Altman v. SEC

768 F.Supp.2d 554 (2011)

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Nature of the Case

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Facts

D was investigating a company called Harrison Securities. Harrison shared office space with another company called Nextgen Inc. Harrison's chief executive officer, Frederick C. Blummer, and Nextgen's owner, Jay Adoni, were close business associates. D instituted administrative proceedings that year against Harrison and Blummer alleging violations of the Exchange Act relating to records-keeping. Harrison and Blummer claimed their systems and files were corrupted by a computer virus. Harrison and Blummer were represented by a lawyer named Irving Einhorn. In 2003, Bonnie Rosen was employed by Nextgen as an administrative assistant, at a $60,000 salary. Rosen spent half her time working for Blummer and had co-signed two car leases for him. Adoni fired Rosen in October 2003. She contacted P, a high school friend, and New York licensed lawyer, who agreed to represent her gratis. P contacted Adoni regarding Rosen's severance and the Blummer car leases, but Adoni refused all requests to pay the severance or to help in removing Rosen's name from the leases. In January 2004 Rosen called the NASD with information damaging to Harrison and Blummer's computer virus defense. D attempted to contact Rosen to obtain her testimony. Rosen referred them to P, whom she identified as her lawyer. P would not commit Rosen to cooperate. P called Einhorn at least six times between January 28, 2004, and February 10, 2004. P allegedly represented that if Harrison and Blummer would pay Rosen's severance from Nextgen and would release Rosen from Blummer's car leases, then in return Rosen would agree to evade D and, if subpoenaed, testify that she could not remember anything regarding their alleged computer virus. Rosen testified that the computer virus defense was a fake. To impeach Rosen, Einhorn played the recordings of his phone conversations with P. Einhorn then withdrew as counsel for Harrison and Blummer and turned the tapes over to law enforcement. The administrative law judge found Rosen 'thoroughly impeached' and unreliable, but nevertheless found Harrison and Blummer in violation of the federal securities laws. D instituted administrative proceedings against P alleging that P knowingly offered to have his client, Rosen, provide false testimony to D. The judge ruled (1) that P had violated the New York Disciplinary Rules 1-102(A)(4), (5), and (7), and P's conduct constituted 'unethical and improper professional conduct' in violation of D's Rule of Practice 102 governing appearances and practice before D. The judge ordered that P be denied the privilege of appearing before D for nine months. P appealed and D increased the sanction to a lifetime ban. P filed the present suit arguing that D's proceedings against him wrongfully usurped powers properly held by the New York State court system and that those proceedings amounted to violations of his constitutional rights to due process, equal protection, and privacy.