BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

JAMES I. MARCUS,

Attorney-Respondent,

No. 1760890.

Commission No. 2017PR00053

FILED --- June 9, 2017

 

COMPLAINT

Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission, by his attorney, Tara Korthals, pursuant to Supreme Court Rule 753(b), complains of Respondent, James I. Marcus, who was licensed to practice law on October 13, 1970, and alleges that Respondent has engaged in the following conduct which subjects Respondent to discipline pursuant to Supreme Court Rule 770:

ALLEGATIONS COMMON TO ALL COUNTS

1. From about January 1, 2006 through December 31, 2014, Respondent practiced law as a partner in the firm of Dziedziak & Marcus, P.C. ("the firm") along with attorney John Dziedziak ("Dziedziak"). Respondent was the sole partner who handled criminal matters for the firm and Dziedziak handled primarily civil matters for the firm.  The firm's practice was that fees paid by clients who were represented by Respondent, belonged to Respondent, after firm expenses were paid, and fees paid by clients who were represented by Dziedziak, belonged to Dziedziak, after firm expenses were paid.

2. From February 22, 2006 through at least December 31, 2014, Respondent and Dziedziak maintained an IOLTA client trust account at BMO Harris Bank ending in the digits 2842, entitled "Dziedziak & Marcus, PC, Attorneys at Law" ("client trust account"), for the firm. Both Respondent and Dziedziak used the client trust account as a depository of funds belonging to clients or third parties and, presently or potentially, to the firm.

3. From February 22, 2006 until July 21, 2013, Respondent and Dziedziak were both signatories on the firm's client trust account.

4. From about February 22, 2006 through at least December 31, 2014, Respondent and Dziedziak maintained a firm operating account at BMO Harris Bank ending in the digits 2826, entitled "Dziedziak & Marcus, PC" ("operating account"). The operating account was used by both Respondent and Dziedziak as a depository of funds belonging to clients or third parties and, presently or potentially, to the firm.

5. From about February 22, 2006 until July 11, 2014, Respondent and Dziedziak were both signatories on the firm's operating account.

6. In or around July 2013, Dziedziak removed earned fees that had been paid by a firm client who had been represented by Respondent from the firm's client trust account and deposited those fees into the firm's operating account without Respondent's knowledge, and contrary to their agreement as described in paragraph one, above.

7. On July 31, 2013, as a result of Dziedziak's actions, and in order to prevent Dziedziak from misusing client funds, Respondent removed Dziedziak as a signatory on the client trust account and Respondent remained the sole signatory on the firm's client trust account. However, at that time, Dziedziak retained online access to the firm's client trust account, and, until at least September 11, 2014, did electronically transfer funds from the firm's client trust account into the firm's operating account.

8. After July 31, 2013, Respondent intended that Dziedziak be responsible for the maintenance of the operating account in order to pay firm expenses. At this time, Dziedziak retained control of the monthly bank statements for both the firm's client trust account and the firm's operating account.

9. On July 11, 2014, Dziedziak removed Respondent as a signatory on the operating account and Dziedziak remained the sole signatory on the firm's operating account.

10. Between July 31, 2013 and at least March 6, 2015, Respondent and Dziedziak came to an arrangement that Dziedziak would be solely responsible for the disbursement of client funds to the firm's personal injury clients and third-parties. Under the arrangement, when funds related to a personal injury case were received, they were to be deposited into the firm's client trust account and then transferred to the firm's operating account for Dziedziak's distribution to the respective clients.

COUNT I
(Failure to safeguard client funds and failure to supervise - Flores matter)

11. In or around November 2013, Dziedziak and Byron Flores ("Flores") agreed that the firm would represent Flores in a personal injury claim against Hawthorne Race Course, Inc. ("Hawthorne") related to injuries received on November 19, 2011. The firm and Flores agreed that the firm would receive thirty-three and one third percent (33 1/3%) of any amount recovered as attorney's fees, and that the firm would be reimbursed for expenses it incurred in representing Flores. Dziedziak and Flores further agreed that Dziedziak would undertake the responsibility of Flores' representation on behalf of the firm.

12. While Dziedziak acted as the primary attorney on the Flores matter, Respondent had a responsibility to ensure that the firm had measures in effect to make reasonable assurances that Dziedziak's conduct conformed to the Illinois Rules of Professional Conduct.

13. On or about November 18, 2013, Dziedziak filed a complaint on behalf of Flores in the Circuit Court of Cook County. The matter was docketed as Byron G. Flores v. Hawthorne Race Course, Inc., case number 13 L 13210.

14. On July 11, 2014, Dziedziak removed Respondent as a signatory on the operating account and Dziedziak remained the sole signatory on the firm's operating account.

15. On or about August 9, 2014, Flores and Hawthorne agreed to settle case number 13 L 13210 for $10,000.

16. Dziedziak and Flores agreed upon a disbursement of the $10,000 settlement amount as follows: $3,333.34 paid to the firm in payment of attorney's fees, $900 to Benefits Administration in satisfaction of an ERISA lien, and the remaining $5,766.66 due to Flores.

17. On September 23, 2014, Hawthorne's insurance company, Philadelphia Insurance Company, issued draft number 1111642050 in the amount of $10,000 made payable to "Byron G. Flores and his Attorneys Dziedziak & Marcus, P.C.," which represented payment for Flores' injuries.

18. On or about October 1, 2014, Dziedziak, or someone at Dziedziak's direction, deposited draft number 1111642050 into the firm's client trust account. At that time, Respondent knew of Dziedziak's behavior in removing fees from the firm's client trust account, and, as described in paragraph six, above, as a result, on July 31, 2013, Respondent removed Dziedziak as a signatory on the firm's client trust account.

19. On or about October 3, 2014, Respondent issued check number 2693 in the amount of $9,500 made payable to "Dziedziak & Marcus, PC" and, Respondent, or someone at Respondent's direction, deposited check number 2693 into the firm's operating account.

20. As of March 6, 2015, Dziedziak had not paid Flores any portion of his $5,766.66 in settlement proceeds due to him from case number 13 L 13210 nor had Dziedziak paid Benefits Administration any portion of its $900 in satisfaction of its lien held against Flores.

21. As of March 6, 2015, Dziedziak drew the balance in the firm's operating account to -$1,694.93, using all of the $5,766.66 in funds belonging to Flores and all of the $900 belonging to Benefits Administration for his own business or personal purposes.

22. On March 6, 2015, instead of distributing the funds to Flores, Dziedziak converted the funds to his own business or personal use, without authority, in violation of Rule 1.15(a).

23. Respondent failed to take any effective steps to prevent Dziedziak's conversion of client funds by transferring the settlement funds belonging to Flores into the firm's operating account, and Dziedziak's control, without further measures in place to verify the firm's appropriate safekeeping and maintenance of the firm's clients' funds.

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

  1. failure to hold property of clients or third persons that is in the lawyer's possession in connection with a representation separate from the lawyer's own property, by conduct including transferring settlement proceeds belonging to Flores and Benefits Administration from the firm's client trust account into the firm's operating account, in violation of Rule 1.15(a) of the Illinois Rules of Professional Conduct (2010); and,

  2. failure to make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct, by conduct including failing to ensure that the firm instituted appropriate safekeeping measures for the firm's clients' funds, in violation of Rule 5.1(a) of the Illinois Rules of Professional Conduct (2010).

COUNT II
(Failure to safeguard client funds and failure to supervise - Smith-Jenkins)

25. In or around September 2011, Dziedziak and Smith-Jenkins agreed that the firm would represent Smith-Jenkins in her personal injury claim related to an automobile accident that occurred on October 17, 2009. Dziedziak and Smith-Jenkins agreed that the firm would receive thirty-three and one third percent (33 1/3%) of any amount recovered as attorney's fees, and that the firm would be reimbursed for expenses it incurred in representing Smith-Jenkins. Dziedziak and Smith-Jenkins further agreed the Dziedziak would undertake the responsibility of Smith-Jenkins' representation on behalf of the firm.

26. While Dziedziak acted as the primary attorney on the Smith-Jenkins matter, Respondent had a responsibility to ensure that the firm had measures in effect to make reasonable assurances that Dziedziak's conduct conformed to the Illinois Rules of Professional Conduct.

27. On or about October 11, 2011, Dziedziak filed a complaint on behalf of Smith-Jenkins in the Circuit Court of Cook County. The matter was docketed as Jacqueline Smith-Jenkins v. Stephen K. Crane, case number 11 L 10561.

28. In or around March 2014, Smith-Jenkins and Crane agreed to settle case no. 11 L 10561 for $11,000.

29. On March 24, 2014, Dziedziak and Smith-Jenkins agreed upon a disbursement of the $11,000 settlement amount as follows: $3,666.67 to be paid to the firm for attorney's fees, $1,258.23 to be paid to the firm for expenses, and the remaining $6,075.10 due to Smith-Jenkins.

30. On September 23, 2014, Crane's insurance company, Founders Insurance Company, issued draft number 1100022205 in the amount of $11,000 made payable to "Jacqueline Smith-Jenkins and Dziedziak & Marcus, PC," which represented payment for Smith-Jenkins' settlement.

31. On or about September 26, 2014, Dziedziak, or someone at Dziedziak's direction, deposited draft number 1100022205 into the firm's client trust account. At that time, Respondent knew of Dziedziak's behavior in removing fees from the firm's client trust account, as described in paragraph six, above, and as a result, on July 31, 2013, Respondent removed Dziedziak as a signatory on the firm's client trust account.

32. On or about October 1, 2014, Respondent issued check number 2692 in the amount of $11,000 made payable to "Dziedziak & Marcus, PC," and, Respondent, or someone at Respondent's direction, deposited check number 2692 into the firm's operating account.

33. As of March 6, 2015, Dziedziak had not paid Smith-Jenkins any portion of her $6,075.10 settlement proceeds from case number 11 L 10561.

34. As of March 6, 2015, Dziedziak drew the balance of the firm's operating account to -$1,694.93, using all of the $6,075.10 in settlement proceeds belonging to Smith-Jenkins for his own business or personal purposes.

35. On March 6, 2015, instead of distributing the funds to Smith-Jenkins, Dziedziak converted the funds to his own business or personal use, without authority, in violation of Rule 1.15(a).

36. Respondent failed to take any effective steps to prevent Dziedziak's conversion of client funds by transferring the settlement funds belonging to Smith-Jenkins into the firm's operating account, and Dziedziak's control, without further measures in place to verify Dziedziak's appropriate safekeeping and maintenance of the firm's clients' funds.

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

  1. failure to hold property of clients or third persons that is in the lawyer's possession in connection with a representation separate from the lawyer's own property, by conduct including transferring settlement proceeds belonging to Smith-Jenkins from the firm's client trust account into the firm's operating account, in violation of Rule 1.15(a) of the Illinois Rules of Professional Conduct (2010); and,

  2. failure to make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct, by conduct including failing to ensure that the firm instituted appropriate safekeeping measures for the firm's clients' funds, in violation of Rule 5.1(a) of the Illinois Rules of Professional Conduct (2010).

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

Tara Korthals
Counsel for the Administrator\
One Prudential Plaza
130 East Randolph Drive, Suite 1500
Chicago, Illinois 60601
Email: tkorthals@iardc.org

Respectfully submitted,

Jerome Larkin, Administrator
Attorney Registration and
Disciplinary Commission

By: Tara Korthals