## Facts

- David T. Austern, a District of Columbia attorney, represented Milton Viorst and Harmony House Corporation in condominium conversions and unit sales.
- Purchasers agreed to close only if Viorst deposited $10,000 into an escrow account to ensure completion of required housing-code work.
- Before closing, Viorst told Austern the check intended to fund the escrow was drawn on an account with insufficient funds.
- Austern signed the escrow agreement and proceeded with the closings without disclosing to purchasers or their counsel that the escrow check was not backed by sufficient funds.
- For weeks after closing, the escrow account was not actually funded, defeating the escrow’s protective purpose during that period.
- No lasting monetary loss ultimately occurred.

## Issues

1. Whether substantial evidence supported findings that Austern violated DR 1-102(A)(4) (dishonesty, fraud, deceit, or misrepresentation) and DR 7-102(A)(7) (assisting client conduct known to be illegal or fraudulent) by proceeding with the closings and escrow agreement despite knowing the escrow check was unfunded and not disclosing that fact.
2. Whether Austern had a professional duty to withdraw once he learned his client intended to proceed with a transaction predicated on an unfunded escrow, and whether failure to withdraw constituted misconduct.
3. What sanction was appropriate.

## Decision

- The court accepted the Board on Professional Responsibility’s factual findings as supported by substantial evidence.
- The court held Austern violated DR 1-102(A)(4) by participating in a materially misleading escrow arrangement through non-disclosure.
- The court held Austern violated DR 7-102(A)(7) by assisting his client’s conduct that Austern knew was fraudulent.
- The court held Austern had a duty to withdraw from the representation once the client insisted on proceeding with the unfunded escrow.
- The court adopted the recommended sanction of public censure.

## Legal Principles

- A lawyer commits professional misconduct by participating in a transaction that the lawyer knows rests on a material misrepresentation, including misrepresentation by silence.
- Assisting a client’s fraudulent transaction violates professional rules even if no party ultimately suffers permanent monetary loss.
- When a client insists on conduct the lawyer knows is fraudulent, the lawyer must not lend professional services to the transaction and must withdraw if the fraud cannot be prevented.

## Conclusion

The court publicly censured Austern for knowingly enabling and concealing an unfunded escrow condition that was essential to purchasers’ decisions to close, and for failing to withdraw when his client persisted in proceeding on a fraudulent premise.


In re Austern, 524 A.2d 680 (D.C. 1987)