A White Plains real estate attorney has been suspended from the practice of law for two years for misusing client funds.
A panel of judges from the Second Appellate Division endorsed the conclusions of a special referee, on Aug. 18, finding that Max William Spaeth had engaged in conduct adversely reflecting his fitness as a lawyer.
Spaeth “cannot argue that he made a mistake or that he did not know his actions were wrong,” special referee Lester B. Adler noted in an April 2024 report. “Using these escrow funds for such things as paying for rent, dinners, drinks, Amazon purchases, and paying back money he owed to friends all serve to indicate that he was only thinking of himself.”
Spaeth was awarded a law degree from Pace University in 2015 and was admitted to practicing law in New York in 2017. He runs a solo practice from a house in the Fisher Hill neighborhood.
The charges center on an escrow account, a bank account where an attorney must act as a neutral agent in handling money on behalf of clients.
In 2023, the regional lawyers’ grievance committee accused Spaeth of misappropriating client funds; co-mingling personal funds with client funds; improper disbursements; and failure to maintain separate fiduciary, business and personal bank accounts.
The appellate court referred the case to Adler, a former Westchester Supreme Court justice, who held a hearing and reported his findings in 2024.
Adler found that Spaeth had made numerous bank deposits and withdrawals for personal matters unrelated to the clients’ interests. At one point in 2020, for instance, the escrow account had a balance of $10,051.37, “an invasion of client funds of early $5,000.”
Spaeth admitted the factual allegations at the hearing but denied misconduct, according to the appellate court decision. He claimed that surgery on his dominant hand in 2019 had impaired his ability to work. In 2020, a bank deactivated his accounts and he was unable to open new accounts because of the Covid-19 pandemic.
He remained “virtually unemployed” during the pandemic, finishing only two real estate closings. But, he testified, all client funds were deposited and paid out on time.
Spaeth said he believed he had acted reasonably when his bank accounts were closed and the pandemic struck. “The conduct that I engaged in was not that of fraud, deceit or misrepresentation.”
Adler concluded that Spaeth’s explanations “do not measure up.”
The appellate panel confirmed Adler’s report.
In determining the appropriate discipline, the judges considered Spaeth’s cooperation with the investigation, the lack of a prior disciplinary history, letters attesting to his integrity and unselfishness, and measures he has taken to better manage an escrow account.
But the judges were troubled by Spaeth’s failure “to show sufficient remorse,” the personal benefits of his misconduct and his failure to honor his obligations as a fiduciary.
The two-year suspension will begin on Sept. 27.
