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:
No. 3127296. .
Supreme Court No. M.R.28844
Commission No. 2017PR00067
STATEMENT OF CHARGES
PURSUANT TO SUPREME COURT RULE 762(a)
Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission ("ARDC"), by his attorneys, Wendy J. Muchman and Udeme V. Itiat, pursuant to Supreme Court Rule 762(a), states that on the date Joseph Harold King, Jr. (hereinafter "Movant") filed a motion requesting that his name be stricken from the Roll of Attorneys, the Administrator was investigating allegations relating to Movant's use of a third party to improperly solicit clients, neglect of cases by failing to file required documents with the bankruptcy court and provision of advice to clients that was detrimental to their interests. Had Movant's 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
Movant's admissions, relevant portions of court and client files, relevant portions of the section 329 bankruptcy proceedings against Movant that resulted in his suspension from bankruptcy court, other materials from bankruptcy matters filed by Movant, relevant statutes, the testimony of Movant's former clients and an attorney who subsequently represented a number of Movant's former clients, would establish the following facts:
1. Movant has been licensed to practice law in Illinois since October 29, 1980. Between 1980 and 2009, more than 95% of the cases Movant handled involved no bankruptcy
issues. Beginning in 2012, Movant refocused his practice and his bankruptcy caseload grew to at least 95% of his practice.
2. Chapter 13 of the Bankruptcy Code allows an eligible debtor to keep property and pay debts over time, usually three to five years. Unless otherwise ordered by the bankruptcy court, a debtor must file specific documents with the court before their matter may proceed. A court-appointed trustee administers each case and both evaluates and serves as a disbursing agent for the case.
3. Between 2012 to 2014, Movant employed retired real estate broker Mario Perea ("Perea") to assist him in locating and obtaining clients. Movant paid Perea $750 each week and Perea worked from Movant's office space to contact and meet with prospective clients. Prospective clients asked for Perea, not Movant, upon their arrival at Movant's office; and Movant also authorized Perea to meet prospective clients in Movant's absence. Between 2012 and 2014, Perea assisted Movant in finding at least 24 clients, including Artemio and Veronica Torres ("the Torreses"), to represent in bankruptcy matters.
4. Between 2012 and 2014, Movant advised several clients to file Chapter 13 bankruptcy matters. Movant lacked sufficient knowledge about current bankruptcy laws and requirements to competently advise those clients regarding their interests and proposed courses of action. Between 2012 and 2014, Movant filed bankruptcy matters without the required supporting documents, including debtor plans and schedules; he missed filing dates in multiple matters and did not execute at least five Court Approved Retention Agreements ("CARA") within the time frame required by statute.
5. Between 2012 and 2014, Movant filed several Chapter 13 cases that did not meet the eligibility requirements based on his clients' mortgage debt, converted cases from Chapter 13
to Chapter 7 without a basis in law for doing so and without regard to whether that action was consistent with his clients' best interests; and he did not keep his clients informed about the status of their cases. At least one of Movant's clients had their Chapter 13 bankruptcy case dismissed based on Movant's failure to file required documents and debtor plans with the court in the required time frame.
6. On January 9, 2013, Movant, or someone acting at his direction, requested a copy of the title for the Torreses' home from Carrington Title Services. Movant had previously advised the Torreses to cease making all payments, including mortgage, property taxes and homeowners' association payments, relating to their home. On February 11, 2013, Movant was informed that the Torreses' mortgage had been released by their lender J.P. Morgan Chase ("Chase"), and that their mortgage debt had been discharged. At no time did Movant inform the Torreses that the mortgage had been released by Chase or that their mortgage debt had been discharged.
7. On April 15, 2013, Movant caused a Chapter 13 bankruptcy petition to be filed on behalf of Artemio and Veronica Torres in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. That petition incorrectly listed the Torreses' primary debt as their Chase mortgage, which Movant knew had been discharged weeks earlier. On May 16, 2013, the Torreses' bankruptcy matter was dismissed on the trustee's motion due to Movant's failure to file a debtor plan and compulsory documents as required by statute. Between November 11, 2013 and January 14, 2014, Movant twice filed new Chapter 13 bankruptcy cases on behalf of the Torreses, each time incorrectly listing a Chase mortgage as their primary debt. In both new filings, the trustee filed a motion to dismiss, stating that the Movant had not filed the required documents, such as a debtor plan, that must accompany a filing like the Torreses' case.
At the time of each filing, Movant knew that the Torreses' Chase mortgage debt had been discharged. By advising the Torreses to file a Chapter 13 case with knowledge that their Chase mortgage debt had been discharged, Movant caused the Torreses to make over $1,000 of mandatory payments to the trustee as required by Chapter 13. Under Chapter 13 guidelines, the payments made by the Torreses' cannot be refunded and must be remitted to the United States Treasury Department as unclaimed funds.
8. On January 14, 2014, Chapter 13 Trustee Glenn Stearns ("Stearns") filed a motion for hearing as to Movant's attorney's fees in the Torres bankruptcy, alleging that any fee Movant charged for the matter was excessive. Stearns filed the motion for hearing because Movant had not submitted required documents, including a CARA or a debtor plan. In a June 4, 2014 motion for sanctions, Stearns alleged that the answers that Movant provided to interrogatories were incomplete and evasive. As a result, the trustee filed a motion for sanctions and sought an order to compel Movant to disgorge his fees in the Torres bankruptcy matter.
9. On October 1, 2014, the court entered an agreed order suspending Movant from practice in the United States Bankruptcy Court in the Northern District of Illinois. In the agreed order, Movant admitted that he was not familiar with the relevant bankruptcy statutes and Bankruptcy Code amendments when he filed the Torreses' bankruptcy petitions and at least 20 additional petitions causing dismissals in at least two cases and delays in all of them. Movant agreed to be suspended from the practice in the United States Bankruptcy Court in the Northern District of Illinois, for one year and until further order of the court, effective October 1, 2014. As of the filing of this Statement of Charges, Respondent has not been reinstated by the United States Bankruptcy Court.
10. During the relevant time period and now, Movant was suffering from chronic mental health disorders. Movant was diagnosed with depression approximately eighteen years ago and was clinically diagnosed with situational bipolar disorder approximately eight years ago. Movant takes a number of strong medications to treat his bipolar disorder, including Escitalopram Oxalate (Lexapro,) Abilify, Duloxetine HCL DR (Cymbalta), and Clonazepam .
II. CONCLUSIONS OF MISCONDUCT
11. By reason of the conduct outlined above, Movant has engaged in the following misconduct:
filing a bankruptcy petition on behalf of the Torreses listing their Chase mortgage as their primary debt, although Movant knew that the Torreses' mortgage had been released, in violation of Rule 1.1. of the Illinois Rules of Professional Conduct (2010);
failure to act with reasonable competence in representing a client, by conduct including failing to execute CARAs within the time frame required by statute in at least five cases, failing to file pleadings in a timely manner, failing to file required debtor plans and schedules in several cases, converting at least one case from Chapter 13 to Chapter 7 when the matter did not meet eligibility requirements based on the type of debt sought to be reduced, and
failure to keep
misrepresentation by conduct including preparing and filing a bankruptcy petition listing the Torreses' Chase mortgage as their primary debt, although Movant knew that the Torreses' mortgage had been previously released, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010).
Wendy J. Muchman