When asked if she would have expected no check to bounce if
    
    respondent’s records were in such poor condition that he could
    
    not keep track of financial matters, Lakind explained that she
    
    would have expected the opposite of what she in fact found.
    
                  That’s usually the best indication where
             an attorney has no idea what’s in there, will
             write a check thinking he’s probably got the
             money in there.      That’s why we have the
             overdraft notification program, it’s exactly
             why it was put into effect, so that where an
             attorney, either through negligence or through
             design, does not have enough money and a check
             is presented, whether it’s paid or not, even
             if it’s paid, we are notified by the bank that
             a   Trust  Account    was  presented   against
             insufficient funds and we immediately contact
             the attorney and we ask for proof of what
             happened and why that happened.
    
                  And in all this time I never found a
             single Trust Account bank statement in which
             there was an overdraft balance or [that a
             check written for an amount in excess of the
             account’s balance was returned]. . . . There
             was always sufficient funds at the moment a
             check was presented for the check to clear.
    
    
                                   10
        Following the conclusion of the demand audit, on December
    
    18, 2008, respondent was charged with several counts of knowing
    
    misappropriation for:   (1) misappropriation of $112,728.93 in
    
    client funds for personal purposes; (2) improper transfer of
    
    funds from one client’s trust account to the account of another
    
    unrelated client; and (3) repeated occurrences of borrowing
    
    against trust accounts for personal purposes, including for fees
    
    he believed he was owed and to replenish other trust accounts.
    
        At the disciplinary hearing, respondent maintained that,
    
    because he suffered from the debilitating mental illness of
    
    severe depression, he should be absolved of improprieties or at
    
    the least granted mitigation in terms of the quantum of
    
    discipline to be imposed, citing Jacob, supra, 
    95 N.J. 132
    .      Dr.
    
    Simring, a board-certified psychiatrist, testified on
    
    respondent’s behalf as an expert and as his treating physician.
    
    Dr. Simring opined that respondent was not functioning
    
    efficiently or rationally and was not competent to manage the
    
    trust funds at the time of the audit.   The OAE’s expert, board-
    
    certified psychiatrist Daniel Paul Greenfield, M.D., testified
    
    that, during 2003-2005, respondent’s mental state did not
    
    support a finding of legal insanity, or any of the other
    
    conditions that would satisfy the Jacob standard (mentioning
    
    also intoxication or diminished capacity as among those other
    
    conditions that could provide a form of Jacob defense but that
    
    
                                    11
    were inapplicable to the present matter).   Dr. Greenfield
    
    expressed his opinion that respondent’s depression was
    
    situational and that he was functional at the time when he
    
    engaged in the unethical conduct that formed the basis for the
    
    disciplinary charges against him.
    
        The special master found that respondent knowingly
    
    misappropriated client funds.   He rejected respondent’s Jacob
    
    defense, finding that there was no medical evidence that
    
    respondent suffered from a mental illness sufficient to excuse
    
    his misappropriating conduct.   As noted earlier, the special
    
    master’s report recommended respondent’s disbarment as the only
    
    appropriate discipline for his misappropriation of client funds.
    
        Following a de novo review, the DRB determined that the
    
    evidence clearly and convincingly established that respondent
    
    was guilty of knowing misappropriation, although not on all
    
    counts.   It found the proofs sufficient, under the clear and
    
    convincing standard, on four out of nine of the charges.
    
        The DRB’s August 8, 2014, decision recounts the basis for
    
    its findings in full but, in sum, the DRB found as follows.
    
    With respect to count three, involving the Arthur R. Haberman
    
    Irrevocable Trust, the DRB concluded that the proofs established
    
    that respondent knowingly misappropriated $100,000 from that
    
    trust on November 3, 2004, to cover a shortage in another trust
    
    that respondent had been managing until he was removed,
    
    
                                    12
    following his arraignment, from his court-appointed position of
    
    fiscal agent and replaced by another attorney.     Similarly, with
    
    respect to count four, involving the Barrillas-to-Gencarelli
    
    real estate transaction, the DRB found that respondent failed to
    
    maintain the necessary funds in his trust account following the
    
    closing, having used $100,000 of the funds to reimburse the
    
    Haberman trust on February, 11, 2005.     With respect to count
    
    eight, involving the Boyko Trust, the DRB determined that the
    
    evidence showed that respondent was not authorized to transfer,
    
    on May 5, 2004, $50,000 from the trust to his business account
    
    to pay legal fees in his criminal case.     Finally, on count nine
    
    involving the Sciarrillo estate, the DRB determined that
    
    respondent provided no evidence to support his claim that the
    
    estate owed him $200,000, which he took from the estate between
    
    September 27, 2004 and November 1, 2005.
    
        The DRB also rejected respondent’s Jacob defense,
    
    concluding that respondent’s diagnosis of major depression did
    
    not satisfy the requisite standard for legal insanity to obtain
    
    relief under Jacob.   To the DRB it was significant that, despite
    
    his depression, respondent continued to function personally and
    
    professionally and that, during that time, he systematically
    
    engaged in “lapping,” or taking one client’s funds to pay
    
    obligations owed to another, while ensuring that the funds were
    
    replenished when it came time to repay the first client.
    
    
                                    13
    Consequently, the DRB determined that respondent should be
    
    disbarred.
    
        We issued an Order to Show Cause on the disbarment
    
    recommendation and, following argument on the matter, remanded
    
    to the DRB
    
             with instruction that the Board more fully
             assess the evidence submitted in connection
             with respondent’s proffered defense pursuant
             to In re Jacob, 
    95 N.J. 132
     (1984), and provide
             a detailed explanation of whether or not
             respondent has met the standard set forth in
             Jacob. The Disciplinary Review Board retains
             the authority to remand the matter to a
             special ethics master if it deems such a
             course warranted.
    
    We also retained jurisdiction.
    
        In a decision dated April 20, 2015, the DRB reaffirmed its
    
    recommendation that respondent be disbarred for the knowing
    
    misappropriation of escrow and client funds.   The DRB addressed
    
    in detail its reasons for rejecting respondent’s argument that,
    
    under Jacob, he should be excused or have his penalty mitigated
    
    due to his mental illness.
    
        First, the DRB addressed the Jacob standard.   The DRB
    
    quoted the standard first articulated in Jacob and noted that it
    
    has been reiterated and applied by this Court, in In re
    
    Greenberg, 
    155 N.J. 138
    , 156-59 (1998), and other matters,
    
    
    
    
                                     14
    functioning as the equivalent of “the M’Naghten standard.”6   The
    
    DRB decision recited numerous occasions on which this Court has
    
    “referred to the Jacob standard as the inability to distinguish
    
    between right and wrong or to understand the nature and quality
    
    of one’s acts.”   The DRB commented that neither the Jacob
    
    standard nor the M’Naghten standard “is satisfied by a
    
    demonstration of an ‘impairment of judgment.’”
    
        Second, the DRB detailed why the evidence offered by
    
    respondent failed the Jacob test as the DRB understood it.
    
    Critically important, that analysis bears repeating in
    
    full:
    
                  [N]either respondent nor [Dr.] Simring,
             his expert, offered any evidence to support
             the conclusion that, at the time of the
             knowing     misappropriations,      respondent
             “suffered a loss of competency, comprehension
             or will of a magnitude that could excuse or
             mitigate egregious misconduct that was clearly
             knowing, volitional and purposeful.” Jacob,
             supra, 95 N.J. at 137. In respondent’s only
             instance of knowing misappropriation that
             preceded the September 2004 indictment, no
             evidence established that, at the time (May 5,
             2004), he was anything more than depressed.
             Respondent claimed that he was “in such a deep
             depression that [he] couldn’t figure out what
             was going on.”      We note that there is
             considerable evidence to the contrary.      He
    
    6 M’Naghten’s Case, 8 Eng. Rep. 718 (H.L. 1843); see also State
    v. Breakiron, 
    108 N.J. 591
    , 616 (1987) (“[T]he insanity defense
    as modified in New Jersey is strictly limited to the M’Naghten
    principle of whether or not the defendant was either unable to
    know the nature and quality of the act he was doing . . . or, if
    he did know it, that he did not know that what he was doing was
    wrong.”).
    
                                   15
             handled quite a few personal and professional
             matters, during that time, and he was able to
             conduct himself in such a fashion that his
             wife had no suspicion that he was under a
             federal criminal investigation. Moreover, the
             inability to figure out “what is going on” is
             a far cry from not being able to distinguish
             between right and wrong.
    
                  As   stated    previously,    depression,
             “however severe,” is insufficient to satisfy
             the Jacob standard, unless the condition
             deprived the attorney of the knowledge that he
             was taking funds that did not belong to him
             and that he was not authorized to do so.
             Greenberg, supra, 155 N.J. at 158-59. No such
             showing was established in this case.
    
             . . . .
    
                  Finally,    we   note   that,    despite
             respondent’s insistence that his conduct was
             an aberration and that he has since reformed,
             the record shows otherwise. As we found, as
             late as September 2008, respondent gave the
             OAE a ledger that he had prepared for [a]
             trust, after the fact.   That ledger falsely
             showed that the $50,000 that respondent had
             paid to his lawyer in the federal criminal
             matter had gone to a beneficiary of the trust
             instead.    Thus, nearly four years after
             respondent’s so-called breakdown, three years
             after his release from incarceration for
             having committed a felony, and despite his
             successful treatment with [Dr.] Simring,
             respondent was still engaging in dishonest
             conduct designed to conceal the fact that he
             deliberately and intentionally took monies
             that did not belong to him and used them to
             fund his defense in the federal criminal
             matter.
    
                                 II.
    
        Respondent argues that the DRB’s analysis on remand
    
    erroneously perpetuated an interpretation of the Jacob standard
    
    
                                   16
    that requires a showing that meets the criminal law standard for
    
    the defense of legal insanity.     He maintains that Dr.
    
    Greenfield, the OAE’s expert, applied only the M’Naghten
    
    standard to assess respondent and opine on whether respondent
    
    could avail himself of a Jacob excuse to knowing
    
    misappropriation and disbarment.      On the other hand, respondent
    
    maintains that his expert, Dr. Simring, opined on his mental
    
    illness and reasons why his mental condition merited mitigating
    
    consideration, which is also permitted under Jacob.        In that
    
    regard, respondent argues that Dr. Simring’s opinion is
    
    unopposed.
    
        The OAE argues that the DRB properly considered the mental
    
    health circumstances that had been advanced by respondent and
    
    correctly concluded that proof of knowing misappropriation was
    
    demonstrated clearly and convincingly.     It emphasizes the timing
    
    of the four incidents of misappropriation and that respondent’s
    
    expert, Dr. Simring, does not contend that respondent could not
    
    appreciate the wrongfulness of his actions at those times.       In
    
    essence, the OAE maintains that respondent did not show
    
    impairment at the time of those misappropriations that deprived
    
    him of the ability to know that he was taking funds that did not
    
    belong to him and that he was not authorized to do so.
    
        Moreover, in arguing against allowing mitigating effect to
    
    be afforded to respondent in this disciplinary matter due to his
    
    
                                     17
    diagnosis of severe depression by Dr. Simring, the OAE contends,
    
    and the DRB concluded, that three of the misappropriations took
    
    place after respondent had been discharged from the hospital,
    
    was under Dr. Simring’s care and responding well to medication,
    
    and was participating in the handling of his criminal matter.
    
    Thus, the OAE maintains that respondent’s misdeeds were not
    
    aberrational and, as further proof of that, adds one more
    
    incident to the mix.   Four years after his hospitalization,
    
    three years after his incarceration, and still while under Dr.
    
    Simring’s care, respondent, according to the OAE, and as found
    
    by the DRB, submitted false information in financial records to
    
    hide evidence of misappropriation from another trust for which
    
    respondent was responsible.
    
                                    III.
    
        In this State, two rules in attorney misconduct matters are
    
    applied, virtually without exception.    First, disbarment is
    
    permanent.   R. 1:20-15A(a)(1); see also In re Breslin, 
    171 N.J. 235
    , 237 (2002) (noting that “in New Jersey disbarment
    
    invariably is permanent”).    Second, an attorney who knowingly
    
    misappropriates funds from a client is subject to disbarment, In
    
    re Wilson, 
    81 N.J. 451
    , 453 (1979), without any practical
    
    prospect of consideration of mitigating factors, id. at 457-60,
    
    or restoration upon a showing of reformation, id. at 460 n.5
    
    (noting that “research reveals only three orders of
    
    
                                     18
    reinstatement following disbarment over the past hundred
    
    years”); see also Greenberg, supra, 155 N.J. at 151 (“We accept
    
    as an inevitable consequence of the application of th[e Wilson]
    
    rule that rarely will an attorney evade disbarment in such
    
    cases.”).
    
           Misappropriating attorneys claiming to be afflicted with
    
    identifiable disorders, including mental illness or related
    
    conditions, have not swayed the Court from imposing the grave
    
    discipline of disbarment.    See Greenberg, supra, at 150, 157-58.
    
           In Jacob, supra, the Court considered, as part of the
    
    defense to a knowing-misappropriation-of-client-funds case, a
    
    medical report by the physician of the respondent that addressed
    
    certain physical and mental health conditions, including
    
    depression, suffered by the attorney.    95 N.J. at 134-35, 137.
    
    The Court spoke sympathetically to the lawyer’s plight but
    
    nevertheless rejected the argument that the medical evidence
    
    served to “exculpate [the] misappropriations.”    Id. at 136.   The
    
    Court explained that the medical proofs did not demonstrate that
    
    the condition from which the respondent suffered “was an
    
    exclusive or major cause of his ethical derelictions.”     Id. at
    
    137.    The Court emphasized that it was looking for a
    
    demonstration of a causal connection between the medical
    
    condition and the financial misdeed.    Ibid.   The Court closed
    
    
    
    
                                     19
    with the following restatement of its reasons for rejecting the
    
    proffered defense:
    
             The report does not furnish any basis grounded
             in firmly established medical facts for a
             legal excuse or justification for respondent’s
             misappropriations.      There   has  been   no
             demonstration by competent medical proofs that
             respondent suffered a loss of competency,
             comprehension or will of a magnitude that
             could excuse egregious misconduct that was
             clearly knowing, volitional and purposeful.
    
             [Ibid.]
    
        Although the Court’s closing comments referred to legal
    
    excuse or justification, and mentioned “loss of competency,
    
    comprehension or will,” a standard that traces language used in
    
    diminished capacity analyses, several subsequent cases in which
    
    a so-called Jacob defense was advanced collapsed the standard
    
    into shorthand in which it is described essentially as an
    
    ability to discern right from wrong.   See In re Hein, 
    104 N.J. 297
    , 302 (1986); see also In re Romano, 
    104 N.J. 306
    , 311 (1986)
    
    (concluding that “respondent has failed to demonstrate that a
    
    disease of the mind rendered him unable to tell right from wrong
    
    or to understand the nature and quality of his acts”).    The DRB
    
    decision in this matter discusses subsequent cases that have
    
    attempted to argue for mitigation of penalty based on “loss of
    
    competency, comprehension or will” language that was used in
    
    Hein, explaining that the language actually originated from
    
    Jacob and requires loss of competency, comprehension or will of
    
    
                                   20
    a magnitude that would excuse conduct that is otherwise knowing
    
    or purposeful.      (Citing In re Steinhoff, 
    114 N.J. 268
    , (1989)).
    
    Most specifically, the Court in In re Roth, 
    140 N.J. 430
    , 448
    
    (1995), addressed mental illness in the context of whether an
    
    attorney lacked volitional capacity to perform his duties.         The
    
    Court equated the loss of competency, comprehension or will as
    
    requiring an inability to distinguish right from wrong and
    
    concluded that the depression from which the respondent was
    
    suffering did not suffice to excuse his conduct under that
    
    standard.   Ibid.
    
        In another case, Greenberg, supra, 
    155 N.J. 138
    , our Court
    
    was asked to consider whether depression caused the respondent
    
    to suffer a substantial impairment of judgment that, when
    
    combined with other mitigating factors, should permit the
    
    attorney to avoid disbarment for stealing law firm funds.      In
    
    rejecting the defense, our Court tied its rationale again to the
    
    lawyer’s failure to demonstrate that “he was unable to
    
    appreciate the difference between right and wrong or the nature
    
    and quality of his acts.”      Id. at 157.   The lawyer’s mental
    
    illness, although severe, did not eviscerate the lawyer’s
    
    knowledge that he was taking the firm’s funds and that his firm
    
    had not authorized the taking.      Id. at 158-59; see also In re
    
    Tonzola, 
    162 N.J. 296
    , 307 (2000) (noting “the debilitating and
    
    overpowering effects of respondent’s illnesses,” but
    
    
                                       21
    acknowledging respondent’s expert’s opinion that respondent “may
    
    have been aware” that clients’ funds were being
    
    misappropriated).
    
        The DRB applied those cases to the matter at hand and
    
    concluded that the Jacob standard requires an inability to
    
    distinguish between right and wrong or to understand the nature
    
    and quality of one’s acts.   Those two expressions of
    
    understanding can be likened to the standard for legal insanity,
    
    under the M’Naghten test, and the standard for diminished legal
    
    responsibility under principles of diminished capacity or the
    
    statutory defense of intoxication.   See N.J.S.A. 2C:4-1
    
    (insanity); see, e.g., State v. Worlock, 
    117 N.J. 596
    , 603
    
    (1990) (“Directed at defendant’s ability to ‘know,’ the
    
    M’Naghten test is essentially one of cognitive impairment.
    
    Sometimes described as the ‘right and wrong’ test, its purpose
    
    is to determine whether the defendant had sufficient mental
    
    capacity to understand what he was doing when he committed the
    
    crime.”); N.J.S.A. 2C:4-2 (diminished capacity); see, e.g.,
    
    State v. Taylor, 
    387 N.J. Super. 55
    , 61-62 (App. Div. 2006)
    
    (stating that, once affirmative defense of diminished capacity
    
    is raised, State must prove beyond reasonable doubt that,
    
    despite evidence of defendant’s mental disease or defect, she
    
    nonetheless “knew” that she was committing the relevant
    
    offense); N.J.S.A. 2C:2-8 (intoxication); see, e.g., State v.
    
    
                                    22
    Mauricio, 
    117 N.J. 402
    , 418 (1990) (stating that “self-induced
    
    intoxication is a defense to a purposeful or knowing crime”).
    
    The Jacob standard may not be a model of clarity, but the point
    
    to Jacob is that it expressed the Court’s willingness to
    
    consider defenses that would negate the mental state to act
    
    purposely.   A mental illness that impairs the mind and deprives
    
    the attorney of the ability to act purposely or knowingly, or to
    
    appreciate the nature and quality of the act he was doing, or to
    
    distinguish between right and wrong, will serve as a defense to
    
    attorney misconduct.   The aforesaid defenses are ones that can
    
    and should be considered in connection with excusing wrongful
    
    conduct by an attorney, or when mitigation of the disciplinary
    
    penalty is appropriate to consider under our disciplinary
    
    jurisprudence addressing the quantum of punishment.
    
        Indeed, Dr. Greenfield noted the same defenses in his
    
    testimony, identifying all three as potential bases for avoiding
    
    legal responsibility under the attorney disciplinary system.     In
    
    his testimony, Dr. Greenfield did not limit his understanding of
    
    a Jacob defense to legal insanity, as respondent argues,
    
    although respondent’s ability to distinguish right from wrong
    
    was the only one of the three possibilities that could apply to
    
    respondent’s mental condition and behavior.   Dr. Greenfield
    
    stated that point more than once, and even Dr. Simring testified
    
    that respondent did not meet any of those three criteria for
    
    
                                    23
    non-responsibility.    There was no expert disagreement on the
    
    fact that respondent did not have a mental illness that met any
    
    of the aforesaid three defenses that negate the mental state to
    
    act knowingly.
    
        Respondent persists in maintaining that the DRB and the OAE
    
    mistakenly limit the Jacob standard to presentation of a
    
    successful insanity defense in a criminal matter and that
    
    nothing more will be considered.       While we agree that the Jacob
    
    standard is not restricted to making a showing that is
    
    equivalent to the M’Naghten standard for legal insanity under
    
    criminal law, we reject respondent’s contention that the DRB’s
    
    decision in this matter is undermined by its focus on the legal
    
    insanity standard as that was the only one of the three possible
    
    defenses that pertained in respondent’s situation.
    
        The DRB properly analyzed the record presented by
    
    respondent and his expert as well as the testimony provided by
    
    the OAE’s expert.     In our view, the DRB correctly concluded that
    
    the OAE has proven knowing misappropriation by clear and
    
    convincing evidence.    Respondent did not demonstrate legal
    
    excuse for his misappropriations.       Moreover, in light of the
    
    pattern and timing of respondent’s misappropriations and
    
    concealment well after having received care and ongoing
    
    treatment, we conclude that his misdeeds were not aberrational.
    
    This Court has previously noted the importance of establishing a
    
    
                                      24
    causal connection between mental illness and the acts of
    
    misappropriation.     See Jacob, supra, 95 N.J. at 137.    Respondent
    
    has not proven an excusing causal connection.
    
           Nor are we persuaded that he is entitled to mitigation of
    
    the normal penalty of disbarment for his knowing, volitional,
    
    and purposeful acts of misappropriation of client and escrow
    
    funds.     We reach that conclusion, notwithstanding Dr. Simring’s
    
    testimony urging that mitigation consideration be given to
    
    respondent due to his severe depression.       In our disciplinary
    
    cases, we have not allowed mitigation from disbarment in
    
    misappropriation cases.     This case does not present reason for
    
    us to start here.     In Wilson, supra, we explicitly stated that
    
    “maintenance of public confidence in this Court and in the bar
    
    as a whole requires the strictest discipline in misappropriation
    
    cases.     That confidence is so important that mitigating factors
    
    will rarely override the requirement of disbarment.”       81 N.J. at
    
    461.     We also have been unswayed by the assertion that a
    
    respondent is unlikely to continue to misappropriate funds in
    
    the future.     “[T]he unlikelihood of subsequent misappropriation
    
    [is] irrelevant in these cases.”       Id. at 460 n. 4.   This Court
    
    has not suggested that a low risk of re-offense is, in itself,
    
    “sufficient to warrant lesser discipline,” because it is “almost
    
    universally present in these matters.”       Ibid.
    
    
    
    
                                      25
        We are satisfied that, on this record, as amplified by the
    
    supplemental decision of the DRB, respondent committed knowing
    
    misappropriation.   We adopt the recommendation of the DRB that
    
    respondent be disbarred.
    
                                   IV.
    
        In the end, notwithstanding his being allowed to practice
    
    after his tax evasion conviction, respondent’s misappropriation
    
    has been proven by clear and convincing evidence.   The penalty
    
    for that misconduct is disbarment.
    
    
         JUSTICES LaVECCHIA, ALBIN, and PATTERSON, and JUDGES CUFF
    and FUENTES (both temporarily assigned) join in this PER CURIAM
    opinion. CHIEF JUSTICE RABNER and JUSTICES FERNANDEZ-VINA and
    SOLOMON did not participate.
    
    
    
    
                                    26
                    SUPREME COURT OF NEW JERSEY
    
    NO.     D-151                                 SEPTEMBER TERM 2013
    APPLICATION FOR
                      Order to Show Cause Why Respondent Should
    DISPOSITION
                    Not be Disbarred or Otherwise Disciplined
    
    
    
    IN THE MATTER OF
    
    FRANK J. COZZARELLI,
    
    An Attorney at Law
    
    
    
    
    DECIDED                      May 2, 2016
    OPINION BY                    Per Curiam
    CONCURRING OPINION BY
    DISSENTING OPINION BY
    
    
     CHECKLIST                                 DISBAR
    
     CHIEF JUSTICE RABNER                   -----------------
     JUSTICE LaVECCHIA                             X
     JUSTICE ALBIN                                 X
     JUSTICE PATTERSON                             X
    
     JUSTICE FERNANDEZ-VINA                 -----------------
     JUSTICE SOLOMON                        -----------------
     JUDGE CUFF (t/a)                              X
    
     JUDGE FUENTES (t/a)                           X
    
    
     TOTALS
                                                   5
    2