Disciplinary Case Summaries
The summaries of disciplinary case Opinions and Conditional Admissions of Misconduct are prepared by the Office of the Presiding Disciplinary Judge (PDJ) and are provided as a service by the CBA. The CBA cannot guarantee the accuracy or completeness of the summaries. Opinions, including exhibits, complaints, amended complaints, and summaries, are available at the PDJ website, www.coloradosupremecourt.com/PDJ/pdj.htm, and on LexisNexis.®The summaries and full-text Opinions are also accessible from the CBA website: www.cobar.org (click on “For Members,” and then “Opinions/Rules/Statutes”).
Conditional Admissions of Misconduct
No. 16PDJ035. People v. Kaker. 06/15/2016.
The PDJ approved the parties’ conditional admission of misconduct and disbarred Trace L. Kaker, attorney registration number 19797, effective June 15, 2016.
Kaker was entrusted with safekeeping more than $100,000 after the assets from an entity called Dovetail Homes Fund I were frozen pending the outcome of a criminal investigation. Kaker transferred the majority of that money from her COLTAF account into her personal account, but she also deposited some of those funds directly into her personal account and her husband’s personal account. Kaker used the money to pay her personal expenses, even though she knew she did not have authorization to use any of those funds, other than her attorney fees, as her own.
When the Denver County District Court ordered that the funds be unfrozen and released, Kaker promised several times to send a check or meet in person to deliver the funds. She did not do so. And though the Office of Attorney Regulation Counsel sent her at least six letters requesting a response to various requests for investigation, Kaker never responded.
Kaker’s conduct violated Colo. RPC 1.15(a) (2008) (a lawyer shall hold property of clients or third persons in the lawyer’s possession separate from the lawyer’s own property); Colo. RPC 8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation); and Colo. RPC 8.1(b) (a lawyer shall not knowingly fail to respond to a lawful demand for information from a disciplinary authority).
No. 16PDJ026. People v. Mrzlak. 06/06/2016.
The PDJ approved the parties’ conditional admission of misconduct and suspended James N. Mrzlak, attorney registration number 11476, for three years, with one year served. If Mrzlak pays full restitution within that first year of his suspension, he may seek reinstatement under CRCP 251.29(b) and the remaining part of his suspension will be stayed. If Mrzlak fails to pay full restitution within that time, the stay on his remaining two-year period of suspension shall be lifted. He shall then serve the three-year suspension unless he pays full restitution during that period, in which case he may seek reinstatement early under CRCP 251.29(c). The suspension is effective on August 1, 2016.
Between 2009 and 2014, Mrzlak provided legal services to a client in her 80s whom he had known for 40 years. In December 2009, Mrzlak told his client he was interested in borrowing money from her for a commercial remodeling project. He stated that he orally advised his client to seek other counsel regarding this arrangement. He also drafted a letter to the client that contemplated an initial loan of $30,000, along with future loan opportunities. In the letter, Mrzlak informed his client to seek outside counsel and advised her that the loan was secured with a deed of trust on his home. The letter was not signed by his client. His client denies having received this letter or discussed with Mrzlak the possibility of seeking outside counsel.
Thereafter, Mrzlak’s client loaned him substantial sums of money through multiple loans between 2010 and 2014. Many of those loans had different repayment terms. Mrzlak recalls providing promissory notes to his client for each individual loan. He made occasional payments on the promissory notes, but it is not clear on which notes he paid. On January 1, 2013, he drafted and signed a promissory note consolidating all the outstanding loans for $239,000, with an interest rate of 6%. He agreed to make monthly payments of $2,000 to his client, with the balance to be fully paid by December 31, 2014. He defaulted on this promissory note, however. On April 1, 2015, Mrzlak executed another note and deed of trust, which indicated that he owed his client $215,811.60, with an interest rate of 6.5%. He agreed to make monthly payments of $2,000, with the balance to be paid by May 1, 2025. This note was secured by Mrzlak’s property, which was valued at $59,348.
Mrzlak’s conduct violated Colo. RPC 1.8(a) (a lawyer shall not enter into a business transaction with a client unless the client is advised to seek independent legal counsel and the client gives written informed consent to the transaction) and Colo. RPC 8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation).
No. 16PDJ046. People v. Nichols. 06/08/2016.
The PDJ approved the parties’ conditional admission of misconduct and publicly censured Ashley M. Nichols, attorney registration number 39120, effective June 8, 2016.
In August 2014, Nichols filed a complaint on behalf of her client, a homeowner’s association, in a foreclosure lien action. On September 26, 2014, the district court issued a notice of failure to prosecute and indicated that the case would be dismissed on October 15, 2014. On October 1, 2014, Nichols moved for default judgment against the homeowner defendant; the defendant then filed an answer. Default judgment was entered against the bank that held the mortgage. The remaining parties were ordered to set the case for trial. Despite her efforts to do so, Nichols was unable to set the case for trial and the case was dismissed for failure to prosecute. She did not tell her client that the case had been dismissed because she believed she would successfully reopen the case.
In January 2015, Nichols drafted a motion to reopen the case. She never filed the motion with the court, however. She twice updated her client about the status of the case but failed to inform the client of the dismissal. After not hearing from Nichols for several months, her client hired successor counsel, who discovered that the case had been dismissed. Nichols’s firm paid the client $15,000 to compensate for the client’s losses. She self-reported her conduct to the Office of Attorney Regulation Counsel in August 2015.
Nichols’s conduct violated Colo. RPC 1.3 (a lawyer shall act with reasonable diligence and promptness when representing a client); Colo. 1.4(a)(3) (a lawyer shall keep a client reasonably informed about the status of the matter); and Colo. RPC 8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation).
Opinions Denying Reinstatement
No. 15PDJ098. People v. Brenner. 04/28/2016.
Following a reinstatement hearing, a hearing board denied Donald Arthur Brenner, attorney registration number 05692, reinstatement to the practice of law under CRCP 251.29. Brenner may not file another petition for reinstatement for two years.
In 2013, Brenner stipulated to violating the Colorado Rules of Professional Conduct in two separate client matters. Brenner represented one client who had been charged with unlawful sexual contact with an at-risk adult, and a second client who was charged with first-degree murder. In both matters, Brenner failed to adequately prepare for trial or diligently prepare his clients’ cases. Courts later ruled that Brenner had provided ineffective assistance of counsel in both matters. He was suspended for one year and one day for his misconduct.
A hearing board denied Brenner’s reinstatement petition because he failed to marshal clear and convincing evidence that he has been rehabilitated and that he is fit to practice law.
No. 15PDJ104. West v. People. 04/18/2016.
Following a reinstatement hearing, a hearing board denied Carl Stuart West, attorney registration number 23435, reinstatement to the practice of law under CRCP 251.29. West may not file another petition for reinstatement for two years.
In 2015, West violated terms of his disciplinary probation when he missed two hearings in a domestic relations representation. As a result, he was required to serve the stayed portion of a one-yearand-one-day suspension originally levied in 2009.
West’s reinstatement petition was not granted because he failed to present clear and convincing evidence that he has been rehabilitated from his prior misconduct. In reaching that determination, the hearing board focused on West’s long and varied history of misconduct, his failure to pinpoint the causes of that misconduct, and the limited evidence of meaningful changes in his life.
Opinion Imposing Sanctions
No. 14PDJ110. People v. Heaphy. 09/09/2015.
Following a hearing, a hearing board disbarred Michael John Heaphy, attorney registration number 26088. Heaphy’s disbarment took effect on June 6, 2016.
While representing a client in a copyright infringement matter, Heaphy knowingly converted over $14,000 in settlement funds, comingled his client’s funds with his own, and then failed to act diligently or to respond to his client’s communications. He paid full restitution plus interest, but only after his license to practice law was threatened with immediate suspension. Through this misconduct, Heaphy violated Colo. RPC 1.3 (a lawyer shall act with reasonable diligence and promptness in representing a client); Colo. RPC 1.4(a)(4) (a lawyer shall promptly comply with a client’s reasonable requests for information); Colo. RPC 1.15(a) (2008) (a lawyer shall hold client property separate from the lawyer’s own property); Colo. RPC 1.16(d) (a lawyer shall, on termination, take steps to the extent reasonably practicable to protect the client’s interests); and Colo. RPC 8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation).
Order Dismissing Petition for Reinstatement
No. 15PDJ094. People v. Walker. 11/19/2015.
The PDJ dismissed a petition for reinstatement filed by Scott Neil Walker, attorney registration number 32859, on November 19, 2015. In 2011, Walker was suspended from the practice of law for three years in case number 10PDJ022 (consolidated with case number 10PDJ111). The PDJ concluded that Walker’s petition for reinstatement must be dismissed under CRCP 12(b)(5) because Walker had not fully paid the restitution and costs he was ordered to pay in his disciplinary matter and thus had not complied with all applicable disciplinary orders and rules, as required by CRCP 251.29(c). The Colorado Supreme Court affirmed the PDJ’s order on May 12, 2016.
Order of Reciprocal Discipline
No. 16PDJ030. People v. Walsh. 06/02/2016.
The PDJ granted a motion for entry of default and imposed reciprocal discipline, suspending for six months Christopher Robert Walsh, attorney registration number 24146. The suspension took effect on June 2, 2016.
On December 23, 2015, the Supreme Court of Minnesota issued an opinion concluding that Walsh engaged in dilatory behavior, neglected to communicate with his clients, acted in bad faith, made a false statement to opposing counsel, and chronically violated court rules and orders, resulting in lost claims. This misconduct violated Minn. R. Prof. Conduct 1.1, 1.3, 1.4, 3.1, 3.2, 3.3(a)(I), 3.4(c), 3.4(d), 4.1, 8.4(c), and 8.4(d). The Supreme Court of Minnesota concluded that the appropriate sanction was an indefinite suspension with no right to petition for reinstatement for six months.
Walsh’s misconduct constituted grounds for reciprocal discipline under CRCP 251.5 and 251.21. Because indefinite suspension is not authorized in Colorado, the PDJ imposed the closely analogous sanction of a six-month suspension with reinstatement of Walsh’s Colorado license conditioned on his reinstatement in Minnesota.
Stipulation to Reinstatement
No. 16PDJ019. Hecker v. People. 06/06/2016.
The PDJ approved a stipulation and agreement concerning reinstatement under CRCP 251.29(j) and reinstated Martin J. Hecker, attorney registration number 16628, to the practice of law, effective June 6, 2016. No opinion was issued.