A Toms River real estate lawyer is in ethics hot water for collecting “estimated” document recording fees from his clients and then allegedly not reimbursing the excess amounts collected when the actual recording fees turned out to be less than the estimate. The lawyer in question also serves as the Board Attorney for the Lacey Township Board of Adjustment but the charges relate solely to his private law practice.
According to documents on file with the New Jersey Supreme Court’s Office of Attorney Ethics (OAE), Toms River attorney Stephen E. Smith, who was admitted to practice law in New Jersey in 1980 and who maintains his law practice on East Water Street, was chosen for a “random compliance audit” on January 7, 2019. According to ethics investigators, the audit “revealed that when [Smith] handled real estate matters as a settlement agent, he did not refund the excess government recording charges” to his clients.
After an investigation, the OAE alleged that Smith retained the excess fees collected in 54 real estate transactions. According to the ethics complaint, the amounts Smith wrongfully retained ranged from $10 to $540. During a February 13, 2020 interview with ethics investigators, Smith reportedly explained that any difference between the estimated and actual recording fee would cover his service fee and that it was a “convenient way” to handle the flat fee.
In a June 26, 2019 letter to the OAE, Smith said that “there was never any attempt to deceive or overcharge clients.” “I screwed up and I regret it,” he wrote. In his answer to the complaint, Smith asked ethics authorities to take his “contrition and remorse” and his clean ethics record into consideration. He also asked the authorities to consider his service to the community and to take note that he has since fully reimbursed his clients.
Ethics complaints are simply allegations and Smith has yet to have been found to have acted improperly. Smith is entitled to a hearing where the burden of proof will rest with ethics authorities.
Neither Smith nor his lawyer, Fredric L. Shenkman, responded to a request for comment.