BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

ARTHUR GEORGE JAROS JR.,

Attorney-Respondent,

No. 1327097.

Commission No. 2013PR00073

FILED --- December 30, 2013

FIRST AMENDED COMPLAINT

Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission, by his attorney, Eunbin Rii, pursuant to Supreme Court Rule 753(b), complains of Respondent, Arthur George Jaros Jr., who was licensed to practice law in the State of Illinois on October 22, 1975, and alleges that Respondent has engaged in the following conduct which subjects Respondent to discipline pursuant to Supreme Court Rule 770:

Background
(Incorporation of Eagle Cove Camp and Conference Center Inc.)

1. On or about May 15, 2002, Respondent's father, Arthur G. Jaros Sr., established a charitable trust entitled Arthur G. Jaros Sr. and Dawn L. Jaros Charitable Trust ("Jaros Charitable Trust"). Respondent and his two younger siblings, Wesley A. Jaros ("Wesley") and Randall S. Jaros ("Randall"), were named trustees of the Jaros Charitable Trust. The Jaros Charitable Trust stated that its purpose was to "devote and apply … for the use of charitable, religious, and educational purposes and organizations … with special emphasis on the dissemination of the Word of God…. purposes be interpreted broadly to include such things as Christian based camps, youth facilities, family services and other organizations of a Christian based charitable nature."

2. After Respondent's father's death, the Jaros Charitable Trust was funded with approximately 34 acres of land located in Woodboro, Wisconsin, and $5,000,000 in cash. It was Respondent's idea, and the desire of his father and siblings, that the 34 acres of land be used for developing a Bible camp. In addition to the 34 acres of land, Respondent, as trustee of the Jaros Family Trusts, owned an additional 25 acres of land adjacent to the 34 acres, which would be available to the Bible camp's use.

3. On or about December 17, 2004, Respondent drafted and executed a form entitled "Articles of Incorporation - Nonstock Corporation" to organize a corporation in the State of Wisconsin. On the form, the name of the corporation was listed as Squash Lake Christian Camp, Inc. ("SLCC") and the three directors of SLCC were listed as Respondent and his two siblings, Wesley and Randall. The listed purpose of SLCC was to "operate for religious purposes a Christian Bible Camp in Oneida County, Wisconsin…." Respondent incorporated SLCC as a not-for-profit organization exempt from federal income taxes under the Internal Revenue Code 26 U.S.C. 501(c)(3). Later, Respondent amended the name of Squash Lake Christian Camp, Inc. ("SLCC") to Eagle Cove Camp and Conference Center, Inc. ("Eagle Cove Center").

4. At all times alleged in this complaint, Respondent was the President and Director of Eagle Cove Center. Respondent's two brothers were also directors and officers of Eagle Cove Center. In 2006, the estimated retail cost to develop Eagle Cove Center was $14,650,000.

5. The land in Woodboro, Wisconsin where Respondent was seeking to develop Eagle Cove Center, as described in paragraph two, above, was zoned as a Single Family Residential and Residential and Farming zones. Due to these zoning restrictions, Respondent was denied permits from the town of Woodboro and Oneida County to develop Eagle Cove Center. Respondent spent more than four years unsuccessfully requesting and applying for rezoning and conditional use permits to allow Respondent and Eagle Cove Center to develop the Christian Bible camp.

6. At various time in or about 2006 to the present, Respondent represented Eagle Cove Center as its attorney. As a result of Respondent's representation of Eagle Cove Center, Respondent had a fiduciary relationship with Eagle Cove Center that required him to exercise the highest degree of honesty, loyalty, and good faith.

Conflict of Interest
(Respondent's Representation of Jean D. Cooney)

7. In or about late 1978 or early 1979, Jean D. Cooney ("Mrs. Cooney") and John A. Cooney ("Mr. Cooney") hired Respondent's law firm, Richter & Jaros, to represent them in matters related to tax services, estate planning, estate administration, guardianship and litigation defense services. In or about the Spring of 1980, Respondent began to personally provide legal services to Mrs. and Mr. Cooney. Respondent represented both Mrs. and Mr. Cooney, providing legal services, such as drafting trust agreements, until Mr. Cooney's death on August 5, 1994. After Mr. Cooney's death, Respondent continued to represent Mrs. Cooney.

8. At no time did Respondent have any familial or close familial relationship with Mrs. or Mr. Cooney.

9. After Mr. Cooney's death, Respondent continued to represent Mrs. Cooney and drafted at least 15 Restatements or Amendments to Mrs. Cooneys' Trust Agreements until her death on October 16, 2010.

10. As a result of Respondent's representation of Mrs. Cooney, Respondent had an attorney-client relationship, which formed a fiduciary relationship obligating Respondent to act with honesty, loyalty, and good faith in counseling Mrs. Cooney in the disposition of her estate and trust. Respondent also had the duty to avoid placing himself in a position where Respondent's personal interests would conflict with the interests of Mrs. Cooney, to avoid engaging in transactions that benefited himself at the expense of Mrs. Cooney, her estate, or her trust, and avoid preparing restatements or amendments to the Jean D. Cooney Trust Agreement giving Eagle Cove Center $425,000.

11. Respondent breached his fiduciary duty by engaging in conduct, including but not limited to drafting restatements and amendments to Mrs. Cooney's trust agreements naming Eagle Cove Center as a beneficiary of Mrs. Cooney's trust, failing to communicate or explain the significance of the matter, failing to obtain consent or waiver, failing to advise Mrs. Cooney to seek out or procure independent legal advice concerning the designation of Eagle Cove Center in her trust agreement, and obtaining and distributing money to Eagle Cove Center, as described in paragraphs 12 through 23 below.

12. In or about October, 2006, Respondent drafted a third restatement of the Jean D. Cooney Trust Agreement ("Third Restatement") that was executed by Mrs. Cooney on October 27, 2006. In Article Third, Section I of the Third Restatement, Mrs. Cooney designated certain non-profit organizations as beneficiaries to receive a specific pecuniary amount after her death. The Third Restatement named six non-profit organizations as beneficiaries to receive a share of $700,000 after Mrs. Cooney's death. SLCC was one of the six non-profit organizations designated a beneficiary in the Third Restatement. The Third Restatement designated SLCC to receive $300,000.

13. At no time before Mrs. Cooney executed her Third Restatement did Respondent explain to Mrs. Cooney that he had a potential conflict of interest in preparing the trust agreement designating SLCC as a beneficiary in her trust agreement to receive $300,000, make a full and frank disclosure of all the relevant information regarding his personal interest in SLCC, and obtain consent or waiver from Mrs. Cooney regarding any potential conflict of interest.

14. At no time before Mrs. Cooney executed her Third Restatement did Respondent advise Mrs. Cooney to seek out or procure independent legal advice concerning the designation of SLCC as a beneficiary in her trust agreement.

15. In or about February 2007, Respondent drafted the fourth restatement of the Jean D. Cooney Trust Agreement ("Fourth Restatement"), which was executed by Mrs. Cooney on February 20, 2007. In Article Third, Section I of Mrs. Cooney's Fourth Restatement, ten non-profit organizations were designated as beneficiaries to receive a share of $822,500 after Mrs. Cooney's death. One of the ten non-profit organizations was Eagle Cove Center and was designated to receive $425,000 at Mrs. Cooney's death.

16. At no time before Mrs. Cooney executed her Fourth Restatement did Respondent explain to Mrs. Cooney that he had a potential conflict of interest in preparing the trust agreement designating Eagle Cove Center as a beneficiary in her trust agreement to receive $425,000, make a full and frank disclosure of all the relevant information regarding his personal interest in Eagle Cove Center, and obtain consent or waiver from Mrs. Cooney regarding any potential conflict of interest.

17. At no time before Mrs. Cooney executed her Fourth Restatement did Respondent advise Mrs. Cooney to seek out or procure independent legal advice concerning the designation of Eagle Cove Center as a beneficiary in her trust agreement.

18. In six subsequent restatements and amendments to Mrs. Cooney's trust agreement, Eagle Cove Center was named in Article Third, Section I, to receive a pecuniary amount of $425,000 after Mrs. Cooney's death.

19. At no time before Mrs. Cooney executed the six subsequent restatements and amendments to her trust agreement did Respondent explain to Mrs. Cooney that he had a potential conflict of interest in preparing the trust agreement designating Eagle Cove Center as a beneficiary in her trust agreement to receive $425,000, make a full and frank disclosure of all the relevant information regarding his personal interest in Eagle Cove Center, and obtain consent or waiver from Mrs. Cooney regarding any potential conflict of interest.

20. At no time before Mrs. Cooney executed her six subsequent restatements and amendments to her trust agreement did Respondent advise Mrs. Cooney to seek out or procure independent legal advice concerning the designation of Eagle Cove Center as a beneficiary in her trust agreement.

21. In Mrs. Cooney's last trust agreement, before her death on October 16, 2010, entitled Third Amendment to the Seventh Restatement of the Jean D. Cooney Trust Agreement ("Third Amendment to Seventh Restatement"), which was executed by Mrs. Cooney on January 5, 2010, nine non-profit organizations were named in Article Third, Section I, to receive a share of $470,000 if Mrs. Cooney died before January 1, 2011. One of the nine non-profit organizations was Eagle Cove Center, which was designated to receive $425,000 after Mrs. Cooney's death.

22. At no time before Mrs. Cooney executed her Third Amendment to Seventh Restatement did Respondent explain to Mrs. Cooney that he had a potential conflict of interest in preparing the trust agreement designating Eagle Cove Center as a beneficiary in her trust agreement to receive $425,000, make a full and frank disclosure of all the relevant information regarding his personal interest in Eagle Cove Center, and obtain consent or waiver from Mrs. Cooney regarding any potential conflict of interest.

23. At no time before Mrs. Cooney executed her Third Amendment to Seventh Restatement did Respondent advise Mrs. Cooney to seek out or procure independent legal advice concerning the designation of Eagle Cove Center as a beneficiary in her trust agreement.

24. On January 29, 2010, Mrs. Cooney resigned as trustee and as a result, Respondent became the trustee of Mrs. Cooney's trust agreement.

25. On October 16, 2010, Mrs. Cooney died.

26. On or about November 6, 2010, Respondent estimated the Cooney Estate to have an estimated value of $3,250,000.

27. In or around 2012, Respondent, as trustee of Mrs. Cooney's trust agreement, made distributions to the designated beneficiaries, including $425,000 to the Eagle Cove Center.

28. By reason of the conduct described above that occurred before January 1, 2010, Respondent has engaged in the following misconduct:

  1. representing a client, Mrs. Cooney, when the representation of that client may be materially limited by his own interests, as the president, co-trustee, and attorney for Eagle Cove Camp and Conference Center, by conduct including failing to obtain consent from the client and failing to disclose or communicate information reasonably sufficient to permit the client to appreciate the significance of the matter in question, in violation of Rule 1.7(b) of the Illinois Rules of Professional Conduct (1990); and

  2. preparing an instrument for his client, Mrs. Cooney, in which Respondent's non-profit organization, Eagle Cove Camp and Conference Center, was designated as a beneficiary to receive a substantial gift from that client with whom he was not related to, by conduct including but not limited to exerting undue influence or failing to advise the client to obtain independent legal advice, in violation of Rule 1.8(c) of the Illinois Rules of Professional Conduct (1990).

29. By reason of the conduct described above that occurred on or after January 1, 2010, Respondent has engaged in the following misconduct:

  1. representing a client, Mrs. Cooney, when the representation of that client will be materially limited by his own interest, as president, co-trustee, and attorney for Eagle Cove Camp and Conference Center, by conduct including failing to obtain informed consent, in violation of Rule 1.7(a)(2) of the Illinois Rules of Professional Conduct (2010); and

  2. preparing on behalf of a client, Mrs. Cooney, an instrument giving the Respondent's non-profit organization, Eagle Cove Camp and Conference Center, a substantial gift, by conduct including exerting undue influence or failing to advise the client to have the detached advice that another lawyer can provide, and where Respondent was not related to or did not maintain a close familial relationship with that client, in violation of Rule 1.8(c) of the Illinois Rules of Professional Conduct (2010).

WHEREFORE, the Administrator respectfully requests that this matter be assigned to a penal of the Hearing Board, that a hearing be held, and that the panel make findings of fact, conclusions of law, and a recommendation of such discipline as is warranted.

Eunbin Rii
Counsel for Administrator
130 E. Randolph Drive, Suite 1500
Chicago, IL 60601
Telephone: 312-565-2600

Respectfully submitted,

Jerome Larkin, Administrator
Attorney Registration and
Disciplinary Commission

By:  Eunbin Rii