Statement of Charges Allowed by the Illinois Supreme Court
and Imposing Discipline on Consent

Allowed September 22, 2017

IN THE SUPREME COURT OF ILLINOIS

In the Matter of:

LAURENCE KALLEN,

Attorney-Movant

No. 1386689.

 

Supreme Court No. M.R.28803

Commission No. 2016PR00111

 

STATEMENT OF CHARGES PURSUANT TO SUPREME COURT RULE 762(a)

Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission, by his attorney, Chi (Michael) Zhang, pursuant to Supreme Court Rule 762(a), states that on the date Laurence Kallen (hereinafter "Movant") filed a motion requesting his name be stricken from the Roll of Attorneys, a complaint was pending against Movant before the Hearing Board of the Commission, charging Movant with the misuse of over $1.5 million in foreclosure sale proceeds from four foreclosure actions in which Movantís former company, Kallen Realty Services, had acted as the judicially-appointed selling officer responsible for holding and distributing those proceeds. Had Movantís conduct been the subject of a hearing, the Administrator would have introduced the evidence described below, and that evidence would have clearly and convincingly established the misconduct indicated below:

I.    FACTUAL BASIS

Movantís admissions, bank records, court orders and records, and the testimony of various individuals, would establish the following facts:

1. From at least 2000 until 2015, Movant has been the sole owner and president of Kallen Realty Services ("KRS"), a business that conducted and effectuated sales of properties as a court-appointed selling officer in foreclosure actions. As the selling officer, KRS notified prospective buyers of properties being foreclosed upon by publishing information about those

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cases in newspapers of general circulation between 45 and 7 days prior to a scheduled sale of the properties. Non-party bidders who were successful in their bid for a property pay at least 10% of the bid price at sale, with the remainder due the next day. Following each sale, Movant submitted a selling officerís report of sale and distribution to the court for the courtís approval. Once those reports were approved, Movant had a duty to distribute to the plaintiff the amount specified in the report. Movantís fee for conducting each foreclosure sale was $300, which was deducted from the sale proceeds.

2. From August to December 2015, Movant conducted four public auctions for properties which were subject to mortgage foreclosure proceedings. Movant deposited the proceeds from those sales, which exceeded $1.5 million, into various checking accounts he maintained with Chase Bank ("Chase"). In around the same time period, Movant was transferring money between his various Chase accounts and making frequent cash withdraws ranging from $1,000 to $3,000, and using those funds for purposes unrelated to the foreclosure cases, including, primarily, loans to his girlfriend, Elizabeth S. Miniotis. This activity continued until May of 2016, when the funds in Movantís various checking accounts were depleted. As of the date this statement of charges was filed, Movant had yet to distribute any portion of the sale proceeds from the four properties to the plaintiffs in the foreclosure proceedings. As a result of Movantís failure to distribute the sale proceeds, he was held in indirect civil contempt and incarcerated for a period of five months. The details of those four foreclosure sales are as follows:

US Bank v. Modiri

3. On September 15, 2015, the Circuit Court of Cook County entered a judgment of foreclosure in the case of US Bank v. Modiri, 2008-CH-14302, in favor of the plaintiff.

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Following its judgment, the court appointed KRS as the selling officer to conduct the foreclosure sale of the property, which was located on North Garland Court in Chicago, at public auction. Movant sold the property for the bid price of $510,000 and deposited the proceeds into one of KRSís checking accounts.

4. On January 6, 2016, Movant filed with the court a report of sale and distribution, which the court approved on March 2, 2016. When Movant did not distribute any portion of the proceeds to US Bank, US Bank petitioned the court to issue a rule to show cause why Movant should not be held in indirect civil contempt. The court issued a rule to show cause on April 14, 2016, and later found Movant to be in indirect civil contempt. On May 31, 2016, the court committed Movant to the custody of the Sheriff of Cook County, who held Movant in the Cook County jail until his release on October 14, 2016.

JPMorgan Chase v. Stanojevic

5. On August 7, 2015, the Circuit Court of Cook County entered a judgment of foreclosure in the case of JPMorgan Chase v. Rosa Stanojevic, 2009-CH-49566, in favor of the plaintiff. Following its judgment, the court appointed KRS as the selling officer to conduct the foreclosure sale of the property, which was located on Wildwood Road in Elk Grove, at public auction. Movant sold the property for the bid price of $204,126 and deposited the proceeds into one of KRSís checking accounts.

6. On December 6, 2015, Movant filed with the court a report of sale and distribution, which the court approved on January 11, 2016. When Movant did not distribute any portion of the proceeds to Chase, Chase petitioned the court to issue a rule to show cause why Movant should not be held in indirect civil contempt. The court issued a rule to show cause on

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April 14, 2015. The contempt proceeding was heard in conjunction with the Modiri matter, referenced in paragraphs 3 and 4, above, which resulted in Movantís subsequent incarceration.

Bank of America v. Park et al.

7. On August 5, 2015, the Circuit Court of Cook County entered a judgment of foreclosure in the case of Bank of America v. Sang Park et al., 2012-CH-06330, in favor of the plaintiff. Following its judgment, the court appointed KRS as the selling officer to conduct the foreclosure sale of the property, which was located on 1718 West Altgeld Street in Chicago, at public auction. Movant sold the Altgeld property for the bid price of $675,001 and deposited the proceeds into one of KRSís checking accounts.

8. On November 20, 2015, Movant filed with the court a report of sale and distribution, which the court approved on February 3, 2016. At the time the court entered the order approving Movantís report of sale and distribution, Movant did not have sufficient funds in his various bank accounts to distribute the proceeds to the plaintiff. As of the date this statement of charges was filed, Movant had not distributed any portion of the sale proceeds to Bank of America.

Bank of America v. Bankston

9. On November 4, 2014, the Circuit Court of Cook County entered a judgment of foreclosure in the case of Bank of America v. Aumon Bankston, 2013-CH-21922, in favor of the plaintiff. Following its judgment, the court appointed KRS as the selling officer to conduct the foreclosure sale of the property, which was located on West Douglas Boulevard in Chicago, at public auction. Movant sold the West Douglas property for the bid price of $124,000 and deposited the proceeds into one of KRSís checking accounts.

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10. On August 18, 2015, Movant filed with the court a report of sale and distribution, which the court approved on September 8, 2015. At the time the court entered the order approving Movantís report of sale and distribution, Movant did not have sufficient funds in his various bank accounts to distribute those funds to the plaintiff. As of the date this statement of charges was filed, Movant had not distributed any portion of the sale proceeds to Bank of America.

II.    CONCLUSIONS OF MISCONDUCT

11. As a result of the conduct described above, Movant has engaged in the following misconduct:

  1. engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, by conduct including knowingly misusing $510,000 in foreclosure sale proceeds held in escrow for distribution to US Bank; knowingly misusing $204,126 in foreclosure sale proceeds held in escrow for distribution to Chase; knowingly misusing $674,701 held in escrow for distribution to Bank of America; and knowingly misusing $124,000 held in escrow for distribution to Bank of America, for a total of over $1.5 million which he used for his own business and personal purposes, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010); and

  2. engaging in conduct that is prejudicial to the administration of justice, by misusing over $1.5 million in foreclosure sale proceeds resulting those funds not being available to distribute upon request, which caused the various banks to file verified petitions for rule to show cause, and the court to enter contempt orders and hold various hearings that would not otherwise have taken place, and consuming judicial resources, in violation of Rule 8.4(d) of the Illinois Rules of Professional Conduct.

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Chi (Michael) Zhang
Counsel for Administrator
130 East Randolph Drive, Suite 1500
Chicago, Illinois 60601
Telephone: (312) 565-2600
Email:mzhang@iardc.org
Respectfully submitted,

Jerome Larkin, Administrator
Attorney Registration and
Disciplinary Commission

By:  /s/Chi (Michael) Zhang
           Chi (Michael) Zhang