|The Colorado Lawyer|
Vol. 34, No. 6 [Page 141]
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From the Courts
Colorado Disciplinary Cases
The Colorado Supreme Court adopted a series of changes to the attorney regulation system, including the establishment of the Office of the Presiding Disciplinary Judge, pursuant to C.R.C.P. 251.16. The Court also made extensive revisions to the rules governing the disciplinary process, repealing C.R.C.P. 241 et seq., and replacing those rules with C.R.C.P. 251 et seq. The Presiding Disciplinary Judge presides over attorney regulation proceedings and issues orders together with a two-member hearing board at trials and hearings. The Rules of Civil Procedure and the Rules of Evidence apply to all attorney regulation proceedings before the Presiding Disciplinary Judge. See C.R.C.P. 251.18(d). These Opinions may be appealed in accordance with C.R.C.P. 251.27.
The Colorado Lawyer publishes the summaries and full-text Opinions of the Presiding Disciplinary Judge, William R. Lucero, and a two-member hearing board, whose members are drawn from a pool appointed by the Supreme Court. For space purposes, Exhibits, Complaints, and Amended Complaints may not be printed.
The full-text Opinions, along with their summaries, are available on the CBA home page at http://www.cobar.org/tcl/index.htm. See page 165 for details. Opinions, including Exhibits, Complaints, and Amended Complaints and summaries, are also available at the Office of Presiding Disciplinary Judge website: http://www.coloradosupremecourt.com/PDJ/pdj.htm; and on LexisNexisTM at http://www.lexis.com/research, by clicking on States LegalU.S./Colorado/Cases and Court Rules/By Court/Colorado Supreme Court Disciplinary Opinions.
Case Number: 04PDJ030
THE PEOPLE OF THE STATE OF COLORADO,
RANDALL M. CHASTAIN.
March 14, 2005
REPORT, DECISION, AND IMPOSITION OF SANCTION
On January 12, 2005, the Presiding Disciplinary Judge ("PDJ" or "the Court") conducted a Sanctions Hearing pursuant to C.R.C.P. 251.15(b). James S. Sudler appeared on behalf of the Office of Attorney Regulation Counsel ("the People"). Randall M. Chastain ("Respondent") did not appear, nor did counsel on his behalf. The PDJ issues the following Report:
SANCTION IMPOSED: ATTORNEY DISBARRED
Respondent was a licensed lawyer in both Colorado and South Carolina. On September 29, 2003, the South Carolina Supreme Court disbarred Respondent for engaging in a "pattern of misconduct" and for working in a capacity "connected with the law" while his license was under suspension. On that basis, the People filed the present Complaint, which Respondent did not answer. Under the rules for imposing reciprocal discipline, the Court must impose the same discipline as the foreign jurisdiction unless inappropriate (lack of due process, infirm proof, grave injustice, different form warranted). Respondent failed to challenge the validity of the South Carolina disbarment order. Should the PDJ therefore disbar Respondent under C.R.C.P. 251.21?
II. PROCEDURAL HISTORY AND BACKGROUND
On April 8, 2004, the People filed the present Complaint against Respondent, requesting the Court to disbar Respondent from the practice of law in Colorado based upon a final order of the South Carolina Supreme Court disbarring Respondent from the practice of law in that state. The People sent the Complaint, with the South Carolina opinion attached, to Respondent via regular and certified mail. Respondent did not file an answer.
On September 21, 2004, the People filed a Motion for Default. On October 18, 2004, the PDJ granted this motion pursuant to C.R.C.P. 251.15(b) and C.R.C.P. 121 § 1-14. Upon entry of default, all facts in the Complaint are deemed admitted, and all rule violations in the Complaint are deemed established. See People v. Richards, 748 P.2d 341 (Colo. 1987); see also Complaint (attached as Exhibit A).
The PDJ then set this matter for a Sanctions Hearing on January 12, 2005. Respondent failed to appear at the Sanctions Hearing. The People, however, presented their case and argued that Respondent should be disbarred from practicing law in Colorado.
III. FACTS AND RULE VIOLATIONS
For sanction purposes, the PDJ considered the following evidence: the facts and violations established by the entry of default, the People’s argument for reciprocal discipline under 251.21, the State of South Carolina Supreme Court Opinion No. 25279 ("the S.C. Opinion"),1 and a certification by the Colorado Supreme Court of Respondent’s current status (suspended) and Respondent’s last known address listed with the Office of Attorney Registration.2
Respondent has taken and subscribed the oath of admission in Colorado, was admitted to the bar of this Court on June 19, 1971, and is registered upon the official records of this Court, registration no. 06058. He is therefore subject to the jurisdiction of this Court in these disciplinary proceedings. C.R.C.P. 251.1(b).
The Complaint3 and the attached S.C. Opinion contain all factual details. In summary, the South Carolina Supreme Court ("S.C. Court") disbarred Respondent from the practice of law in South Carolina on September 29, 2003. In doing so, the S.C. Court found that Respondent had "demonstrated a pattern of misconduct" warranting disbarment.
In 1994, the S.C. Court had imposed a two-year suspension for neglecting several legal matters, failing to respond to clients, failing to return unearned retainer fees, and failing to respond to disciplinary inquiries. In re Chastain, 450 S.E.2d 578 (S.C. 1994). Respondent has not been reinstated since that time, but remains subject to the disciplinary rules of the S.C. Court. After the first incident in 1994, Respondent went before the S.C. Court for rule violations in 1995, 1997, and 2000. These violations involved criminal contempt for performing legal work while suspended and criminal convictions.
In the matter giving rise to the S.C. Opinion disbarring Respondent, the South Carolina Office of Disciplinary Counsel brought formal charges against Respondent for working in the Richland County Attorney’s Office in violation of Rule 34 of the Rules for Lawyer Disciplinary Enforcement ("a suspended lawyer shall not be employed as a paralegal, investigator or in any other capacity connected with the law"). Respondent failed to answer to the charges, and default entered against him. A Hearing Officer then held a hearing on sanctions, of which Respondent had valid notice. Respondent failed to attend and present evidence in mitigation. The Hearing Officer and the Panel recommended disbarment. Thereafter, the S.C. Court accepted this recommendation, noting that "[i]n addition to his other misconduct over the years, he has on more than one occasion worked, while under suspension, in a capacity connected with the practice of law."
The ABA Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") and the Colorado Rules of Civil Procedure are the guiding authorities for imposing reciprocal discipline for lawyer misconduct. Reciprocal discipline is the imposition of a sanction for conduct that already gave rise to discipline in another jurisdiction. ABA Standard 2.9. The commentary to ABA Standard 2.9 states:
Public confidence in the profession is enhanced when lawyers who are admitted in more than one jurisdiction are prevented from avoiding the effect of discipline in one jurisdiction by practicing in another. [Model Rules for Lawyer Disciplinary Enforcement] 22 provides that a certified copy of the findings of fact in the disciplinary proceeding in the other jurisdiction should constitute conclusive evidence that the respondent committed the misconduct. Reciprocal discipline can be imposed without a hearing, but the court should provide the lawyer with an opportunity to raise a due process challenge or to show that a sanction different from the sanction imposed in the other jurisdiction is warranted.
Further, C.R.C.P 251.21(a) provides:
Except as otherwise provided by these Rules, a final adjudication in another jurisdiction of misconduct constituting grounds for discipline of an attorney shall, for purposes of proceedings pursuant to these Rules, conclusively establish such misconduct.
Therefore, all the facts and conclusions reached by the S.C. Court are adopted and incorporated into this Report.
Under C.R.C.P. 251.21(d), respondent attorneys have the opportunity to challenge the validity of the discipline imposed elsewhere on any of the following bases: 1) the procedure in the other jurisdiction did not comport with due process requirements; 2) the proof upon which the other jurisdiction relied is so infirm that the Court cannot accept the determination as final and remain consistent with its duty; 3) the imposition of the same discipline would result in "grave injustice"; or 4) the misconduct proved warrants a "substantially different" form of discipline.
Respondent failed to make any appearance in this action. Respondent did not contest the validity of the S.C. Opinion. Respondent did not make any claim that the S.C. Court denied him due process or relied upon infirm evidence. Respondent did not show the Court that disbarment in Colorado would result in "grave injustice." Respondent did not present any evidence or argument that the misconduct, established by the S.C. Opinion, warrants a different form of discipline. Additionally, the People seek the identical sanction as was imposed in South Carolina. Consequently, the Court finds no reason to deviate from the presumptive reciprocal sanction. Under these circumstances, the PDJ is required to issue an order imposing the same discipline as imposed by the South Carolina Supreme Court. C.R.C.P. 251.21(d).
The discipline ordered in South Carolina is reciprocally appropriate in this case. The South Carolina Supreme Court provided Respondent with due process by affording him the opportunity to respond to the disciplinary charges against him. Ultimately, the S.C. Court found that Respondent violated multiple professional rules in South Carolina by failing to obey the terms of his suspension. As a result, the S.C. Court disbarred Respondent from the practice of law in that state. Respondent was also afforded ample opportunity to respond to the Complaint, based upon his conduct in South Carolina, filed with this Court. Respondent declined to do so, and thus there is no basis upon which to conclude that disbarment is not warranted. Accordingly, the PDJ finds that the imposition of the identical sanction on a reciprocal basis is appropriate.
Therefore, PDJ concludes that Respondent should be disbarred from the practice of law in the State of Colorado.
It is therefore ORDERED:
RANDALL MEADS CHASTAIN, attorney registration 06058, is DISBARRED from the practice of law, effective thirty-one (31) days from the date of this Order, and his name shall be stricken from the roll of attorneys licensed to practice law in the State of Colorado.
RANDALL MEADS CHASTAIN is ORDERED to pay the costs of these proceedings. The People shall submit a Statement of Costs within fifteen (15) days of the date of this Order. Respondent shall have ten (10) days in which to file a response.
1. Attached to the Complaint as Complainant’s Exhibit ___.
2. Complainant’s Exhibit 1.
3. Exhibit A.
Case Number: 04PDJ058
THE PEOPLE OF THE STATE OF COLORADO,
JEFFREY A. PARSLEY.
REPORT, DECISION AND IMPOSITION OF SANCTION
March 10, 2005
On January 13, 2005, the Presiding Disciplinary Judge ("PDJ" or "the Court") conducted a Sanctions Hearing pursuant to C.R.C.P. 251.15(b). Kim E. Ikler appeared on behalf of the Office of Attorney Regulation Counsel ("the People"). Jeffrey A. Parsley ("Respondent") did not appear, nor did counsel appear on his behalf. The Court issues the following Report:
SANCTION IMPOSED: ATTORNEY DISBARRED
As established by default, Respondent knowingly made material false statements in applying for a loan, and thereby fraudulently received $180,000. Respondent’s conduct constitutes a felony under federal and state law. Disbarment is the presumed sanction for a lawyer who commits a serious crime involving dishonesty. As Respondent did not answer the Complaint or participate in the Sanctions Hearing, there is no evidence of mitigation. Under these circumstances, what is the appropriate sanction?
Upon review of the case file, the ABA Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992), and the relevant Colorado Supreme Court case law, the Court finds that disbarment is the appropriate sanction.
II. PROCEDURAL HISTORY AND BACKGROUND
On May 24, 2004, the People initiated this action by filing a Petition for Immediate Suspension. On May 25, 2004, the Court issued a show cause order under C.R.C.P. 251.8, giving Respondent until June 24, 2004 to show cause in writing why he should not be immediately suspended from the practice of law. Respondent filed his response on June 8, 2004, which included a request for a hearing. The Court set the matter for hearing on June 17, 2004. Respondent failed to appear on that date. Thereafter, the Court issued a report pursuant to C.R.C.P. 251.8 (b)(2), recommending immediate suspension. After considering this report, the Colorado Supreme Court immediately suspended Respondent from the practice of law in Colorado on June 29, 2004.
On July 6, 2004, the People filed a Citation and Complaint in this matter. On the same day, the People mailed the Citation and Complaint to Respondent at his registered address, 27 Inverness Drive East, Suite 303, Englewood, CO 80112. An agent of Respondent signed for receipt of the certified mail containing the Citation and Complaint on July 7, 2004. On July 12, 2004, the People filed Proof of Service with the Court. Service is therefore proper pursuant to C.R.C.P. 251.32(b).
On September 3, 2004, the People filed a Motion for Default. On October 5, 2005, the Court entered a default on all claims in the Complaint (attached as Exhibit A). Upon entry of default, all facts in the Complaint are deemed admitted and all rule violations in the Complaint are deemed established. People v. Richards, 748 P.2d 341 (Colo. 1987).
The PDJ then set this matter for a Sanctions Hearing on January 13, 2005. The People sent notice and confirmation of the Sanctions Hearing to Respondent on or about October 14, 2004. Respondent accepted service of the same. Respondent, however, did not appear for the Sanctions Hearing.
III. FACTS AND RULE VIOLATIONS
Respondent has taken and subscribed the oath of admission, was admitted to the bar of this Court on May 17, 1977, and is registered upon the official records of this Court, registration no. 08069. He is therefore subject to the jurisdiction of this Court in these disciplinary proceedings. Respondent’s registered business address is 5808 S. Rapp Street, No. 107, Littleton, CO 80120. Respondent’s last known business address is 27 Inverness Drive East, Suite 303, Englewood, CO 80112.
The Complaint contains all factual details.1 In summary, Respondent applied for and received a $180,000 loan from Equity Mortgage based upon fraud and misrepresentation. On July 20, 2001, Respondent executed the loan paperwork, including a Deed of Trust. In doing so, he secured the loan with real property in Boulder County ("the Boulder property" or "the property"). Before and during the loan closing, Respondent represented that he held fee simple title to the property. For example, he prepared a Title Commitment to prove ownership. Respondent, however, did not own the property, and did not have the authority to offer it as security for the loan. Rather, his parents held title to the property, and they had already encumbered it with a "reverse mortgage" in the face amount of $232,875. Respondent did not inform Equity Mortgage of the existing mortgage, and allowed Equity Mortgage to believe it had obtained a first position mortgage. In addition to the Deed of Trust, Respondent executed a number of other fraudulent documents, which he certified to be true and upon which the lender relied in approving the loan. Thus, Respondent received the loan proceeds ($180,000) based upon fraud and misrepresentation.
Respondent knew at the closing that Equity Mortgage planned to sell Respondent’s mortgage to Flagstar Bank, which is insured by the Federal Deposit Insurance Corporation ("FDIC"). Equity Mortgage did so. When Respondent defaulted on the loan, the note holder hired a lawyer to collect the money owed. Upon completion of a title search, the lawyer discovered that the Boulder property did not belong to Respondent. As a result, the lawyer also discovered that the Title Commitment falsely stated that Respondent was vested in fee simple title to the Boulder property. The Complaint alleges and default establishes that Respondent violated 18 U.S.C. § 1014 and C.R.S. § 18-4-401.
These facts constitute professional misconduct on the following grounds: Colo. RPC 8.4(b) (commission of a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects); Colo. RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation); and C.R.C.P. 251.5(b) (conduct which violates the criminal laws of this state or . . . the United States). While Respondent has not been convicted in a state or federal court for his misconduct, such is not required before addressing these matters in disciplinary proceedings. C.R.C.P. 251.5; People v. Morley, 725 P.2d 510, 514 (Colo.1986) (conviction of criminal offense is not a condition precedent to attorney disciplinary proceedings involving the offense).
The ABA Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") and Colorado Supreme Court case law are the authorities for selecting and imposing sanctions for lawyer misconduct. The appropriate sanction depends upon the facts and circumstances of each case.
Under ABA Standard 5.11 "[d]isbarment is generally appropriate when a lawyer engages in serious criminal conduct a necessary element of which includes . . . false swearing, misrepresentation, fraud, extortion, misappropriation, or theft . . . ." Colorado Supreme Court decisions are in accord with ABA Standard 5.11. The Supreme Court stated in In re DeRose:
We have previously held that conduct constituting a felony and evidencing dishonesty may result in disbarment. This is especially true when the conduct is intentional, involves a dishonest motive, and is coupled with previous discipline. See People v. Chappell, 927 P.2d 829, 830-31 (Colo. 1996) (previously disciplined attorney disbarred for intentionally aiding a client in the violation of a child custody order amounting to a felony); People v. Viar, 848 P.2d 934, 936 (Colo. 1993) (attorney disbarred for bribery, a class three felony); People v. Schwartz, 814 P.2d 793, 794-95 (Colo.1991) (attorney disbarred for conviction of bankruptcy fraud).
55 P.3d 126, 130 (Colo. 2002). In DeRose, the respondent pled guilty to felony charges after he engaged in structuring financial transactions to evade federal reporting requirements. Id. at 127-28.
As set forth in the Complaint and established by default, Respondent committed both federal and state crimes with respect to the loan.2 In knowingly making false statements to an FDIC-insured institution for the purpose of influencing action on the loan, Respondent violated 18 U.S.C. § 1014. This crime is punishable by a fine of up to $1,000,000 and/or a term of imprisonment up to 30 years. In knowingly obtaining the bank’s money by deception, Respondent violated C.R.S. § 18-4-401 (theft), a Class 3 Felony. For disciplinary purposes, the term "serious crime" is defined to include any felony. C.R.C.P. 251.20(e)(1). Therefore, the Court finds that Respondent’s conduct constituted serious federal and state crimes. Respondent’s conduct also evidenced dishonesty, because his actions involved a conscious effort to deceive.
Accordingly, disbarment is the presumptive sanction for Respondent’s misconduct. However, disbarment is not mandated. See e.g. In re Elinoff, 22 P.3d 60, 61-62 (Colo. 2001) (three-year suspension for the commission of bribery, a Class 3 felony, when the respondent had no prior discipline, no dishonest motive, and made an effort to rectify his conduct). Before determining the appropriate sanction, ABA Standard 3.0 directs the Court to examine the following factors:
(1) the duty violated;
(2) the mental state of the lawyer;
(3) the injury or potential injury caused; and
(4) the aggravating and mitigating evidence.
A. DUTIES VIOLATED
Respondent had a duty to deal honestly and openly with the lender and underwriters on the loan. Instead, Respondent used his imprimatur as a lawyer in good standing3 to persuade the underwriter that he was a worthy credit risk and that he indeed owned the Boulder property. Attorneys are officers of the court and pledge to uphold the law. Consequently, they must adhere to high moral and ethical standards. In re Paulter, 47 P.3d 1175, 1178 (Colo. 2002). "If lawyers are dishonest, then there is a perception that the system must be dishonest. Attorney misconduct perpetuates the public’s misperception of the legal profession and breaches the public and professional trust." DeRose, 55 P.3d at 131 (paraphrasing Paulter, 47 P.3d at 1179).
B. MENTAL STATE
While no testimony was offered in this regard, the Complaint establishes that prior to Respondent’s loan application, he was going through a divorce "resulting in emotional and financial distress and hardship." The Court previously found in its Report re: Petition for Immediate Suspension (entered on June 22, 2004) that Respondent had lost over $200,000 in bad investments and admittedly need more funds to meet his obligations. While these facts provide an explanation for Respondent’s actions, they also tend to show that he knowingly deceived the lender to assure loan approval.
C. INJURY CAUSED
Respondent unquestionably obtained a loan based upon false pretenses. Although Respondent serviced the loan for a little over one year, he then defaulted. Upon Respondent’s default, the lender was left with little recourse in recovering its funds, as it could not foreclose on the Boulder property. This fact alone demonstrates serious injury to the lender. Respondent also caused injury to the legal profession, by using his status as a lawyer to obtain the loan on false pretences and thereby undermining confidence in the profession.
D. AGGRAVATING AND MITIGATING EVIDENCE
1. MATTERS IN AGGRAVATION, ABA Standard 9.2
Respondent has previously been disciplined for attorney misconduct. In 1992, the Supreme Court issued a letter of admonition for neglect of a legal matter with respect to a single client. In 2000, the Supreme Court suspended Respondent for 90 days for neglect of a legal matter, failure to provide competent representation, and conduct prejudicial to the administration of justice with respect to a single client.
DISHONEST OR SELFISH MOTIVE
Respondent engaged in a conscious effort to deceive in order to personally benefit from loan proceeds in the amount of $180,000. Respondent applied for and obtained the loan by misrepresenting first that he owned the Boulder property in fee simple and second that the lender would receive a first position mortgage. This conduct was dishonest. Further, Respondent received the proceeds of this loan to meet personal obligations. Thus, Respondent chose to carry out a scheme of misrepresentation for his own monetary benefit.
SUBSTANTIAL EXPERIENCE IN
THE PRACTICE OF LAW
Respondent has been practicing law for nearly 30 years and therefore should be well aware of his professional responsibilities as an attorney. Experience in the law, however, is not required to understand every citizen’s obligation to refrain from illegal conduct.
INDIFFERENCE TO MAKING RESTITUTION
Respondent has not made restitution. Nevertheless, there is no evidence in the record to show that his failure to do so is the result of indifference rather than a lack of ability. Therefore, the PDJ finds no aggravation for this factor.
2. MATTERS IN MITIGATION, ABA Standard 9.3
Respondent failed to appear for the Sanctions Hearing. As a result, there are no mitigating factors supported by the record.
Upon consideration of the duties breached, Respondent’s mental state, the injuries caused, the aggravating factors present, and the absence of mitigating factors, the Court concludes that the gravity of Respondent’s conduct substantially outweighs any justification for deviation from the presumptive sanction of disbarment.
While the conduct in this case involves a single loan, this was not a simple act of deception. Rather, Respondent engaged in a fairly sophisticated scheme to defraud a lender and thereby obtain a large amount of money (approximately $180,000). It has been established by default that Respondent caused a number of fraudulent documents to be drafted, including a title commitment. Respondent executed his scheme over an extended period of time and involved innocent parties, including his own parents. In addition, Respondent was the only person to benefit from the deception, as he received all the funds disbursed. A number of parties and the financial system as a whole were directly affected by Respondent’s actions. Respondent’s dire financial position cannot excuse his scheme to defraud or ameliorate the sanction for such conduct.
Although Respondent’s actions did not directly concern the practice of law, they harmed a number of parties, as well as the legal profession and respect for the law in general. The rules governing lawyer discipline support disbarment for serious criminal conduct involving false swearing, misrepresentation, fraud, or theft. While Respondent has not been convicted of any offense beyond a reasonable doubt, proof of commission of such a crime by clear and convincing evidence, as established by default, is sufficient for disciplinary purposes. Respondent’s breach of integrity is simply unacceptable for a member of the legal profession. The Court therefore finds that disbarment is the appropriate sanction.
It is therefore ORDERED:
1. JEFFREY A. PARSLEY, attorney registration number 08069, is DISBARRED from the practice of law, effective thirty-one (31) days from the date of this Order, and his name shall be stricken from the roll of attorneys licensed to practice law in the State of Colorado.
2. JEFFREY A. PARSLEY is ORDERED to pay the costs of this proceeding; the People shall submit a Statement of Costs within fifteen (15) days of the date of this Order. Respondent shall have ten (10) days within which to respond.
1. Exhibit A [Available on PDJ website].
2. The Complaint does not identify the elements of the crimes alleged or relate these elements to Respondent’s alleged conduct. However, in judging the sufficiency of the Complaint prior to entering default, see People v. Richards, 748 P.2d 341, the Court engaged in its own analysis and found that the facts alleged in the Complaint would support commission of the specified federal and state crimes.
3. See Letter from Jeffrey A. Parsley to Stephen Strauber of Equity Financial Services, Inc., attached to the Complaint as Complainant’s Exhibit H.
Case Number: 04PDJ023
THE PEOPLE OF THE STATE OF COLORADO,
GIORGIO DESHAUN RA’SHADD.
March 10, 2005
OPINION AND ORDER IMPOSING SANCTIONS
On September 14, 2004, John E. Hayes and Terry F. Rogers, both members of the bar, and William R. Lucero, the Presiding Disciplinary Judge, conducted a hearing pursuant to C.R.C.P. 251.18(d) solely on the issue of appropriate sanctions. Nancy L. Cohen, Assistant Regulation Counsel, appeared on behalf of the Office of Attorney Regulation ("the People"). Giorgio Deshaun Ra’shadd ("Respondent") appeared pro se.
SANCTION IMPOSED: ATTORNEY DISBARRED
Respondent converted client funds and disobeyed a court order to return the funds, misrepresented his child support obligations to the Colorado Supreme Court, and placed an advertisement for his services containing false information. Absent extraordinary circumstances, disbarment is the presumptive sanction for an attorney who knowingly converts client money or intentionally deceives the court for personal benefit and thereby causes serious injury. Is the lack of prior discipline and Respondent’s testimony that he suffers from seizures sufficient evidence in mitigation to overcome the presumption of disbarment?
Despite Respondent’s evidence in mitigation, the Hearing Board concludes that disbarment is appropriate in this case.
II. PROCEDURAL HISTORY AND BACKGROUND
On March 24, 2004, the People filed a Complaint against Respondent. On April 26, 2004, Respondent filed an Answer to the Complaint. On August 10, 2004, the People filed a Motion for Summary Judgment. On August 20, 2004, Respondent filed a response to the Motion for Summary Judgment. On August 31, 2004, the Court granted the People’s Motion for Summary Judgment as to Claims II, III, and V of the Complaint. The People then moved to dismiss the remaining claims, Claims I and IV, and the Court granted this motion. The Complaint is attached to this Opinion.
Based upon the summary judgment in favor of the People, the record establishes that there is no dispute as to the facts contained in Claims II, III, and V. Thus, the rule violations with respect to those claims are established. These claims relate, respectively, to violations of: Colo. RPC 8.4(c) (conduct involving dishonesty, fraud, deceit, and misrepresentation); Colo. RPC 3.4 (failure to obey an obligation under the rules of a tribunal); and Colo. RPC 7.1 (a lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services). Accordingly, the only issue for the Hearing Board to decide is the appropriate sanction for these rule violations and the facts that support them.
Kristal Bernert, an attorney who presently represents Felecia Pleas, the personal representative of the Wickliffe Estate, testified on behalf of the People. Mr. Pinkney, a non-lawyer colleague of Respondent’s, testified on behalf of Respondent. Respondent also testified on his own behalf. In addition to testimony, the Hearing Board considered the pleadings, the Motion for Summary Judgment and the attached exhibits, the trial briefs, the Parties’ arguments, and the credibility of witnesses.
III. UNDISPUTED FACTS
Based upon the summary judgment entered on August 31, 2004, the following facts, establishing the rule violations outlined above, are undisputed:
Respondent has taken and subscribed the oath of admission, was admitted to the bar of this Court on February 4, 1999, and is registered upon the official records of this Court (registration no. 30417). He is therefore subject to the jurisdiction of this Court in these disciplinary proceedings. The Respondent’s registered business address is 8505 East Alameda Ave., Suite 3234, Denver, Colorado 80230-6069.
Conversion of Funds from the Wickliffe Estate
Felecia Pleas is the personal representative of the estate of her late mother, Annie Wickliff ("the Wickliffe Estate" or "the Estate"). Ms. Pleas hired Respondent in January 2003 to probate the Estate. During that same month, Ms. Pleas delivered a total of $32,734.75 to Respondent—$23,816.73 from the credit union that held Wickliffe Estate assets, and $8,919.00 in other Wickliffe assets. Respondent then deposited these funds, respectively, into two accounts:
• US Bank account no. 103658587680 ("Estate Account")
• US Bank account no. 103658096393 ("COLTAF Account").
On February 3, 2003, Ms. Pleas paid Respondent an "attorney retainer" fee of $750.00. This was the only money Ms. Pleas agreed to provide Respondent. Nevertheless, Respondent thereafter withdrew money from both the Estate and COLTAF Accounts without Ms. Pleas’ permission, beginning in January 2003 and continuing to March of 2003. During this time, Respondent failed to advise Ms. Pleas about the withdrawals he made and failed to keep records accounting for them. At some point, Respondent also managed to deposit $2,777.95 in personal funds belonging to Ms. Pleas (unrelated to the Estate) into the Estate Account. He did so by presenting a check, from Resources Trust and payable to Ms. Pleas, to US Bank.
In March of 2003, Ms. Pleas terminated Respondent’s services and demanded the return of her file and all funds from both accounts. She then hired new counsel, Kristal Bernert, to represent her as the personal representative of the Wickliffe Estate. Respondent did not return the file or the funds belonging to the Estate and Ms. Pleas individually.
When Respondent refused to return Ms. Pleas’ file and the funds, Ms. Bernert asked Respondent to account for the funds he had withdrawn from the Estate and COLTAF accounts. Respondent, however, did not provide Ms. Pleas with an accounting as requested. After Ms. Bernert’s request for an accounting, Respondent opened a new account with Key Bank. Without Ms. Pleas’ permission, he transferred all the Wickliffe funds in the COLTAF Account into the new account. In addition, Respondent refused to answer Ms. Pleas’ letters and telephone calls. Finally, Ms. Pleas filed a motion in the probate court, asking the court to order Respondent to return both the money and her client file.
On June 10, 2003, the probate court ordered Respondent to return Ms. Pleas’ file and all of the Wickliffe property, plus interest, by the close of business that day. Despite the probate court’s order, Respondent failed to return all of the money or account for funds he withdrew from the Estate and COLTAF accounts. Instead, Respondent only returned $18,363.37, an amount that represents the funds Respondent transferred from U.S. Bank to Key Bank without Ms. Pleas’ permission.
In January 2003, Ms. Pleas delivered to Respondent a total of $32,734.73 in Wickliffe assets. As a result of Respondent’s failure to either return the funds he controlled or to account for them, the probate court held him in contempt. To date, Respondent has yet to return or account to Ms. Pleas for $4,050.35 from the COLTAF Account and $3,379.00 from the Estate Account, despite the probate court’s order to do so.
In addition, the probate court set a hearing on June 10, 2003, for the purpose of accounting for the missing funds. Respondent appeared at that hearing and asked for a continuance, claiming that he had to appear in court in Bent County to represent another client as guardian ad litem. A clerk for the probate court made phone calls to Bent County to confirm Respondent’s claim, but learned instead that no such hearing had been scheduled.
Respondent’s conversion of the Wickliffe Estate funds and funds belonging to Ms. Pleas, as well as his false statements to the tribunal constitute a violation Colo. RPC 8.4(c) because he engaged in dishonest and fraudulent conduct. Furthermore, Respondent’s failure to repay the remainder of the Wickliffe funds to Ms. Pleas as ordered by the probate court constitutes a violation of Colo. RPC 3.4(c) because he knowingly disobeyed an obligation under the rules of the tribunal.
Failure to Pay Court-Ordered Child Support
Since March of 1992, Respondent has been in arrears on child support owed to his first wife, Deborah Williams. He was ordered to pay this obligation through the District Court of Shawnee County, Kansas. Because Respondent has never amended the original divorce decree, he continues to owe Ms. Williams $353.00 per month for support of their two minor children. Although Respondent has made a few sporadic payments, as of January 15, 2004 he owes $28,076.69 in child support payments.
In spite of the Kansas support order, Respondent falsely stated on his year 2000 attorney registration form, submitted to the Colorado Supreme Court, that he was "not under a current order to pay child support." However, in the years 2001 to 2003, Respondent falsely certified on his Colorado attorney registration statements that he was "in compliance" with outstanding child support orders. Thus, Respondent misrepresented his legal obligation to pay child support in 2000, and later misrepresented the status of his child support obligation in 2001, 2002, and 2003.
Respondent had an obligation, based upon the divorce decree entered in Kansas, to pay child support to Ms. Williams. Therefore, Respondent’s failure to pay child support to Ms. Williams constitutes a violation of Colo. RPC 3.4(c) because he knowingly disobeyed an obligation under the rules of a Kansas tribunal. In addition, Respondent’s misrepresentations to the Colorado Supreme Court regarding his child support obligations constitute a violation of Colo. RPC 8.4(c) because he was dishonest and deceitful in dealing with a court.
Falsely Advertising Services to Potential Clients
From January 17, 2003 until March 11, 2003, Denise Gray, a first-year law student at the University of Denver Law School, worked for Respondent as a law clerk at his firm, Rocky Mountain Poverty Law Center, LLC. Although they had an agreement that Ms. Gray would be paid for her work, Respondent, never paid her. On May 8, 2003, after Ms. Gray had departed from Respondent’s firm, Respondent placed an ad in the Aurora Sun Sentinel under the caption "Legal Services" and listed Ms. Gray as a "special advocate" of his firm. Ms. Gray, however, never trained or served as a special advocate while working for Respondent. Further, Ms. Gray had no knowledge of Respondent’s use of her name in the advertisement. Accordingly, Respondent’s act of placing an advertisement that contained false and misleading information about his law firm’s services constitutes a violation of Colo. RPC 7.1.
IV. IMPOSITION OF SANCTIONS
The ABA Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") and Colorado Supreme Court case law are the guiding authority for selecting the appropriate sanction to impose for lawyer misconduct. In re Roose, 69 P.3d 43, 46-47 (Colo. 2003). In determining the appropriate sanction, ABA Standard 3.0 directs the Hearing Board to examine the following factors:
(1) the duty breached;
(2) the mental state of the lawyer;
(3) the injury or potential injury caused; and
(4) the aggravating and mitigating evidence.
The Hearing Board will first consider the presumptive sanctions relevant to Respondent’s conduct. As discussed below, the presumptive sanctions point toward disbarment. The Hearing Board must then decide whether the factors listed in ABA Standard 3.0, including the evidence presented in mitigation, warrant departure from the presumed sanction of disbarment.
A. Presumptive Sanctions
1. Presumptive sanction for conversion
The act of knowing misappropriation "consists simply of a lawyer taking a client’s money entrusted to him, knowing that it is the client’s money and knowing that the client has not authorized the taking." People v. Varallo, 913 P.2d 1, 11 (Colo. 1996) (quoting In re Noonan, 506 A.2d 722, 723 (N.J. 1986)). Neither the lawyer’s motive in taking the money, nor the lawyer’s intent regarding whether the deprivation is temporary or permanent, are relevant for disciplinary purposes. Id. at 10-11. Respondent took funds belonging to both the Wickliffe Estate and Ms. Pleas. He has failed to account for them and has failed to return them, despite repeated requests and a court order. This constitutes conversion.
The presumptive sanction for knowing conversion of client property entrusted to an attorney is disbarment. ABA Standard 4.11 states: "Disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client." Suspension is normally reserved for misconduct, such as commingling funds, that does not amount to misappropriation or conversion of funds for the attorney’s own use. ABA Standard 4.12 (commentary). Likewise, the Colorado Supreme Court has indicated that lawyers are "almost invariably disbarred" for knowing misappropriation of client funds. Varallo, 913 P.2d at 11; People v. McGrath, 780 P.2d 492, 493 (Colo. 1989) ("the Court would not hesitate to enter an order of disbarment if there was no doubt that the attorney engaged in a knowing conversion of his client’s funds"); In re Thompson, 991 P.2d 820, 823 (Colo. 1999); People v. Lavenhar, 934 P.2d 1355 (Colo. 1997); People v. Lefly, 902 P.2d 361 (Colo. 1995); People v. Young, 864 P.2d 563 (Colo. 1993) (conversion of clients’ funds warrants disbarment even absent prior disciplinary history and despite cooperation and making restitution).
2. Presumptive sanction for disobeying a court order
Respondent twice disobeyed a court order. First, he failed to either return or account for converted funds in accordance with the probate court order. Second, Respondent knowingly failed to pay child support to his first wife, required pursuant to a divorce decree. "Disbarment is generally appropriate when a lawyer knowingly violates a court order . . . with the intent to obtain a benefit for the lawyer or another, and causes serious injury or potentially serious injury to a party, or causes serious or potentially serious interference with a legal proceeding." ABA Standard 6.21.
3. Presumptive sanction for dishonest conduct
and lack of candor with the court
Respondent made, certified, and submitted false statements to the Colorado Supreme Court. Not only did Respondent have knowledge that his statements were false, he also intended to deceive the Court about the status of his child support obligation. "Disbarment is generally appropriate when a lawyer, with the intent to deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious or potentially serious injury to a party, or causes a significant or potentially significant adverse effect on the legal proceeding." ABA Standard 6.11. On the other hand, suspension is the appropriate discipline if a lawyer "knows" his statement to the court is false but does not act with the "intent to deceive the court." ABA Standard 6.12; See In re Cardwell, 50 P.2d 897 (Colo. 2002) (three year suspension appropriate where lawyer failed to advise the court of his client’s prior DUI conviction after client advised the court that it was his first conviction). Thus, with respect to Respondent’s conduct, the presumed sanction is disbarment.
4. Presumptive sanction for misleading
communications regarding services
By falsely advertising Ms. Gray’s services for his firm, Respondent knowingly misrepresented his services to the community at large. Reprimand is generally appropriate when a lawyer knowingly engages in non-criminal conduct "that involves dishonesty, fraud, deceit, or misrepresentation and that adversely reflects on the lawyer’s fitness to practice law." ABA Standard 5.13. As a result, a reprimand is the minimum sanction that Respondent should receive for this action.
Although the above sanctions are presumed for Respondent’s conduct, the Hearing Board considered the following factors before arriving at the appropriate sanction.
B. Factors Under ABA Standard 3.0
The Hearing Board finds that the following evidence, relevant to determining the appropriate sanction, has been proved by clear and convincing evidence:
1. Duties breached
Respondent had a duty to his client, Ms. Pleas, to deal professionally, honestly, and openly with the Wickliffe Estate, of which his client was the personal representative. Respondent also had a duty to his client to deal professionally, honestly, and openly with her own personal funds. As an officer of the court, Respondent had a duty to render an honest and accurate accounting on the funds entrusted to him. In addition, he had a duty to promote confidence, not distrust, in our system of justice. Respondent blatantly breached each of these duties.
2. Mental state of the lawyer
Respondent acted knowingly when he took Wickliffe Estate funds and Ms. Pleas’ money from his COLTAF and Estate Accounts. Although Respondent claimed that Ms. Pleas authorized the withdrawals or stole money from the accounts, this claim makes little sense in the absence of any supporting evidence. In addition, Respondent testified that he had a closed head injury during Operation Desert Storm, but he again offered no evidence that such an injury was related to his misconduct. See People v. Lujan, 890 P.2d 109, 112-113 (Colo.1995) (disbarment is not the appropriate sanction where an injury causes a respondent to engage in the misconduct).
3. Injury or potential injury caused
Respondent converted at least $4,050.35 from the COLTAF Account and $3,379.00 from the Estate Account. In addition, Respondent’s first wife and two minor children have lost the benefit of $28,076.69 because Respondent has disregarded his child support order. These facts alone demonstrate serious injury. Respondent also caused injury to our system of justice, by obstructing the effective administration of the Wickliffe Estate and failing to honor of court orders.
4. Aggravating and mitigating evidence
a. Mitigating Factors, ABA Standard 9.3
1. No Prior Discipline
Respondent has no prior discipline. He has been licensed to practice law in Colorado for six years. Both Respondent and Mr. Pinkney testified that, over the course of his career, Respondent has donated much of his time to pro bono clients in Bent County, as well as other locations in the Arkansas Valley and Denver. Respondent testified that he also donated the fees earned in the Wickliffe Estate case to charity.
2. Personal or Emotional Problems
Neither Party presented evidence from an expert on this point, nor did Respondent raise this issue. Respondent, however, appeared to have difficulty remembering dates and events. In addition, he acted in a detached manner at times during the hearing. Further, Respondent testified that he suffered a closed head injury during Operation Desert Storm. There is no evidence, however, to show that any injury caused his misconduct or affected his ability to represent himself in these proceedings.
b. Aggravating Factors, ABA Standard 9.2
1. Dishonest or Selfish Motive
Although Respondent has been given ample opportunity to explain what he did with the unreturned funds, Respondent cannot or will not provide any explanation, even after spending a night in jail for contempt of court. As a result, the Hearing Board concludes that Respondent converted this money for his own use and benefit, and as such, he had a selfish motive for the misappropriation. He also acted with a dishonest and selfish motive when he provided the Supreme Court with false certifications on his attorney registration reports, where in one instance he failed to disclose his child support obligations altogether, and in other instances he stated that his child support obligations were current.
2. Multiple Offenses
As outlined in the Complaint, Respondent’s actions were not limited to a single act of misappropriation. Rather, Respondent misappropriated money from Ms. Pleas’ trust accounts, which held the assets of her mother’s estate, multiple times from January through March 2003. Respondent not only converted estate funds, but also deposited a check that he knew belonged to Ms. Pleas, although the record is silent on how he managed to do so. Respondent’s actions collectively demonstrate that he engaged in multiple acts of conversion.
3. Refusal to Acknowledge Wrongful Conduct
During the sanctions hearing, Respondent stated that he was prepared to accept whatever sanction the Hearing Board thought was appropriate. Nevertheless, and despite an inability to prove his assertions, Respondent blamed others for his present situation. For example, he blamed Ms. Pleas for the missing funds; the OARC for failing to investigate records supporting his assertion that he had a hearing in Bent County; and the Kansas courts for allegedly informing him that he no longer needed to send child support checks to Kansas in the future.
4. Vulnerability of Victim(s)
Respondent took advantage of Ms. Pleas, a woman who was suffering emotional distress from the loss of her mother. Ms. Pleas completely relied on Respondent to give her professional advice and to honestly administer her mother’s estate.
5. Indifference to Making Restitution
Respondent has never acknowledged that he converted funds. As a consequence, he has never offered to make restitution to Ms. Pleas or the Wickliffe estate.
Upon consideration of the mitigating and aggravating factors, as well as the duties breached, the injuries caused, and Respondent’s mental state, the Hearing Board finds that the gravity of Respondent’s conduct substantially outweighs any justification for a sanction short of disbarment.
To his credit, Respondent has no prior discipline, but this mitigating factor in isolation cannot ameliorate the degree of damage Respondent knowingly caused to his client, to the legal profession, and to our system of justice. See e.g. Varallo, 913 P.2d at 12 (good reputation in the local legal community and absence of prior discipline insufficient mitigation to warrant sanction less than disbarment).
Respondent also claims that a closed head injury he suffered in Operation Desert Storm is currently causing him to suffer from grand and petit mal seizures. He agrees that, with this condition, he should not be practicing law. The record here, however, is far short of that in the Lujan case where an expert testified that the mental defect actually caused the misconduct. 890 P.2d 109. To the contrary, the evidence here is that Respondent’s actions, in accessing funds that did not belong to him and avoiding an order to pay child support, were knowing and in furtherance of his efforts to satisfy his own needs. Nevertheless, in an abundance of caution, the PDJ ordered an independent medical exam of Respondent at the close of testimony. The doctor has provided that report to the Court, and the doctor’s findings do not alter the conclusions reached in this Opinion.
Respondent has not recognized the seriousness of his conduct, and refuses to take responsibility for his actions. He offers unsupported statements about his innocence, but cannot or will not acknowledge that the facts do show his culpability.
Finally, the Court advised Respondent well in advance of the hearing on sanctions that the Court was prepared to appoint an experienced and respected lawyer to represent Respondent pro bono in these proceedings. Respondent simply needed to call this lawyer. Respondent, however, did not do so. When the Court inquired why Respondent did not contact the attorney, Respondent replied that he was busy defending a client in a criminal matter and did not have the time.
One of the primary goals of our disciplinary system is to protect the public from lawyers who pose a danger to them. Respondent intentionally harmed and deceived his client, the probate court, and the Colorado Supreme Court. On these facts, any sanction short of disbarment would be a disservice to our stated goal of protecting the public. The Hearing Board therefore finds that disbarment is the appropriate sanction.
It is therefore ORDERED:
GIORGIO DESHAUN RA’SHADD, attorney registration no. 30417, is DISBARRED from the practice of law, effective thirty-one (31) days from the date of this Order, and his name shall be stricken from the roll of attorneys licensed to practice law in the State of Colorado.
GIORGIO DESHAUN RA’SHADD is ORDERED to pay the costs of this proceeding; the People shall submit a Statement of Costs within fifteen (15) days of the date of this Order. Respondent shall have ten (10) days in which to respond.
GIORGIO DESHAUN RA’SHADD is ORDERED to pay $7,429.35 to the Estate of Annie Wickliffe.
Case Number: 04PDJ077
THE PEOPLE OF THE STATE OF COLORADO,
LAWRENCE C. RIDER.
April 13, 2005
AMENDED OPINION AND ORDER IMPOSING SANCTIONS
On July 30, 2004, the Office of Attorney Regulation Counsel ("OARC") filed a Complaint against attorney Lawrence C. Rider ("Respondent"). Respondent answered the Complaint on September 1, 2004, admitting all factual allegations, but reserving the right to be heard on the issue of sanctions. On September 23, 2004, the People moved for judgment on the pleadings, which Respondent did not oppose. On September 24, 2004, the Presiding Disciplinary Judge ("PDJ") granted the People’s motion on the only Claim in the Complaint, violation of Colo. RPC 8.4(c), engaging in conduct involving dishonesty, fraud, deceit, and misrepresentation. Thus, the only remaining issue is the appropriate sanction for the misconduct Respondent admits.
On November 2, 2004, a Hearing Board consisting of Thomas J. Overton, a member of the bar, Frances L. Winston, a representative of the public, and William R. Lucero, the Presiding Disciplinary Judge, heard and deliberated on evidence presented under C.R.C.P. 251.18(d). Charles E. Mortimer, Assistant Regulation Counsel, represented the Office of Attorney Regulation (the "People"). E. Gregory Martin represented Respondent Lawrence C. Rider.
The following witnesses testified on behalf of Respondent: former Colorado Supreme Court Justice Jean Dubofsky, District Court Judge Morris Sandstead, John R. Mehaffy, Esq., Lane Earnest, Esq., Martha Ridgway, Esq., and Pastor John Hess. The Hearing Board also heard and considered testimony from Respondent. In addition, Respondent offered and the PDJ admitted trial Exhibits A (a letter from James T. Dunn, the Complainant) and B (an affidavit from Melody Fuller, the President of the Boulder County Bar Association). The People presented no evidence.
The Hearing Board considered the parties’ Trial Briefs and oral arguments, their Stipulation of Facts, and the evidence presented at trial, including the credibility of witnesses. On January 3, 2005, the Hearing Board issued an Opinion and Order Imposing Sanctions in this case, disbarring Respondent Lawrence C. Rider from the practice of law in Colorado. In the Opinion, the Hearing Board specifically found, based upon the representation of the Parties, that Respondent had no prior discipline. Since that time, evidence of a prior private censure has surfaced. Consequently, the Parties jointly requested that the Hearing Board amend its Opinion to reflect the fact of prior discipline. Accordingly, this Amended Opinion and Order Imposing Sanctions is intended to replace the January 3, 2005 Opinion and Order Imposing Sanctions.
SANCTION IMPOSED: ATTORNEY DISBARRED
A lawyer who knowingly misappropriates $148,000 from the estate of an ill and elderly woman, over eight years and while acting as her conservator, egregiously violates his duties to his client and the legal system. Under these circumstances disbarment would normally be the appropriate sanction. But is a lesser sanction appropriate if the lawyer expresses genuine remorse, makes full restitution, and presents evidence of an excellent reputation?
Despite the mitigation presented, the Hearing Board concludes that disbarment is appropriate in this case.
II. FINDINGS OF FACT
The Hearing Board finds that the People proved the following facts by clear and convincing evidence:
Respondent has taken and subscribed the Oath of Admission, was admitted to the Bar of this Court on October 4, 1968, and is registered as an attorney upon the official records of this Court, registration number 771. Hence, Respondent is subject to the jurisdiction of this Court and the Office of the Presiding Disciplinary Judge in these proceedings. Throughout his career, Respondent has practiced law from offices located in Boulder, Colorado.
In the early 1990s, Mr. James Dunn, an attorney in Utah, called Respondent to ask if he would be willing to represent Mary Halverson, an elderly women who suffered from a bipolar disorder. Ms. Halverson required the services of counsel in a variety of matters, including fraud claims relating to the sale of horses and a breach of contract claim involving horse trailers. At the time, Ms. Halverson was living near Chimney Rock in Archuleta County, Colorado.
With knowledge of her bipolar condition, Respondent agreed to represent Ms. Halverson. Thereafter, he met with her and discovered that she did not trust the lawyers in Archuleta County. Respondent also soon discovered that Ms. Halverson was a client who required much of his time, particularly because he traveled from Boulder to Chimney Rock to tend to her legal needs. For example, Ms. Halverson, according to the Respondent, had challenged the sheriff to a gunfight and he had to go to Chimney Rock to resolve the matter. On other occasions, the Respondent helped Ms. Halverson deal with other matters including disputed credit card charges.
As time passed, Ms. Halverson’s mental condition deteriorated and she needed someone to assist her in handling a portion of her financial affairs. In 1993, Mr. Dunn suggested, and Respondent agreed, that the Respondent would act as Ms. Halverson’s conservator. Accordingly, in 1993, the district court in Archuleta County appointed Respondent conservator for Ms. Halverson. Nevertheless, she continued to carry on day-to-day financial activities, including maintaining her own bank accounts and making her own purchases. Eventually, however, Ms. Halverson needed to leave her ranch in Archuleta County. As conservator, Respondent assisted with the sale of Ms. Halverson’s 63-acre ranch and its contents. Likewise, he then maintained control over the proceeds.
Following his appointment as conservator in 1993 and through November 1996, Respondent filed inventory and accounting reports with the district court each year. During this time, he also applied twice for payment from Ms. Halverson’s estate for legal fees incurred as conservator. The court approved both requests. Thus, he received a total of $35,430.87 for services he provided through 1996. Though he should have, Respondent filed no reports with the district court after November 1996. He testified that he provided an additional $16,000 in legal work after 1996, but did not submit these fees to the court for payment.
After Ms. Halverson left her ranch, she lived in Boulder County for a brief time. Then, in 2000, because her mental and physical condition worsened, she moved from Boulder to an assisted living facility in Utah. Shortly thereafter, the district court dismissed the conservatorship.
When Ms. Halverson died on March 1, 2002, Mr. Dunn was both the beneficiary and executor of her estate. In April 2002, Respondent gave Mr. Dunn a check for $300,000, funds that Respondent represented were due the estate. Respondent provided no accounting with the check. He explained to Mr. Dunn that there were a few matters he needed to complete in order to close the estate, and that there was a remainder of $9,000 due the estate.
Following Ms. Halverson’s death, Mr. Dunn worked with Mr. Russell Whitehouse, CPA, to administer the estate. Mr. Dunn and Mr. Whitehouse made at least nine written requests to Respondent for complete accountings. As of November 3, 2003, Respondent had not given Mr. Dunn accountings for calendar years 1999, 2000 and 2001, or for January and February of 2002. Mr. Dunn told Respondent that he would report this matter to the OARC if Respondent did not provide an accounting as requested. Nevertheless, Respondent did not do so. Respondent testified that he attempted several times to prepare an accounting for Mr. Dunn, but could not. He described himself as "paralyzed" and unable to act. Mr. Dunn reported these grievances against Respondent to the OARC on November 3, 2003.
The OARC mailed Mr. Dunn’s request for investigation to Respondent on November 12, 2003, and asked him to respond. Respondent received this mailing and asked for three enlargements of time to answer Mr. Dunn’s complaint. The OARC granted these requests. Ultimately, Respondent promised he would respond by February 2, 2004, but he did not. As a consequence, the OARC subpoenaed Respondent to be deposed on February 17, 2004.
Respondent appeared at the deposition and answered questions about his appointment and role as conservator for Ms. Halverson’s estate. Specifically, Respondent testified under oath that his failure to provide an accounting was due to the lack of certain records necessary to complete it. He swore under penalty of perjury that the problem rested with an outside investment firm, which had failed to provide him with account statements on the conservatorship. In fact, this was not true. Respondent had most, if not all, of the records needed to complete an accounting. These records, however, would have revealed his misappropriation of $148,000 from Ms. Halverson’s estate.
At trial, Respondent testified that he thought he could "out-smart" everyone. He believed that he could pay back the money in the long run, without anyone discovering his misconduct. Before attending the deposition, Respondent designed his defense and considered creating false documents to substantiate his story about the investment firm error.
However, Respondent never acted on the impulse to create false documents. Instead, he attended the deposition with a plan to delay the process further by claiming that he just did not have the necessary documents. The deposition started at 8:58 a.m. and finished at 9:56 a.m. After Respondent left the OARC offices, he sat in his parked truck and struggled with his conscience. He realized the gravity of lying under oath, and felt that he could no longer hide what he had done. He returned to the OARC offices and admitted to Mr. Mortimer that he had not told the truth during his deposition. He confessed that he had misappropriated funds belonging to Ms. Halverson. At the time, he was visibly distressed and the OARC referred him to a grief counselor.
A few days after his disclosure, Respondent provided the OARC with two boxes of documents, primarily bank records, showing activity on accounts belonging to the conservatorship. Respondent reported that at the time, his records were in a state of "chaos." The OARC supplied copies of these records to Mr. Dunn and Mr. Whitehouse. Upon review of the records, they confirmed that Respondent had misappropriated approximately $148,000. The records showed that Respondent wrote approximately 80 checks to himself or his creditors from Ms. Halverson’s estate over a period of eight years while he was her conservator. Most important, the records also showed that Respondent wrote the first of the unauthorized checks within one month of his appointment as conservator.
The records also detailed how and when Respondent misappropriated Ms. Halverson’s money. In one instance, Respondent sold a truck belonging to Ms. Halverson to a company his son owned for $7,500. He did not, however, collect the full purchase price at the time of sale. After his son’s company failed, Respondent neglected to pursue payment of the remaining $2,800 for the benefit of Ms. Halverson’s estate.
When he wrote unauthorized checks, Respondent justified his actions by convincing himself that he would pay the estate back. He further justified his actions by reasoning that his legal fees would cover the amounts taken. When asked what he spent the money on, Respondent testified that it was initially to pay taxes he urgently needed to pay. Later, he took money when he needed it, even for groceries. Respondent offered no other evidence to explain why he took the money.
While Respondent had access to the Halverson funds, he had no meaningful oversight. Though he had a duty to account to the court regarding his activities as a conservator, he did not do so after November 2003. Even when he did, he provided no information disclosing his misappropriation of estate funds. Meanwhile, Mr. Dunn and Ms. Halverson trusted Respondent to handle the estate honestly.
Following his admission of misconduct to the OARC on February 17, 2004, Respondent told counsel for Mr. Dunn that he intended to repay the funds he misappropriated. Respondent then met with Mr. Dunn in Salt Lake City and reached an agreement on restitution. Respondent refinanced his house and paid the restitution to Ms. Halverson’s estate with the loan proceeds.
On or about August 6, 2004, the People received a letter from Mr. Dunn. Mr. Dunn reported that the Respondent had made a complete accounting of the conservatorship funds, as well as money due and owing to the estate. Mr. Dunn "supports reinstatement" of Respondent’s license to practice law.
Respondent enjoys a sterling reputation in the legal community. The witnesses who testified on his behalf urge the Hearing Board to consider a lengthy suspension instead of disbarment. They believe the misappropriation described above was an aberration, and will not likely recur. They point out that, apart from these events, Respondent has been an exemplary lawyer. However, Respondent has been disciplined before. The Supreme Court privately censured him in 1993.
III. IMPOSITION OF SANCTIONS
The ABA Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") are the guiding authority for selecting the appropriate sanction to impose for lawyer misconduct. In determining the appropriate sanction, ABA Standard 3.0 directs the Hearing Board to examine the following factors:
(1) the duty breached;
(2) the mental state of the lawyer;
(3) the injury or potential injury caused; and
(4) the aggravating and mitigating evidence.
The act of knowing misappropriation "consists simply of a lawyer taking a client’s money entrusted to him, knowing that it is the client’s money and knowing that the client has not authorized the taking." People v. Varallo, 913 P.2d 1, 11 (Colo. 1996) (quoting In re Noonan, 506 A.2d 722, 723 (N.J. 1986)). Neither the lawyer’s motive in taking the money, nor the lawyer’s intent regarding whether the deprivation is temporary or permanent, are relevant for disciplinary purposes. Id. at 10-11.
The presumptive sanction for knowing conversion of client property entrusted to an attorney is disbarment. ABA Standard 4.11 states: "Disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client." Generally, suspension is reserved for misconduct, such as commingling funds, that does not amount to misappropriation or conversion of funds for the attorney’s own use. ABA Standard 4.12 (commentary). Likewise, the Colorado Supreme Court has indicated that lawyers are "almost invariably disbarred" for knowing misappropriation of client funds. Varallo, 913 P.2d at 11; People v. McGrath, 780 P.2d 492, 493 (Colo. 1989) ("the Court would not hesitate to enter an order of disbarment if there was no doubt that the attorney engaged in a knowing conversion of his client’s funds").
Nevertheless, the Supreme Court has always deemed extraordinary mitigating factors an important part in determining an appropriate sanction, even in cases involving conversion of client funds; People v. Dice, 947 p.2d 339 (Colo. 1997) ("[w]e have repeatedly held that a lawyer’s knowing misappropriation of funds . . . warrants disbarment except in the presence of extraordinary mitigating factors").
More recently the Supreme Court reminded hearing boards not to overlook significant mitigating factors that may overcome the presumption of disbarment. In the Matter of Fischer, 89 P.3d 817 (Colo. 2004). Thus, it is incumbent upon hearing boards to properly consider evidence in mitigation, and to recognize that each case presents unique facts and perhaps a different need for sanctions.
In Fischer, the Court disapproved disbarment. That case, however, did not involve stealing client money. Rather, the attorney had deviated from a separation agreement disbursement schedule without first obtaining court approval. Mitigating factors included lack of an attempt to falsify, deceive, or conceal the misconduct. In addition, the attorney accepted personal responsibility for all debts subject to the separation agreement and all additional expenses. Finally, the Court believed that, while the attorney admitted knowingly misappropriating third-party funds, he thought he was simply attempting to overcome hurdles in liquidating assets and it had not occurred to him that he was violating a court order. Fischer is thus readily distinguishable from cases in which the attorney flagrantly abuses a client’s trust by treating client funds as his own. Id. at 821.
The Hearing Board finds the following evidence relevant to determining the appropriate sanction.
A. MATTERS IN MITIGATION
1. PERSONAL AND EMOTIONAL PROBLEMS
Respondent presented no expert evidence on this issue. However, one lay/fact witness did offer her perspective on this point. This witness felt that Respondent’s actions were a call for help because Respondent was overwhelmed with the practice of law.
Respondent also testified that he sought psychiatric assistance to understand why he took the money from Ms. Halverson’s estate. He briefly saw two psychiatrists, but soon stopped meeting with them. He did not think the first psychiatrist was helpful, and he discontinued meeting with the second due to a lack of money.
The Complainant, Mr. Dunn, states that Respondent has "completed restitution and has paid all amounts due and owing to the estate." The Hearing Board notes, however, that restitution was made only after Mr. Dunn lodged a complaint with the OARC.
In over 35 years as a lawyer, Respondent has built a solid reputation. A host of highly respected members of the legal community, who know Respondent professionally and personally, offered credible testimony in this regard.
One of the witnesses described Respondent, his wife, and his children as the "quintessential American family." Respondent’s law partner for over 30 years testified that he would "never question" Respondent’s honesty. A well-respected Boulder lawyer with 35 years of legal experience testified that Respondent’s reputation was "superb." An 18-year attorney, who practices in Boulder County and has tried a number of contentious divorce cases against Respondent, described his reputation as "outstanding." In addition, the Assistant Pastor of the First Presbyterian Church of Boulder testified about the pro bono and charitable work Respondent had done for clients and members of the church, describing him as always "available and credible." Finally, a Boulder District Court Judge testified that Respondent was "one of the great guys" and a man of "great integrity," based upon his knowledge of Respondent as a lawyer and a friend.
Although Respondent’s reputation is undeniable, its weight as a mitigating factor is significantly reduced by the presence of prior discipline. To a certain extent, Respondent’s reputation may have to do with his ability to conceal any wrongdoing.
Respondent has indeed served the legal community throughout his career. Exhibit B, an affidavit executed by Melody K. Fuller, the President of Boulder County Legal Services, details the contributions Respondent has made to the profession. They include a wide range of pro bono services, particularly in the areas of family law and children’s issues. Respondent has represented a family that was victimized by a mortgage scam, mobile home owners seeking justice against a mobile home park owner, and a mentally disabled adult who needed assistance in recovering funds from a bank.
Respondent is remorseful for the harm he caused his family, his colleagues, and the legal profession. His demeanor shows the depth of his contrition. He recognizes his ethical violations and has accepted full responsibility for his actions. Although he delayed eight years in admitting his wrongdoing, he ultimately did so, and thereafter fully cooperated with the OARC. On the other hand, the Hearing Board also notes that Respondent does not fully acknowledge the harm to his client, Ms. Halverson. Instead, Respondent offers that he took care of her needs.
B. MATTERS IN AGGRAVATION:
1. PRIOR DISCIPLINARY OFFENSES
Respondent has one prior disciplinary offense. In 1993, the same year that he was appointed as Ms. Halverson’s conservator, Respondent was subject to private censure by the Supreme Court. As the legal representative and attorney-in-fact of a trust, Respondent accepted a $50,000 zero interest loan from trust proceeds without advising the settlor and the trustee that the various interests may differ, that the loan terms may be detrimental to the trust, and that another attorney should be consulted to review the transaction. The trust lost approximately $10,000 as a result of the loan.
2. DISHONEST OR SELFISH MOTIVE
Respondent testified that, while he took money from Ms. Halverson’s estate for "urgent" needs including taxes, he also took money simply for whatever he needed. There was no detailed testimony with respect to how he spent the $148,000. Undoubtedly, he put his own needs and desires ahead of the needs and desires of Ms. Halverson, an elderly woman who suffered from health and psychological problems and who depended upon him for protection.
More important, this was not an instance of immediate disclosure and restitution following a single act or series of acts of conversion within a short period of time. Respondent concealed his actions and carried on his deceit for eight years, misleading the court, Mr. Dunn, and Ms. Halverson. A number of witnesses candidly stated that, knowing what they know about this case, they would not likely recommend Respondent as a conservator for one of their clients.
3. MULTIPLE OFFENSES
This was not a single instance of misappropriation. Respondent misappropriated money from Ms. Halverson’s estate within a month of his appointment as conservator. From that point on, Respondent took money whenever he needed it. Respondent ultimately wrote 80 unauthorized checks over a period of eight years.
4. SUBMISSION OF FALSE STATEMENTS
During his deposition and while under oath, Respondent submitted false and misleading statements to the People regarding estate funds.
5. VULNERABILITY OF VICTIM
Respondent knowingly took advantage an elderly woman with serious mental and physical infirmities. Respondent misappropriated $148,000 from Ms. Halverson while acting under a court order to protect her interests as conservator of her estate. In addition, Respondent does not believe that his actions caused harm to Mrs. Halverson in the "classic sense." Rather, Respondent testified that he took care of all her financial needs. This view is particularly troubling to the Hearing Board.
6. SUBSTANTIAL EXPERIENCE IN THE PRACTICE OF LAW
Respondent has practiced law for over 36 years. He is and was well aware of his duties as a fiduciary.
C. DUTIES BREACHED
Respondent had a duty to deal professionally, honestly, and openly with Ms. Halverson and her estate. As an officer of the court, he had a duty to render an honest and accurate accounting on the funds entrusted to him as conservator. In addition, he had a duty to promote confidence, not distrust, in our system of justice. Respondent blatantly breached each of these duties.
D. INJURY CAUSED
Respondent unquestionably stole $148,000 from Ms. Halverson’s estate. This fact alone demonstrates serious injury. Respondent also caused injury to our system of justice, by obstructing the effective administration of Ms. Halverson’s estate.
E. MENTAL STATE
Respondent admits that he acted knowingly when he took Ms. Halverson’s money. He was fully aware of his actions and their consequences. Nevertheless, he continued his misconduct for eight years, deceiving his client, the court, and Mr. Dunn in the process. Respondent abused the trust that he knew others placed in him and engaged in a pattern of deceit for his own benefit.
Upon consideration of the mitigating and aggravating factors, as well as the duties breached, the injuries caused, and Respondent’s mental state, the Hearing Board finds that the gravity of Respondent’s conduct substantially outweighs any justification for leniency. To his credit, Respondent has demonstrated remorse and made full restitution. These mitigating factors, however, are overshadowed by the degree of damage Respondent knowingly caused to his client, to the legal profession, and to our system of justice.
Over an extended period of time, Respondent committed numerous acts of theft against an elderly woman who suffered from physical and mental infirmities. Respondent first stole from Ms. Halverson within one month of his appointment as conservator of her estate. Thereafter, he wrote eighty unauthorized checks to himself and his creditors. As a fiduciary, Respondent was trusted to protect Ms. Halverson and to promote her best interests. Instead, Respondent took advantage of the authority he had over her affairs and converted a large amount of money from her estate for his own personal use.
Under the circumstances of this case, any personal justification for taking the money or intention to repay the funds is rendered irrelevant. Throughout the period in question, Respondent engaged in deceit to conceal his wrongdoing. His dishonesty extended to the point of lying under oath during the OARC’s investigation. This case is distinguishable from Fischer, as it involves the actual, intentional, and concealed conversion of substantial funds from a vulnerable client over an extended period of time. 89 P.3d at 820-822.
One of the primary goals of our disciplinary system is to protect the public from lawyers who pose a danger to them. Respondent harmed his client, his colleagues, and our judicial system. On these facts, any sanction short of disbarment would be a disservice to our stated goal of protecting the public. The Hearing Board therefore finds that disbarment is the appropriate sanction.
It is therefore ORDERED:
LAWRENCE C. RIDER, attorney registration 00771, is DISBARRED from the practice of law, effective thirty-one (31) days from the date of this Order, and his name shall be stricken from the roll of attorneys licensed to practice law in the State of Colorado.
LAWRENCE C. RIDER is ORDERED to pay the costs of this proceeding; the People shall submit a Statement of Costs within fifteen (15) days of the date of this Order. Respondent shall have ten (10) days in which to respond.
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