Filed April 23, 2008
In re William A. Lockhart
Commission No. 07 CH 69
Synopsis of Hearing Board Report and Recommendation
NATURE OF THE CASE: 1) converting funds; 2) breaching fiduciary duties; 3) failing to respond to a lawful demand for information from a disciplinary authority; 4) engaging in conduct prejudicial to the administration of justice; and 5) engaging in conduct that tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute.
RULES DISCUSSED: Rules 8.1(a)(2), and 8.4(a)(5) of the Illinois Rules of Professional Conduct and Supreme Court Rule 770.
DATE OF OPINION: April 23, 2008.
HEARING PANEL: Michael L. Bolos, Chair, Leonard J. Schrager, and David A. Dattilo.
ADMINISTRATOR'S COUNSEL: Robert J. Verrando.
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
WILLIAM A. LOCKHART,
Commission No. 07 CH 69
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on March 26, 2008, at the Chicago, Illinois offices of the Attorney Registration and Disciplinary Commission ("ARDC") before the Panel of Michael L. Bolos, Chair, Leonard J. Schrager, and David A. Dattilo. Robert J. Verrando represented the Administrator of the ARDC. Respondent failed to appear at the hearing and was not represented by counsel.
PLEADINGS AND PRE-HEARING PROCEEDINGS
On July 24, 2007, the Administrator filed a two-count Complaint against Respondent pursuant to Supreme Court Rule 753(b). The Administrator alleged that Respondent converted funds from a construction business in which he was a partner, and failed to cooperate with the ARDC. On November 7, 2007, Respondent was served with notice of the complaint by substitute service pursuant to Supreme Court Rule 765(b). Respondent failed to answer the Complaint. On December 7, 2007, the Administrator filed a motion to deem the allegations of the Complaint admitted. On December 13, 2007, that motion was granted and the allegations of the Complaint were deemed admitted. On January 23, 2008, the Administrator filed a motion for
sanctions. On January 30, 2008, that motion was granted, and Respondent was barred from testifying, calling witnesses or introducing any documents into evidence at the hearing.
The Administrator presented the testimony of one witness, and offered no exhibits.
In 2004, Respondent and Charles L. Cornelius, Jr., a non-attorney, formed a partnership under the name Catalpa Developers, LLC for the purpose of developing and marketing a residential condominium project in Chicago. As part of the venture, Respondent and Cornelius also incorporated American Associates Construction, Inc. (AAC) for the purpose of acting as general contractor for construction of the project. In December 2004, Respondent and Cornelius opened an account at North Community Bank in the name of AAC to be used as an operating account during the construction of the project. Respondent and Cornelius identified themselves as the principals of AAC, and the bank gave each the authority to draw and negotiate checks from the account.
Between December 2004 and December 2006, Catalpa sold condominium units and deposited part of the proceeds into the AAC account at North Community Bank to fund the construction. At all times, Respondent owed a fiduciary duty to Cornelius, Catalpa and AAC to act with good faith and to use the partnership funds only for purposes relating to the business of the partnership.
On several occasions in and after October 2006, Cornelius and persons acting at his direction sought to communicate with Respondent by telephone and mail, and received no response. On December 8, 2006, Respondent drew a check from the North Community account
made payable to cash in the amount of $1,000, negotiated it, and used the funds for his own purposes. On February 1, 2007, Respondent drew a check from the same account made payable to cash in the amount of $1,250, negotiated it, and used the funds for his own purposes. On February 13, 2007, Respondent drew a check from the same account made payable to cash in the amount of $7,000, negotiated it, and used the funds for his own purposes. At no time did he inform Cornelius, Catalpa or AAC of these checks, and at no time did Cornelius, Catalpa or AAC authorize Respondent to use these funds for his own purposes. As of February 13, 2007, Respondent had converted at least $9,250 from, and violated his fiduciary duties to Cornelius, Catalpa and AAC.
Testimony of John Kennedy
John Kennedy is an attorney who represented Cornelius in matters relating to Respondent. The venture between Respondent and Cornelius was organized so both men were needed to run the business. At some point, Respondent essentially abandoned the project, and Cornelius hired Kennedy to take the legal steps necessary to allow Cornelius to continue the project without Respondent. (Tr. 5-6). Kennedy determined that Respondent had to be divested of his interests and filed an injunction action against him. Kennedy ultimately obtained a judgment against Respondent. (Tr. 6). Respondent did not participate in the lawsuit and a default judgment was entered against him, including $94,504 in fees and costs. (Tr. 7-8). Cornelius also hired Kennedy to obtain a truck that Respondent used and was leased to the company, that had been seized by the Chicago Police Department. The costs and fees for that matter totaled $4,495. Respondent has not paid any of these amounts. (Tr. 8-9). Kennedy was not aware of Respondent performing any legal work for the companies. (Tr. 9-13).
On April 2, 2007, Cornelius's attorney submitted a request for investigation of a lawyer to the ARDC, describing the conduct articulated in Count I. On May 7, 2007 and June 19, 2007, counsel for the Administrator sent letters to Respondent's registered address requesting that he provide information relating to his involvement with Catapla. At no time did Respondent respond to the letters.
Respondent has not engaged in prior misconduct.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In attorney disciplinary proceedings, the Administrator must prove the alleged misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Ingersoll, 186 Ill. 2d 163, 168, 710 N.E.2d 390 (1999). "Clear and convincing evidence is a standard of proof which, while less than the criminal standard of proof beyond a reasonable doubt, is greater than the civil standard of preponderance of the evidence." Cleary and Graham, Handbook of Illinois Evidence, sec. 301.6 (6th ed. 1994). This standard of proof is one in which the risk of error is not equally allocated; rather, this standard requires a high level of proof, both qualitatively and quantitatively, from the Administrator. Santosky v. Kramer, 455 U.S. 745, 764-66, 102 S. Ct. 1388 (1982); In re Tepper, 96 CH 543, M.R. 14596 (1998) (Review Bd. Dec. at 12). Suspicious circumstances are insufficient to warrant discipline. In re Lane, 127 Ill. 2d 90, 111, 535 N.E.2d 866 (1989).
In this case, based on the admitted facts and testimony presented at the hearing, we conclude that the Administrator proved, by clear and convincing evidence, that Respondent engaged in all of the alleged misconduct. Specifically, we find that Respondent:
breached his fiduciary duty to Cornelius, Catalpa and AAC;
failed to respond to a lawful demand for information from a disciplinary authority in violation of Rule 8.1(a)(2) of the Illinois Rules of Professional Conduct;
engaged in conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(a)(5) of the Illinois Rules of Professional Conduct; and
engaged in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, in violation of Supreme Court Rule 770.
The purpose of the disciplinary system is to protect the public, maintain the integrity of the legal system and safeguard the administration of justice. See In re Gorecki, 208 Ill. 2d 350, 802 N.E.2d 1194 (2003); In re Howard, 188 Ill. 2d 423, 721 N.E.2d 1126 (1999). "The Rules of Professional Conduct recognize that the practice of law is a public trust and lawyers are the trustees of the judicial system." In re Smith, 168 Ill. 2d 269, 287, 659 N.E.2d 896 (1995). The objective of a disciplinary inquiry is not punishment, but to protect the public from incompetent or unscrupulous attorneys, maintain the integrity of the profession, and protect the administration of justice from reproach. See In re Twohey, 191 Ill. 2d 75, 727 N.E.2d 1028 (2000). In determining the appropriate sanction for an attorney's misconduct, the purpose of the disciplinary system and the facts surrounding the misconduct must be considered. See In re Chernois, 114 Ill. 2d 527, 502 N.E.2d 722 (1986).
The discipline imposed on an attorney who has engaged in misconduct also depends on the aggravating and mitigating factors presented during that attorney's disciplinary proceedings. See Gorecki, 208 Ill. 2d at 360-61. In this case, there are several aggravating factors and one mitigating factor.
Respondent's misconduct is aggravated by the fact that he caused harm to his Cornelius and their companies. As a result of Respondent's misconduct, in addition to the loss of the $9,240 Respondent converted, Cornelius had to hire an attorney so he could continue the condominium project. Cornelius's attorney, Kennedy, filed a lawsuit and obtained judgments against Respondent for $94,504. Moreover, Cornelius also hired Kennedy to obtain a truck that Respondent used and was leased to the company, that had been seized by the Chicago Police Department. The costs and fees for that matter totaled $4,495. Respondent has not paid any of these amounts. Ultimately, Cornelius incurred these expenses. See In re Lewis, 118 Ill. 2d 357, 364, 515 N.E.2d 96 (1987) (harm caused by an attorney's misconduct is an aggravating factor).
Respondent's misconduct is also aggravated by the fact that he failed to participate in these disciplinary proceedings. Respondent was properly served with a copy of the complaint and was aware of these proceedings. Yet he failed to participate in the pre-hearing conferences and the hearing. An attorney's lack of cooperation in his own disciplinary proceedings demonstrates a "complete want of professional responsibility," and "indifference toward or even contempt for disciplinary procedures," and a "disregard for the authority and process of the Attorney Registration and Disciplinary Commission." In re Brody, 65 Ill. 2d 152, 156, 357 N.E.2d 498 (1976); In re Pass, 105 Ill. 2d 366, 371, 475 N.E.2d 525 (1985).
Respondent's misconduct is further aggravated because it was willful. Respondent purposefully and intentionally wrote checks from the company's account made payable to cash, negotiated those checks, and used the money for his own purposes See In re Mason, 122 Ill. 2d 163, 175, 522 N.E.2d 1233 (1988) (willfulness can be an aggravating factor).
The only mitigating factor presented is that Respondent has had no prior discipline. Generally, the lack of a prior discipline is a significant mitigating factor, however, based on the
egregious facts of this case, we give this fact little weight. See In re Demuth, 126 Ill. 2d 1, 14, 533 N.E.2d 867 (1988).
Having considered the aggravating facts and lack of mitigating facts, we must now recommend the appropriate sanction. The Administrator recommends Respondent be disbarred, and cites several cases supporting this recommendation. See In re Rotman, 136 Ill. 2d 401, 556 N.E.2d 243 (1990) (disbarment for converting $15,000 from an incompetent client's estate by forging checks); In re Daugherty, 05 CH 51, M.R. 21469 (March 19, 2007) (one year suspension and until he paid restitution after fraudulently obtaining a $15,000 loan and making misrepresentations to tribunals); In re Tyer, 04 CH 90, M.R. 20266 (September 26, 2005) (disbarment for converting $18,000 from a title company office he operated and harassment of an employee); In re Loftus, 07 CH 41 (Hearing Bd. Rpt., February 7, 2008; motion to approve and confirm under advisement) (recommending disbarment for converting $7,000 and neglecting two cases).
After reviewing the cases cited by the Administrator, and other cases, and considering all of the evidence, we believe that disbarment is the appropriate sanction. In addition to the cases cited by the Administrator, this case is analogous to In re Burnham, 07 CH 22, M.R. 14176 (January 29, 1998). In that case Burnham was the secretary of the Black Women Lawyer Association, and took $17,589 from the association's scholarship fund. The Hearing Board found that she committed theft of the funds and stated that theft is no less serious than conversion. Burnham did not participate in the disciplinary hearing. Relying on conversion cases, which have imposed disbarment, the Hearing Board recommended that Burnham be disbarred. Burnham, 07 CH 22 (Hearing Bd. Rpt. at 8-9) citing In re Stillo, 68 Ill. 2d 49, 368 N.E.2d 897 (1977). The Illinois Supreme Court affirmed that recommendation.
In the present case, as in Burnham, we find little difference between Respondent's conduct and theft. Respondent took money that did not belong to him with the intent to deprive the company and his partner of the money.
Also in Burnham, as in the present case, the misconduct arose from actions taken by an attorney outside of the practice of law. In addressing this issue, the Hearing Board in Burnham relied on the well-established principle that an attorney "is subject to discipline under the Rules of Professional Conduct for dishonest behavior even though he is not serving in the capacity of an attorney for the victim of his actions." (Hearing Bd. Rpt. at p. 6). In this case, as in Burnham, the fact that Respondent's misconduct occurred in the context of a business relationship does not impact our ability to recommend the appropriate discipline.
Therefore, in light of Respondent's misconduct, and considering the aggravating factors and relevant case law, we recommend that Respondent be disbarred.
Date Entered: April 23, 2008
|Michael L. Bolos, Chair, Leonard J. Schrager, and David A. Dattilo concurring.|