BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

BERNHARD OLSON II,

Attorney-Respondent,

No. 2105640.

Commission No. 2017PR00006

 

SECOND AMENDED COMPLAINT

Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission, by his attorney, Gary S. Rapaport, pursuant to Supreme Court Rule 753, complains of Respondent, Bernhard Olson II, who was licensed to practice law in Illinois on May 19, 1970, and alleges that Respondent has engaged in the following conduct which subjects Respondent to discipline pursuant to Supreme Court Rule 770: 

COUNT I
(Discovery fraud, false pleadings, and entering into a business relationship with a client without disclosures - Joenne M. Courtney)

1. On March 15, 2013, Joenne M. Courtney ("Joenne") filed a petition for dissolution of marriage against Jesse N. Courtney ("Jesse"). The case was docketed as Joenne M. Courtney v. Jesse N. Courtney, Fulton County case number 13 D 28.

2. On February 25, 2014, Respondent and Joenne met to discuss Respondent's taking over Joenne's representation in case number 13 D 28, as her prior attorney, Derek Schroen ("Schroen"), had indicated an intent to withdraw from representation of Joenne.

3. In February 2014, Joenne was not regularly employed and was the caretaker of the parties' disabled minor daughter. Jesse was employed as a consultant and also received income from his 400-acre farm that had been deeded solely to him by his mother. In 2014, the farm property was worth between $1,000,000 and $4,000,000.

4. In their meeting on February 25, 2014, Respondent and Joenne agreed in writing that Respondent would represent her in the case, and that he would charge an hourly rate of $350 per hour, plus costs. Respondent told Joenne he estimated that his fees would be $30,000 if the case went to trial and between $20,000 and $25,000 if the case were settled. In the meeting, Respondent requested an initial payment of $2,500 toward his fees. Joenne told Respondent she would borrow some money to pay him the $2,500, but that she had little to no income, and that Respondent would need to seek his fees from Jesse.

5. Joenne paid Respondent $2,500 towards his fees later on February 25, 2014. She also paid Respondent $2,500 on April 7, 2014, and $1,250 on August 7, 2014.

6. In May 2014, Respondent told Joenne that she needed her to pay him something for expenses in her case. Respondent told Joenne he had lost his cleaning service and said she could work off part of the expenses by cleaning his house. Joenne initially did not agree to clean Respondent's house.

7. In July 2014, Respondent again asked Joenne if she would clean his house. Respondent said he would credit her $25 per hour for her services against his bill for legal services and costs. Joenne agreed to clean Respondent's house for $25 per hour, to be credited against his bill, as offered by Respondent.

8. Respondent instructed Joenne not to tell anyone about their house cleaning arrangement and told Joenne he did not want Jesse or his attorney, Stephanie Johnson ("Johnson"), to know about the employment.

9. At no time did Respondent disclose and transmit in writing the housekeeping arrangement to Joenne.

10. At no time did Respondent advise Joenne in writing that she may seek the advice of independent counsel on the housekeeping transaction.

11. At no time did Joenne give informed consent, in writing, to the essential terms of the housekeeping transaction and Respondent's role in the transaction, including whether Respondent was representing her in the transaction.

12. At no time did Respondent advise Joenne that she may be required to disclose the housekeeping employment to Jesse, and that the employment could negatively affect her pending claim for spousal maintenance, as she was claiming she could not work because she was caring for her disabled daughter, and that she could not find work.

13. At no time did Respondent advise Joenne that if she did not disclose in discovery her employment by Respondent, she may be filing inaccurate discovery responses, which could harm her case or subject her to sanctions.

14. In July 2014, Joenne spent approximately 40 hours performing an initial cleaning of Respondent's home and earned $1,000 to be credited against Respondent's bill. After the initial cleaning, Joenne spent four or five hour per week cleaning Respondent's home, earning $100 to $125 per week against Respondent's bill.

15. As of August 2014, Joenne also earned $72 per week cleaning for a woman in Bushnell, Illinois.

16. On August 20, 2014, Respondent filed an "updated petition for interim attorney's fees and costs" on behalf of Joenne which he had prepared. In paragraph two of the pleading, Respondent stated, "Joenne M. Courtney is only employed on a part-time basis ($72 a week) and has been unable to secure a job that is located close to home where she needs to be available to care for their disabled daughter Michelle, Joenne is her primary caregiver [sic]."

17. Respondent's statement that Joenne was only earning $72 a week was false, because that figure did not include Joenne's compensation for housekeeping services for Respondent.

18. Respondent knew that paragraph two of his "updated petition for interim attorney's fees and costs" was false when he prepared and filed the pleading.

19. As of December 2014, the total number of hours that Joenne spent cleaning Respondent's house was approximately 160 and she earned $4,000 to be credited against Respondent's bill.

20. On December 12, 2014, Respondent wrote to Johnson in response to an inquiry from Johnson about Joenne's job search. Respondent wrote: "Your second unnumbered paragraph on page two (2) deals with job search. You are well aware that Michelle [the parties' disabled daughter] is requires [sic] constant care. Joenne has continued to search for jobs, she has continued to look online. There is nothing available that would accommodate her need to be the caregiver for Michelle. You can raise this issue as you want at trial, however, it is impossible to secure any employment in the depressed area that exist between Avon/Fulton County and numerous other surrounding areas [sic]."

21. Respondent's above-quoted statement in his letter to Johnson was false and misleading because Joenne had been working for him as a housekeeper and had earned approximately $4,000 by the date of the letter.

22. Respondent knew that the above-quoted statement in his letter to Johnson was false and misleading when he prepared and sent the letter.

23. In December 2014, Joenne told Respondent she no longer wanted to clean his house, and the arrangement ended.

24. On February 2, 2015, Respondent filed a "petitioner's job search disclosure" that he had prepared on behalf of Joenne. In paragraphs two and three of the pleading, Respondent stated that since August 2013, all of Joenne's attempts to find employment had been unsuccessful, except as disclosed in discovery. Respondent and Joenne both signed the pleading.

25. Paragraphs two and three of the above-described job search disclosure were false, as Joenne had provided $4,000 worth of housekeeping services to Respondent in 2014, which employment had not been disclosed in discovery.

26. Respondent knew that paragraphs two and three of the above-described job search disclosure were false when he prepared and filed the pleading.

27. At various times in 2014 and 2015, Respondent's secretary, Larissa Tortorete ("Tortorete"), told Respondent that Joenne had requested credit on her bill for her housekeeping services.

28. Respondent instructed Tortorete not to credit Joenne for the housekeeping services on Respondent's bills.

29. On August 6, 2015, Respondent filed a motion to withdraw as counsel for Joenne in case number 13 D 28 for the alleged reason that Joenne had failed to pay him attorney fees. On August 20, 2015, the court allowed the motion.

30. On October 28, 2015, Respondent filed a "petition for order setting final fees and costs" against Joenne. The petition alleged, in Exhibit E which was attached to the petition, that Joenne owed Respondent a total amount of $33,347.11 for unpaid fees and costs. In Exhibit E, Respondent purported to disclose all payments that he had received from and for Joenne, but Respondent omitted any credit for the housekeeping services performed by Joenne.

31. Exhibit E of Respondent's above-described petition for final fees and costs was false because it overstated the amount of Joenne's unpaid fees and costs by omitting any credit for Joenne's housekeeping work.

32. Respondent knew that Exhibit E of his petition to set final fees was false when he prepared it and filed it.

33. On November 15, 2015, the court entered an order reducing Respondent's fees by $4,000 for the housekeeping work that Joenne had done for him.

34. By reason of the conduct described above, Respondent has engaged in the following misconduct:

  1. entering into a business transaction with a client in which the transaction and terms are not fully disclosed and transmitted in writing to the client, by entering into an agreement with Joenne for cleaning services and not transmitting such written disclosure to her, in violation of Rule 1.8(a)(1) of the Illinois Rules of Professional Conduct (2010);

  2. entering into a business transaction with a client without informing the client in writing that the client may seek the advice of independent legal counsel on the transaction, by entering into an agreement with Joenne for cleaning services without informing her in writing that she may seek the advice of independent counsel on the transaction, in violation of Rule 1.8 (a)(2) of the Illinois Rules of Professional Conduct (2010);

  3. entering into a business transaction with a client without obtaining the client's informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing her in the transaction, by entering into an agreement with Joenne for cleaning services without obtaining her informed consent, in a writing signed by Joenne, to the essential terms of the transaction and Respondent's role in the transaction, including whether he was representing her in the transaction, in violation of Rule 1.8 (a)(3) of the Illinois Rules of Professional Conduct (2010);

  4. knowingly making a false statement of fact or law to a tribunal, by conduct including that he filed pleadings in which he knowingly made false statements, including an "updated petition for interim attorney fees" on August 20, 2014, a "petitioner's job search disclosure" on February 2, 2015, and a petition to set final and costs on October 28, 2015, in violation of Rule 3.3(a)(1) of the Illinois Rules of Professional Conduct (2010); and

  5. engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation, by conduct including that he filed pleadings in which he made false statements, including an "updated petition for interim attorney fees" on August 20, 2014, a "petitioner's job search disclosure" on February 2, 2015, and a petition to set final fees and costs on October 28, 2015, and making false statements to opposing counsel in a letter dated December 12, 2014, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010).

COUNT II
(Unauthorized endorsements and
conversion of $4,850.68 of client funds - Joenne Courtney
)

35. The Administrator realleges paragraphs 1 through 33 of Count I, above.

36. In February 2015, the parties in case number 13 D 28 entered into a written agreed order on certain property issues. Pursuant to the agreed order, Jesse was to sell certain marital property to pay off debts, and any remaining proceeds were to be split equally between Jesse and Joenne.

37. On or about May 26, 2015, pursuant to the February agreed order, Respondent received Jesse's check number 2460, made payable to Joenne and Respondent, in the amount of $3,700.68, which was Joenne's share of the proceeds of the sale of an excavator.

38. Respondent did not inform Joenne that he had received the check from Jesse.

39. On May 29, 2015, Respondent affixed Joenne's purported signature on the back of the check and deposited it into his account number XXX-570 at Farmers and Mechanics Bank.

40. At no time did Joenne authorize Respondent to sign her name to check number 2460 or to deposit or negotiate the check.

41. [deleted]

42. In or about August 2015, Respondent told Joenne that he had received check number 2460 and was holding it for her at his office.

43. Respondent's statement to Joenne in or around August 2015 that he was holding a check for her from Jesse was false. Respondent had affixed Joenne's purported signature to the check and deposited it in account number XXX-570 on May 29, 2015.

44. Respondent knew his statement to Joenne described above was false at the time that he made the statement to her.

45. On or about August 25, 2015, pursuant to the February agreed order, Respondent received Jesse's check number 2480, made payable to Joenne and Respondent, in the amount of $1,150, which was Joenne's share of the proceeds of the sale of a trailer.

46. Respondent did not inform Joenne that he had received check number 2480 from Jesse.

47. On September 2, 2015, Respondent affixed Joenne's purported signature on the back of the check and deposited it into his account number XXX-570 at Farmers and Mechanics Bank.

48. At no time did Joenne authorize Respondent to sign her name to check number 2480 or to deposit or negotiate the check.

49. After depositing the two checks described above in account number XXX-570, Respondent expended and withdrew funds from the account for his personal and business purposes, including paying his secretary's salary.

50. By November 19, 2015, the balance in Respondent's account number XXX-570 was $386.59. On November 30, 2015, account number XXX-570 was overdrawn by $1,051.87.

51. As of November 30, 2015, Respondent had used all of the proceeds of check numbers 2460 and 2480, in the sum of $4,850.68, for his own purposes.

52. At the times that Respondent used the proceeds of check numbers 2460 and 2480 for his own purposes, he did not have authority to use the funds for his own purposes and he knew that he did not have such authority.

53. Respondent's actions described above constituted conversion of client funds.

54. By reason of the conduct described above, Respondent has engaged in the following misconduct:

  1. engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation, by conduct including that he falsely told Joenne that he was holding check number 2460 for her; that he affixed Joenne's purported signature to the backs of check numbers 2460 and 2480 without her permission or knowledge and deposited the checks; and that he used the proceeds of the checks for his own uses without Joenne's knowledge and without any authority, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010); and

  2. upon receiving funds in which a client or third person has an interest, failing to promptly notify the client or third person, by conduct including that he did not promptly notify Joenne that he had received check numbers 2460 and 2480, in violation of Rule 1.15(d) of the Illinois Rules of Professional Conduct (2010).

COUNT III
(Failure to file federal employer's tax returns)

55. From 1974 to the present, Respondent operated a solo law practice in Galesburg, Illinois. Between 2001 and 2012, Respondent employed nonlawyer assistants and secretaries.

56. Under federal law, Respondent was required to file with the Internal Revenue Service ("IRS") Form 941 employer's quarterly tax returns ("941s") four times per year. Federal law required Respondent to remit to the IRS, with each quarterly 941, the sum of the following taxes ("941 taxes"): the employer's share of Social Security and Medicare taxes on the employees' reported pay, the employees' share of Social Security and Medicare taxes on their reported pay (withheld from the employees' pay), and federal income tax withholding on the employees' reported pay (withheld from their pay).

57. Between 2001 and 2004 and between 2006 and 2012, Respondent paid wages to his employees and incurred liability to pay the above-described 941 taxes as shown in the following chart:

Year

941 taxes

2001

$3,758.22

2002

$4,877.74

2003

$13,561.22

2004

$14,252.93

(2005)

N/A

2006

$22,419.61

2007

$11,716.05

2008

$24,118.38

2009

$24,804.01

2010

$25,555.11

2011

$24,177.99

2012

$4,950.45

Total

$174,191.71

58. As of October 15, 2010, Respondent had not filed 941s for the years 2001 and 2002, and he had not remitted to the IRS the 941 taxes due for the years 2001 and 2002.

59. As of the date on which the Inquiry Board voted that this count be filed, Respondent had not filed 941s for the years 2003, 2004, and 2006 through 2012, and he had not remitted to the IRS the 941 taxes due for the years 2003, 2004, and 2006 through 2012.

60. At all times indicated above, Respondent knew that he was required under federal law to file 941s within certain time periods and pay 941 taxes.

61. Respondent willfully did not file or did not timely file 941s for the years 2001-2004 and 2006-2012.

62. Between October 26, 2010 and September 24, 2012, the IRS recorded tax liens against Respondent for the above-charted 941 taxes owed to the IRS.

63. As of the date on which the Inquiry Board voted a complaint in this matter, Respondent has not satisfied the federal liens for the 941 taxes that Respondent owed for the years 2003, 2004, and 2006 through 2012.

64. By reason of the actions described above, Respondent has engaged in the following misconduct:

a. commission of a criminal act, to wit, willful failure to file federal tax return, in violation of 26 USCA 7203, that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, by conduct including that he willfully did not file or did not timely file 941s for the years 2001-2004 and 2006-2012, in violation of Rule 8.4(a)(3) of the Illinois Rules of Professional Conduct (1990) and Rule 8.4(b) of the Illinois Rules of Professional Conduct (2010); and

b. conduct involving dishonesty, fraud, deceit or misrepresentation, by conduct including that he willfully did not file or did not timely file 941 federal tax returns for the years 2001-2004 and 2006-2012, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (1990) and in violation of Rule 8.4 (d) of the Illinois Rules of Professional Conduct (2010).

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

Gary S. Rapaport
Attorney Registration and
Disciplinary Commission
3161 W White Oaks Dr., Suite 301
Springfield IL 62704
Telephone: (217)546-3523
Email:
grapaport@iardc.org
Email:
ARDCeService@iardc.org

Respectfully submitted,

Jerome Larkin, Administrator
Attorney Registration and
Disciplinary Commission

By:  Counsel for the Administrator