Filed July 17, 2012

BEFORE THE HEARING BOARD
OF THE
ILLINOIS ATTORNEY REGISTRATION
AND
DISCIPLINARY COMMISSION

In the Matter of:

ROBERT KENNETH LOCK, JR.,

Attorney-Respondent,

No. 6202454.

Commission No. 2010PR00164.

REPORT AND RECOMMENDATION OF THE HEARING BOARD

INTRODUCTION

The hearing in this matter was held on January 17 and 18, 2011, at the Chicago, Illinois offices of the Attorney Registration and Disciplinary Commission ("ARDC"), before a Hearing Board Panel of Michael C. Greenfield, Chair, Thomas P. Young and Frederich J. Bingham. The Administrator was represented by James A. Doppke. Respondent appeared in person and was represented by Steven Muslin.

PLEADINGS

On November 4, 2010, the Administrator filed a four-count Complaint against Respondent pursuant to Illinois Supreme Court Rule 753(b) alleging various acts of misconduct stemming from Respondent's role in the operation of Credit Collections Defense Network ("CCDN"), a limited liability company that offered certain services to individuals experiencing credit card debt problems. Counts I through III are similar and allege Respondent engaged in conduct involving dishonesty, fraud, deceit or misrepresentation in violation of Rule 8.4(a)(4) and 8.4(c) of the Illinois Rules of Professional Conduct by making certain false and misleading statements on the company's website and in written materials distributed to individuals who

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enrolled in the program. The charges in Count IV stem from a marketing agreement Respondent entered into with a nonlawyer who solicited clients and collected fees on CCDN's behalf. Respondent is charged with paying improper referral fees in violation of Rule 7.2(b), improperly sharing fees with a nonlawyer in violation of Rule 5.4(a), and improper solicitation in violation of Rule 7.3.

Respondent filed an Answer in which he admitted many of the underlying factual allegations contained in the Complaint. Respondent denied some of the factual allegations and denied all of the charges of misconduct.

THE EVIDENCE

The Administrator presented the testimony of Kimberly Cullen, Douglas Davis, and Christopher Taylor. Respondent testified on his own behalf. Administrator's Exhibits 1-13 and 15-16 were admitted into evidence. (Tr. 14, 323-24).

Background

Respondent is 53 years old. He is married and has three children. He received his law degree from John Marshall Law School and has been licensed to practice law in Illinois since 1989. Respondent began working at the Cook County State's Attorney's Office while attending law school and continued to work there after being admitted to the bar. He initially prosecuted narcotics offenses and worked on narcotics forfeiture matters. He later moved to the public utilities division of the public interest bureau, where he pursued litigation on behalf of Cook County consumers, including actions opposing rate increases by utilities and telecommunications carriers. (Tr. 356-63).

In 1993, Respondent was recruited to work at the Illinois Commerce Commission as a legal and policy adviser to Commissioner William M. Dixon, where he provided support

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regarding proposals by Illinois utilities, the Citizens Utility Board, and other public interest groups. Respondent left that job after three and a half years to join a private telecommunications consulting company. He remained in that position until 2000 or 2001, when he left to become a sole practitioner. (Tr. 362-68).

After beginning his own law practice, Respondent initially remained involved in the telecommunications field. He later began to handle individual consumer clients. After he prevailed in a case involving a consumer who was sued by a credit card company, he began to focus his practice on representing individuals under state consumer protection laws, the Fair Debt Collection Practices Act, the Fair Credit Billing Act, and the Fair Credit Reporting Act. Respondent's work in this area ultimately led to his involvement in CCDN. Respondent continued to focus his law practice on consumer protection, debt collection, and credit billing matters while he was involved in CCDN. Since CCDN ceased operating in 2010, Respondent has devoted the majority of his practice to defending homeowners in foreclosure actions. (Tr. 368-71).

Counts I through III

Admitted Facts

Between 2005 and 2010, Respondent and Philip Manger ("Manger"), an attorney licensed in New York and residing in Connecticut, were the two members of CCDN, a Nevada limited liability corporation. Manger, who was not licensed to practice law in Illinois, was the managing member of CCDN. CCDN offered its potential clients the opportunity to use its "Debt Reconciliation Program" in order to validate existing consumer debts, restore their credit, and, where applicable, seek redress for alleged violations of the Fair Debt Collection Practices Act. CCDN conducted its operations at several different locations. Between 2005 and 2009, it

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conducted operations at a residence in Cattaraugus, New York, which it designated as the "CCDN Support Center." Between 2009 and 2010, the CCDN Support Center was located at an office suite in Brick, New Jersey. Further, various promotional materials created by Respondent or Manger for CCDN gave the address for CCDN's headquarters as 7144 North Harlem Avenue, Suite 323, Chicago, which was a private mailbox located at a UPS store. During its existence, CCDN employed two paralegals in the state of Ohio. (Though not an admitted fact, there was testimony the CCDN Support Center also employed a manager.)

Between 2005 and 2010, CCDN received payments in amounts between $2,500 and $4,800 from each of at least 2,219 clients seeking its assistance with credit card debts and other debt collection matters, including, but not limited to, CCDN's assistance in communicating with original creditors in relation to validation or invalidation of debts. Respondent and Manger drafted and revised materials given by CCDN's agents or employees to its clients relating to the Debt Reconciliation Program, including a document entitled Debt Reconciliation Program Enrollment Manual ("Enrollment Manual"). Respondent knew the Enrollment Manual stated, inter alia, that the Debt Reconciliation Program purported to involve three phases: Phase I (Credit Restoration); Phase II (Reconciliation); and Phase III (Federal Lawsuit). Respondent further knew the Enrollment Manual stated that the Debt Reconciliation Program was to continue for 24 months after the customer or client began participating in the program.

Between 2005 and 2010, Respondent caused, or participated in causing, the Enrollment Manual to contain the following description of Phase I of CCDN's purported Debt Reconciliation Program:

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Phase I

Credit Restoration

Credit Restoration begins as soon as you enter our program and will continue for 24 months thereafter. Our experience is the majority of negatives will be removed from a typical clients (sic) credit reports within the first 4 to 6 months of this process, but we will continue to challenge unverified information and monitor all clients' credit reports for the full 24 months.

Once your paperwork is received at the CCDN Support Center, the support team will send your credit restoration application to The Fulfillment Center within two weeks. Following submission of your application, The Fulfillment Center will then begin the process of credit restoration with you by contacting you by e-mail.

The sole "credit restoration" service CCDN provided during this time was to refer its clients to The Fulfillment Center ("TFC"), a Delaware business entity in which neither Respondent nor Manger participated. At no time during Respondent's participation in the operation of CCDN did CCDN take action to challenge any information on its clients or clients' credit reports, or otherwise monitor any such reports.

Between 2005 and 2010, Respondent caused or participated in causing, the Enrollment Manual to contain the following description of Phase II of CCDN's purported Debt Reconciliation Program:

Phase II

Reconciliation

Validation and Reconciliation also begins as soon as your paperwork is processed. The purpose of this phase is to create an administrative record and establish as much information as possible as to the ownership and validity of the alleged debt.

The process works through two levels. First we send out a series of proprietary letters at specific times to either the original creditor (OC) or the third party debt collector (3PDC) in an attempt to have the OC or 3PDC provide validation of the alleged debt. If they are unable to do so, we demand that they zero out our customer's account and mark it "paid as agreed."

Second, these letters are used to expedite the transfer of the account from the OC to the 3PDC at which time our correspondence is used to enhance our compliance audits in Phase Three.

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Phase Two usually take from 3 to 8 months depending on the status of the accounts when the individual enters the program and the speed at which the various OCs and 3PDCs respond to our correspondence.

When you stop paying the creditors, they will begin their collection efforts. These efforts include phone calls and letters. You will have to keep a log of the calls (we will provide you with a form) and fax any collection items or letters you receive in the mail to the Support Center ASAP so we can send you the proper response. The same applies to all 3PDCs as well.

Also included in this program, is (sic) the education and the support documents to aid our Clients against unlawful attacks of third party debt collectors. As CCDN does not work in the State court level, only the Federal level, the client will use these documents to protect themselves from these unlawful attacks with the goal of preventing State legal action and potential judgments.

The creditors, and especially third party debt collectors, typically violate several laws designed to protect the consumer. To learn more about how collectors work, visit our web site at www.ccdnlaw.com, click on the Education tab at the top and read the articles "How Debt Collectors Work" and "Abusive Debt Collectors" Also, familiarize yourself with the Fair Debt Collections Practices Act, Fair Credit Billing Act and the Fair Credit Reporting Act found in the Education Section on our web site, as well.

CCDN did not directly take any action during this time to contact creditors on behalf of its clients in order to validate the consumer debts incurred by its clients, to demand that the creditor zero out an account and mark it "paid as agreed," or for any other reason. Instead, as part of its services, CCDN provided to its clients copies of form letters requesting validation of a debt, and advised the clients to complete the form letters and send them to their creditors in order to obtain validation of their debts.

As part of his participation in the operation of CCDN, Respondent maintained, or participated in maintaining, a website pertaining to CCDN located at www.ccdnlaw.com. In or about 2009, Respondent participated in drafting or revising a portion of the CCDN website entitled "FAQ" ("Frequently Asked Questions") and caused it to include the following text:

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SECTION 2: HOW DOES THE CCDN DEBT RECONCILIATION PROCESS WORK?

8) How do you eliminate my debt?

Please understand that this is not a "Debt Elimination" process. If you are looking for a way to avoid your legal obligations under contract, you have found the wrong place. We have seen all of the processes out there, from UCC Redemption to Ultra Vires to Bonding to foreign mail drops coupled with lawsuits and liens, and everything in between. While some may work for a time, they all ultimately suffer the same fate?Failure?and in more and more cases, Sanctions.

The CCDN uses a proprietary set of tools and strategies developed by certified paralegals and licensed attorneys to validate unsecured debt claims, and then identify, develop and litigate consumer claims for violations of state and federal consumer protection laws. In all circumstances, the CCDN will endeavor to secure validation of the underlying debt from an original creditor and any subsequent owners or holders of the unsecured debt amount. During the process, some debts may be invalidated. A debt that is proven to be invalid must be forgiven and removed from the credit report and the records of the financial institution. Other debts may be subject to negotiation and settlement. Still others may be litigated. From our experience and research, rarely do any of these federal claims go to trial.

CCDN did not directly take any actions on behalf of consumers to validate debts owed by its clients, or to otherwise communicate directly with clients' creditors with respect to the validation of debts.

Between 2005 and 2010, CCDN did not take any action to remove any negative items from its clients' credit reports; monitor its clients' credit reports; or contact any original creditors of any of its 2,219 clients in order to secure validation of any of those clients' debts, or for any other purpose. In or about 2010, CCDN ceased its operations and ceased maintaining the website previously located at http://www.ccdnlaw.com.

Witness Testimony

Kimberly Cullen

Kimberly Cullen resides in Maloney, Michigan. She has two children and currently works part-time at Home Depot. Ms. Cullen first learned of CCDN in 2006 when she came

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across its web site while doing research on the internet in an effort to find an alternative to filing bankruptcy. (Tr. 34-36, 90, 151-52). She and her husband, Bill, were considering bankruptcy because they had accumulated approximately $30,000 in credit card debt. Prior to enrolling in CCDN, Ms. Cullen also consulted with a bankruptcy lawyer. They chose CCDN over bankruptcy because they thought it was a better alternative for them. (Tr. 41-42, 93-95, 152-54).

Ms. Cullen testified she obtained her understanding of the services CCDN would provide based upon her review of several CCDN web sites, including ccdnlaw.com ("the CCDN web site"). (Tr. 45-50; Adm. Exs. 7, 8). Before deciding to enroll, she also spoke with several individuals who contacted her after she filled out a form on the web site, including Richard Russ, Greg Britt, and Manger. Mr. Russ and Mr. Britt were CCDN salespeople and Manger introduced himself as Respondent's partner in CCDN. Mr. Britt also arranged for Ms. Cullen and her husband to participate in a telephone conference with representatives from a group assisting CCDN called the Consumers Advocate Foundation ("CAF"), where the CCDN process was further explained. Ms. Cullen did not speak with Respondent. (Tr. 37-38, 51-52, 90-91).

Based upon her review of the CCDN web site and her discussions with these individuals, Ms. Cullen believed the CCDN program would provide her with "attorney representation," would help her clear up her credit report, and would eliminate her debt through a process called debt "invalidation." (Tr. 36, 39, 42-43, 90, 154). Ms. Cullen testified she was "not exactly sure" what "debt invalidation" was, but thought it was a debt relief program that would result in her debts being forgiven. Ms. Cullen recalled reviewing language on the CCDN web site stating a "debt that is proven to be invalid must be forgiven and removed from the credit report and the records of the financial institution." (Tr. 50-51, 136-38; Adm. Ex. 8).

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Ms. Cullen admitted she also read the response to question 8 in the FAQ section of the CCDN web site which states CCDN is not a "Debt Elimination" process. Ms. Cullen testified she still believed debt invalidation meant CCDN would "get rid of" her debt and it would be "eliminated." Ms. Cullen believed Mr. Britt and CAF told her that invalidating a debt means the same thing as eliminating it. (Tr. 95-104; Adm. Ex. 7 at 8).

Ms. Cullen paid a total fee of $4,500 in two installments to enroll in CCDN. She was instructed by the CCDN sales team to make her payments to R & G Marketing. Ms. Cullen testified it was not easy for her to come up with these funds and she had to use "pretty much everything" she had. (Tr. 38, 43-45, 92, 104, 135-36).

After the fee was paid in full, Ms. Cullen received a packet from the CCDN support group, which included the Enrollment Manual. The Enrollment Manual was supposed to have been mailed to her, but she did not initially receive it so she contacted CCDN. It was then e-mailed to her by Tracy Webster, who was her contact person at CCDN. (Tr. 43-45, 55-57; Adm. Ex. 1).

Included in the Enrollment Manual were various form letters and a document labeled "Limited Power of Attorney." Ms. Cullen filled in the blanks on the form letters with the applicable information and sent them off to the credit card issuing banks. She also submitted various materials to CCDN, including signed powers of attorney and other information related to each credit card account she and her husband entered into the CCDN process. Ms. Cullen testified she signed the power of attorney forms because she assumed she was getting "attorney representation." She provided this other information to CCDN regarding her accounts because she thought "they were going to be doing something for us." (Tr. 57-62; Adm. Ex. 1 at 10-11; Adm. Ex. 5).

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Ms. Cullen reviewed exhibits introduced by the Administrator reflecting the contents of the CCDN web site on January 13, 2009 and September 24, 2009. In describing Phase II of the program involving "Validation and Reconciliation," the CCDN web site states: "First, we help you send out a series of proprietary letters at specific times to either the original creditor (OC) or the third party debt collector (3PDC) in an attempt to have the OC or 3PDC provide validation of the alleged debt." Ms. Cullen conceded this language suggests CCDN would be helping with the process by providing her with the letters she would then be sending out. She also acknowledged CCDN did provide her with debt validation letters and told her how to fill them out and send them. (Tr. 105-107; Adm. Ex. 7 at 3, Adm. Ex. 8 at 5).

Ms. Cullen testified she visited the CCDN web site in 2006 and did not think the language indicating CCDN would "help" send out the letters was on the web site when she became involved. She understood CCDN was supposed to take a bigger role in the process. Ms. Cullen reviewed the following language in the Enrollment Manual describing the debt validation process: "Firstly (sic), we send out a series of proprietary letters at specific times to either the original creditor (OC) or the third party debt collector (3PDC) in an attempt to have the OC or 3PDC provide validation of the alleged debt." Ms. Cullen testified this statement was consistent with her understanding of what CCDN would do. (Tr. 138-40; Adm. Ex. 1 at 5).

Ms. Cullen reviewed documents included in the CCDN Enrollment Manual titled "CCDN Phone Log and Instructions." She testified this aspect of the program was introduced several years after she joined. Ms. Cullen was one of the early clients and CCDN was not pushing clients to take calls from creditors at that time. (Tr. 64-65; Adm. Ex. 1 at 24-25).

After enrolling in CCDN, Ms. Cullen and her husband began to receive letters from their creditors. Each time they received one, they attached a notice to the letter and sent it to CCDN.

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Ms. Cullen testified she sent these materials to CCDN because she thought they were reviewing them and using them to build a federal case that would clear up her debt. (Tr. 63-66).

About six months into the process, Ms. Cullen was sued by Discover Card in Michigan. After she was served, she sent the completed paperwork and other information about the lawsuit to a secretary at CCDN for the file it was creating. The CCDN secretary later e-mailed that file to Respondent and Colleen Lock. Ms. Cullen later contacted Ms. Lock to ask for help in finding an attorney in her area to handle the Discover Card case. Ms. Lock e-mailed her back on January 5, 2007, and asked her to respond to a series of questions regarding the case before she could quote her a fee. Ms. Lock also stated that before she could refer Ms. Cullen to an attorney in her area, "fees for your case must be paid." Ms. Cullen testified she was "shocked," "fearful" and "angry" when she read this part of the e-mail, because part of the reason she had chosen CCDN was the attorneys it had available. While she understood having to pay the attorney, she did not understand having to pay to simply get the name of an attorney. (Tr. 66-72, 107-10; Adm. Ex. 12).

Ms. Cullen testified she did not contact Ms. Lock and ask why she had to pay more money for an attorney even though she was already a member of CCDN, because she understood when she joined the program it only covered federal matters and did not cover the costs for attorneys in state court debt collection cases. She also knew if CCDN referred her to a lawyer to handle a state court case, she would have to pay for the lawyer herself. (Tr. 110-113, 122, 140, 155).

Several days later, Ms. Cullen received another e-mail from Ms. Lock stating CCDN had an attorney in her area, but before it could refer her to that attorney "fees for the first half of your case are $3,100.00 and must be paid." The e-mail included a list of items covered by this fee and

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requested payment be sent to Respondent's law firm. Ms. Cullen testified she did not make this payment because she did not have the funds and was not going to pay $3,100 for a referral. (Tr. 72-74, Adm. Ex. 12 at 3). Ms. Cullen initially testified she thought the $3,100 was just for the referral; she later stated she thought it might also cover part of the attorney's fees. After reviewing Ms. Lock's e-mail which described what was covered by the fee, Ms. Cullen testified she is not sure she even thought about what was included because she had already decided she was not going to pay CCDN "[a]ny more money." (Tr. 123-35; Adm. Ex. 12).

Ms. Cullen did not attempt to get an attorney on her own and decided to deal with the Discover Card lawsuit herself. She prepared and filed an answer in the case based upon information she received from Mr. Webster at CCDN. Ms. Cullen was not required to make any additional payments to CCDN for these services or materials. Ms. Cullen appeared in court on the case on two occasions. At the second appearance, the judge found in favor of Discover Card and entered a judgment against her for approximately $10,000. The attorney for Discover Card never made any settlement proposals and refused to accept any less than the full amount owed. (Tr. 67, 74-79, 115-19, 156-57; Adm. Ex. 4).

In addition to the Discover Card matter, two credit card collection cases were also brought against Ms. Cullen's husband by Citibank while they were enrolled in CCDN. Those cases resulted in judgments of approximately $32,000 and $4,200. After each of these judgments was entered, Ms. Cullen informed CCDN by filling out and submitting the applicable paperwork. Although CDDN acknowledged receipt of the information, Ms. Cullen is not aware of any action taken by CCDN on her behalf with respect to these matters. Ms. Cullen testified the two Citibank judgments have now been paid through wage garnishments and other means, but the Discover Card judgment remains outstanding. (Tr. 78-88, 107-108).

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Ms. Cullen testified she believes it was the information she received from CCDN that resulted in her being sued. Although she admitted owing the money, she had been making minimum payments on the credit cards until she enrolled in CCDN and was told to stop making the payments. (Tr. 119-21).

Ms. Cullen reviewed certain language included in the FAQ section of the CCDN's web site in 2009, including the following:

10) I am currently making payments on my accounts, should I continue to make minimum payments?

Many people who come to us are already in default on at least one account. This is the most pressing question for those who have not defaulted. If you choose to enter an account into the process then it is your choice whether or not to make payments to an account which you believe to be invalid.

The Fair Debt Collection Practices Act 15 U.S.C. [Section] 1692, et seq. (FDCPA) provides for the withholding of payments during the dispute of a debt. Further, the Fair Credit Billing Act allows for the withholding of payment during a billing dispute. We believe that if payments continue to be made, they should be made under protest or duress. Otherwise, the act of payment may be interpreted as a validation of the disputed debt. Remember, the companies that you are dealing with are large, computerized operations who are more interested in checks and other forms of payment than any other type of communications. Therefore, if you choose to pay under protest, that fact should be communicated on the payment instrument itself.

Ms. Cullen testified she might have read this if it was on the web site at the time she reviewed it. Although she acknowledged she chose to stop making payments, she testified she was instructed to do so by Mr. Webster from CCDN. She received these instructions early on in the process and believed they were communicated to her by e-mail. She did not have a copy of that e-mail with her and was not sure she provided it to the Administrator. (Tr. 145-49; Adm. Ex. 7 at 9).

Ms. Cullen testified she also believed the instructions to stop making payments were included in the materials she received from CCDN. The Enrollment Manual includes the following language:

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When you stop paying the creditors, they will begin their collection efforts. These efforts include phone calls and letters. You will have to keep a log of the calls (we will provide you with a form) and fax any collection items or letters you receive in the mail to the Support Center ASAP so we can send you the proper response. The same applies to ALL third party debt collectors as well.

Ms. Cullen testified she assumed stopping payment of her creditors was "part of the program" because "if you don't stop the payment, this process doesn't start." Ms. Cullen testified she did not receive instructions to stop making payments from Respondent. (Tr. 120-21, 149-51; Adm. Ex. at 6).

Ms. Cullen testified she provided CCDN with all the information it requested and believed Respondent was working on a federal complaint. To her knowledge, CCDN has never filed any federal lawsuits on her behalf. Ms. Cullen did not know whether there were any federal violations in her case. (Tr. 86-87, 141-45).

Ms. Cullen testified her experience with CCDN has "most definitely" affected her opinion of lawyers. She stated she is no longer sure who is being honest with her or who she can trust. (Tr. 88-89).

Christopher Taylor

Mr. Taylor is 28 years old and lives in Boston, Massachusetts. He currently works in retail sales in the telecommunications industry and is also attending college. Mr. Taylor testified he encountered CCDN near the end of 2007 when he was looking for a way to address financial problems related to his accumulation of a significant amount of credit card debt. At the time, he owed approximately $27,000 to American Express, $2,500 to HSBC, and $5,000 to Discover Card. (Tr. 195-98, 231-32).

Mr. Taylor began doing research on the internet and came across videos made by Robert Lindsey (also referred to as "Bob Lindsey," "Lindsey," or "BL"), who owned and operated a Texas-based company called The Credit Card Solution ("TCCS"). He also came across the

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CCDN web site. Mr. Taylor contacted TCCS rather than CCDN because Lindsey was "very convincing" in the videos. (Tr. 197, 199, 234).

After submitting a form to TCCS, Mr. Taylor received a call from Lindsey's secretary, Linda Self. Ms. Self went over some information with him and sent him a worksheet to complete concerning the amount of his debt. After he returned the worksheet, Ms. Self arranged a telephone call between him and Lindsey, during which Lindsey explained the program. Lindsey explained there are rules banks are required to follow and record-keeping requirements they must adhere to in order to "be legal." He told Mr. Taylor that by using these "loopholes," they could "invalidate" his debt. Lindsey represented that the three accounts "would basically be gone," and Mr. Taylor would be able to "wipe the slate clean." (Tr. 200-202, 234).

Lindsey informed Mr. Taylor the fee for the program was $4,500. Mr. Taylor did not have this amount readily available, so he had to wait awhile before signing up. After thinking about it and looking around some more, he concluded this program was his best option and decided to go forward. It took him several weeks to gather the necessary funds. He used some money from his family that was meant for college and some funds he had left over from a tax refund. (Tr. 203-204).

On June 25, 2008, Mr. Taylor paid $4,500 to TCCS by electronic check. Mr. Taylor made the payment to TCCS rather than CCDN because he understood you could not pay CCDN directly. Mr. Taylor testified he believed by paying this amount, Lindsey would be able to put him into a program that would resolve his financial problems. (Tr. 205, 234-35, 238-39, 277).

Mr. Taylor was not sure when he became aware of CCDN's involvement in the process, but was certain he knew about it after he paid his money and received the Enrollment Manual. Mr. Taylor testified he read through the Enrollment Manual, even though it was voluminous, and

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it seemed generally consistent with what Lindsey had told him. Mr. Taylor understood the program would enable him to correct his financial problems without hurting his credit, which was important to him. He also understood his debt that could not be validated would be "zeroed out." He understood there were several phases to the process and the entire process would take less than two years. Mr. Taylor testified he believed CCDN would be in communication with the debt collectors and the credit agencies on his behalf. He was not sure this was actually said to him by TCCS, or if this was just his assumption. (Tr. 203, 205-207).

After receiving the Enrollment Manual, Mr. Taylor completed the included CCDN Debt Reconciliation Program Application and mailed it back to CCDN. (Tr. 208-209; Adm. Ex. 1 at 8). He was also required to review and initial a list of items setting forth various terms of the arrangement. One of the items on the list stated CCDN would "[p]rovide educational materials to support the Client's ability to prepare and initiate any and all investigations with the respective agencies." Although Mr. Taylor acknowledged initialing this, he thought it might refer to educational documents in addition to the services he thought he was purchasing. Other items on the list stated CCDN would "[r]eview all correspondence received by Client from each Respective Agency as presented to the CCDN by the Client" and "[p]rovide educational materials to assist the Client in responding accordingly to the correspondence received." Mr. Taylor confirmed these things did occur. The list further stated "CCDN does not guarantee improvement of Client's past history or FICO scores as many factors beyond our control affect these items." Mr. Taylor acknowledged he read this item and understood CCDN was not guaranteeing improvement of his credit history or FICO scores. Mr. Taylor was also required to agree "[Respondent] is not my attorney of record and that CCDN will only provide legal services through the CCDN affiliate attorney network within my state." Although Mr. Taylor admitted

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initialing this statement, he testified he did not necessarily know Respondent would not be acting as his attorney. While he knew this was not guaranteed, he understood from Lindsey that Respondent was the lead attorney and worked on cases. (Tr. 239-45; Adm. Ex. 1 at 9).

Mr. Taylor testified he was also required to specifically initial and agree to the following: to use CCDN or its affiliates to dispute negative, inaccurate or misleading items on his credit report; to give CCDN limited power of attorney to perform work on his behalf; and to give CCDN authority to contact credit bureaus, creditors, and collection agencies directly. Mr. Taylor testified he understood and expected CCDN would do these things for him. (Tr. 278-79; Adm. Ex 1 at 9).

As part of the enrollment process, Mr. Taylor was also required to execute a Limited Power of Attorney form for each of the three accounts he was entering into the program. Mr. Taylor did not really question the purpose of this form, but believed it was necessary for CCDN to deal with his creditors and credit reports on his behalf. He was also required to request copies of his credit reports. Mr. Taylor did this and faxed the reports to TFC. Mr. Taylor initially thought TFC was just a department of CCDN, but later learned it was a separate company. (Tr. 208-11).

Mr. Taylor testified he did not make any additional payments on his credit card debts after he enrolled in CCDN. He said he was told by Lindsey if he continued to make payments, the program would no longer work and the account would be dropped from the program. Mr. Taylor conceded he was already behind in his payments and in default on these accounts when he enrolled in CCDN. He also acknowledged reviewing information on CCDN's web site stating it is the customer's choice whether or not to continue to make payments on their accounts. (Tr. 212-15, 235-38; Adm. Ex. 7 at 9, Adm. Ex. 8 at 12).

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After receiving the Enrollment Manual, Mr. Taylor began filling out the forms and sending out the letters. When he received letters back from his creditors, he contacted CCDN and CCDN gave him additional letters to send out. (Tr. 245-46). Mr. Taylor also began receiving calls from creditors and debt collectors concerning his credit card debts. He was required by CCDN to document each call by noting the date and time, what was said, and how it made him feel. Mr. Taylor believed this information was necessary for Phase III of the program. He understood each time a collector called, chances were very high the collector was violating some part of the statute. He believed by creating a record, CCDN could build a "solid federal complaint" against the debt collectors for these violations. Mr. Taylor understood the filing of a federal complaint was the "ultimate goal" of the CCDN process and the information he was submitting would be used for this purpose. He believed when enough violations had been accumulated and collected, he would be referred to one of the attorneys in the network to file a complaint on his behalf. Mr. Taylor prepared all of the call logs as instructed and submitted all of the required information to CCDN. (Tr. 215-16, 220; Adm. Ex. 13).

Mr. Taylor testified regarding various e-mail communications and other contacts he had with various individuals from CCDN during the time he was enrolled in the program. These are reflected in CCDN records introduced into evidence by the Administrator. Mr. Taylor confirmed these records show he sent call logs to CCDN regarding his contacts with his creditors and the debt collectors at various times, including in August 2008 and January 2009. (Tr. 217-18; Adm. Ex. 13).

CCDN's records also reflect a series of communications Mr. Taylor had with various members of CCDN's Support Group in August and September 2009 regarding the possibility of filing a federal complaint with respect to Mr. Taylor's American Express account. In several e-

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mails to Tom Roberts, Mr. Taylor expressed concern he had not had much contact with CCDN and asked Mr. Roberts to review his files and let him know if the call logs would ever be used. On August 5, 2009, Mr. Roberts e-mailed Mr. Taylor that he had reviewed his accounts and concluded he had a "good violation" with respect to the American Express account, several small violations on the Discover account, and no violations yet on the HSBC account. Mr. Roberts indicated they should move forward and prepare a federal complaint on the American Express account because the statute of limitations was set to expire on September 22, 2009. Although Mr. Taylor knew filing a complaint was the goal of the process, this was the first time he heard CCDN would be preparing a federal complaint on his behalf. Mr. Taylor e-mailed Mr. Roberts and asked him what he needed to do to start the federal complaint. Mr. Roberts responded that CCDN would contact him and him know what, if anything, he needed to do. (Tr. 218-19; Adm. Ex. 13 at 2-4).

Over the course of the next several weeks, Mr. Taylor received a number of e-mails from Jennifer Devine, a CCDN paralegal, requesting various materials she needed to prepare the federal complaint against American Express. Mr. Taylor testified he believed he sent Ms. Devine everything she requested. (Tr. 269-71; Adm. Ex. 13 at 4-7).

CCDN records show Mr. Taylor had a telephone conversation with Mr. Roberts on September 17, 2009, during which Mr. Roberts explained to him he might have to file the complaint on his own if they could not find an attorney before the statute of limitations expired. Mr. Taylor acknowledged discussing the statute of limitations with Mr. Roberts and being told they had to act "fairly quickly," but did not believe he was told until later he might have to file the complaint on his own. Mr. Taylor testified he was never informed when he began the process he would be filing a complaint on his own. He believed when they got to that point, he

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would be referred to an attorney who would file the complaint for him. Mr. Taylor also received an e-mail on September 17, 2009, from Ms. Devine informing him he would be have to pay the $350 filing fee required by the court. Mr. Taylor believed this is the first he heard of a $350 filing fee. (Tr. 220-22; Adm. Ex. 13 at 6-7).

On September 18, 2009, the Friday before the statute of limitations expired on the American Express claim, Ms. Devine sent Mr. Taylor several e-mails requesting various materials she needed for the federal complaint. In his response to one of these e-mails, Mr. Taylor expressed his concern that all of this needed to be done by the following Tuesday and asked if they were "going to make it." Ms. Devine responded she could not present the complaint to an attorney until it was finished and she had all of the documents and exhibits. Mr. Taylor testified that, prior to receiving these e-mails from Ms. Devine, he was not aware CCDN needed any additional materials from him and did not recall being asked for these items prior to that day. Although he acknowledged receiving several earlier e-mails from Ms. Devine requesting various items, he believed he had already sent all of these items to CCDN. (Tr. 223, 257-71; Adm. Ex. 13 at 7-8).

On September 22, 2009, Mr. Taylor received an e-mail from Ms. Devine offering to refer him to a "professional debt negotiator." She stated CCDN had a sister company who could negotiate the best possible settlement for a flat fee of $500. Mr. Taylor testified he was not interested in those services because he had already paid CCDN $4,500 in order to avoid debt settlement as a way to resolve his problems. (Tr. 223-24; Adm. Ex. 13 at 10).

Mr. Taylor testified he eventually received a copy of the federal complaint in the American Express case from CCDN, but it was not until after the statute of limitations had

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expired. On September 24, 2009, he e-mailed Ms. Devine and she confirmed it was "too late" to file the complaint now. (Tr. 224-25; Adm. Ex. 13 at 11).

Mr. Taylor later e-mailed CCDN and requested a refund of the fee he had paid for the CCDN program. On October 9, 2009, he received an e-mail from John Hagenstein, CCDN Director of Sales, denying his request for a refund. In giving his reasons for the denial, Mr. Hagenstein made a number of statements critical of Mr. Taylor's participation in the program. Mr. Taylor testified he did not agree with many of Mr. Hagenstein's statements. (Tr. 225-28; Adm. Ex. 13 at 12-13).

Mr. Taylor acknowledged that, at some point during the CCDN process, he received offers from Discover Card and American Express to settle his outstanding debt for 30 percent of the amounts owed. Mr. Taylor testified he did not accept these offers because that is not why he signed up for the program. He believed the CCDN process was supposed to eliminate his entire debt, not just help him settle it. Mr. Taylor could not recall whether he had received offers to pay less than what he owed prior to enrolling in CCDN. (Tr. 233, 246-50, 286).

Mr. Taylor testified he ultimately resolved his outstanding credit card debt with both American Express and Discover Card. He paid American Express a reduced amount of $2,500 and settled with Discover Card for about half of what he owed. The HSBC debt of $2,600 is still outstanding and is reflected on his credit report. Mr. Taylor was never given any indication the settlement offers he received had any connection to CCDN and did not believe the money he paid for the program or the letters he sent out had anything to do with getting his accounts settled. He believes the settlement offers were due to his own work in calling his creditors and talking to them. (Tr. 229, 272-75, 281, 286-87).

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Mr. Taylor testified he honestly believed when he signed up with CCDN and paid $4,500, CCDN would be able to eliminate his $35,000 in debt. Although he acknowledged CCDN's web site states CCDN is not a debt elimination process, he believed his debt could be removed from his record through a process called debt validation, which is described in CCDN's Enrollment Manual. The way the process was explained to him, debts were never validated because the creditors always do something to "to mess that up, to make it invalid." He also understood once they found something invalid about the account, the original signed agreement was void. Mr. Taylor testified he believed if CCDN could not validate his debt, he would owe nothing. CCDN never went over what would happen if the debt was found to be valid. He assumed if that occurred, he would have to pay the money. (Tr. 242-43, 249-52, 255-56, 281-82, 291-95).

Mr. Taylor testified he believed his $4,500 payment to CCDN would get his debts reduced to zero and his credit restored because "that's what they said." (Tr. 275-76). He knew CCDN was run by attorneys and felt he could "trust an attorney." (Tr. 252-53). He did not think at the time his expectations were unrealistic because he was "taking instruction from a network of attorneys." (Tr. 296). Mr. Taylor admitted he now feels like a "sucker" for believing CCDN could do all these things for him. (Tr. 280-81).

Mr. Taylor testified CCDN never filed any federal complaints on his behalf. (Tr. 216-17). His credit has not improved since his enrollment in CCDN, but has only gotten worse. Mr. Taylor never received any money back from CCDN, TCCS, or Lindsey. (Tr. 228-30).

In addition to the loss of his $4,500, Mr. Taylor's experience with CCDN has had a negative effect on his opinion of lawyers and the legal profession. When he reach out to the founders of the CCDN who put their faces on the web site, they were not helpful, did not return

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calls, did not reply to letters, and did not provide a refund. Although Mr. Taylor never spoke directly with Respondent, he testified he sent Respondent a certified letter and also sent an e-mail to CCDN requesting Respondent call him. (Tr. 231, 282-84).

Douglas Davis

Douglas Davis is an attorney licensed to practice law in West Virginia, Ohio and Kentucky. He served as law clerk to the Honorable G. Ross Anderson, Jr., in the U.S. District Court for South Carolina and then worked at a private defense firm from 1990 until 1996. He has been employed by the West Virginia Attorney General's office since 1996, where he handles antitrust and consumer protection matters. (Tr. 160-64).

Mr. Davis became familiar with CCDN through consumer complaints the Attorney General's office received from West Virginia residents. He was assigned to look into the matter after one of these complaints was unsuccessfully mediated. Mr. Davis initially sent a follow-up letter to CCDN at its Chicago address, but received no response. He then began a preliminary investigation to learn more about CCDN and the individuals involved. The initial consumer complaint was filed against CCDN and Active Debt Solutions ("ADS"), the lead generator who signed up the customer. Mr. Davis discovered CCDN was owned and operated by Respondent and Manger. He knew Respondent was an attorney because he is registered with the Illinois Supreme Court, but did not learn until later Manger was also an attorney in New York. (Tr. 164-67, 180; Adm. Ex. 11).

Mr. Davis testified he is not sure how many other complaints his office received. Some of the complaints were against CCDN and some were against the lead generators who referred clients to CCDN. Mr. Davis initially reviewed the complaints and conducted some investigation through the internet. In 2009, his office issued a subpoena to CCDN to learn more about the

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company and to determine the extent to which West Virginia consumers were involved. After receiving no response, his office brought an enforcement proceeding in the circuit court and obtained a court order enforcing the subpoena. Manger eventually provided certain information in response to the subpoena, including a list of the names and addresses of West Virginia consumers, the name of the lead generator, and the amount of money received from West Virginia consumers. CCDN did not produce the documents requested in the subpoena. CCDN stated it was not a debt fulfillment company and had nothing responsive to produce. (Tr. 166-70).

Mr. Davis testified the subpoena was directed to CCDN, not Respondent or Manger. It was issued in West Virginia, and he did not open up a case in Illinois to have the subpoena served on Respondent. Mr. Davis stated the subpoena would not have been served personally, but would have been served by mail by the West Virginia Secretary of State's Office. (Tr. 180-81).

Based upon the information provided by Manger, Mr. Davis learned there were a total of 26 consumers in West Virginia who had signed up with CCDN. After he obtained the list of names, he sent letters to all of these consumers. Only about five or six of these consumers responded. Mr. Davis testified they interviewed some of these individuals, but he was not sure how many. Mr. Davis talked to at least two of the complainants himself. Mr. Davis did not believe the individuals he spoke with or the original complainant had any contact with Respondent. (Tr. 178-80).

After determining the number of consumers and the amount of money involved, the Attorney General's office decided to proceed with a lawsuit. In April 2010, an action was filed in Kanawha County, West Virginia, against CCDN, Respondent, and Manger. The complaint

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did not include the names of any of the individual consumers, but affidavits from some of them were attached. (Tr. 170-71, 183-84; Adm. Ex. 15).

Mr. Davis had the complaint served through the West Virginia Secretary of State in accordance with a West Virginia long arm statute. It was also served on CCDN's registered agent in Nevada. Mr. Davis did not open up a case in Illinois and serve the complaint on Respondent personally, but a copy of the complaint was forwarded to Respondent at his Chicago address. Mr. Davis did not believe he ever spoke with Respondent regarding the case. No answers or motions to dismiss were filed in the case. (Tr. 172, 182-83).

Mr. Davis waited several months after the answers were due and made sure proper service was obtained before moving for summary judgment. They decided to move for summary judgment rather than pursue a default judgment because they wanted to obtain a permanent injunction and civil penalties, not just a money judgment. CCDN did not file a written response to the motion for summary judgment. Prior to the hearing date, Mr. Davis received two telephone calls from Manger inquiring whether it was possible to resolve the matter. After they were not able to agree to terms, they proceeded with the summary judgment hearing. (Tr. 173-74).

No one appeared at the hearing on the summary judgment motion on behalf of CCDN, Manger or Respondent. On March 8, 2011, the court entered an order granting the state's motion for summary judgment against all three defendants. The relief awarded included a judgment against the defendants in the amount of $21,985.15 as restitution to the consumers who were victimized. The court also entered a judgment in the amount of $130,000 as a civil penalty and permanently enjoined CCDN, Manger and Respondent from doing business in the state. Mr.

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Davis testified neither of the monetary judgments in the case has yet been paid. (Tr. 174-76, 184-85; Adm. Ex. 15).

Mr. Davis is confident CCDN knew about the case because he had been contacted by Manger on several occasions. Manger advised him both he and Respondent were aware of the lawsuit. Mr. Davis also obtained Respondent's home address from litigation that was pending in North Carolina and sent notices regarding the case to that address. None of that mail was returned to him. Mr. Davis acknowledged he has never had any direct contact with Respondent. (Tr. 174-75, 185-86).

Respondent

Respondent testified CCDN came together informally in 2004 after he was contacted by Manger, who had heard about Respondent's success on behalf of consumers in debt collection matters. There were very few lawyers at the time knowledgeable in the issues involved in such cases, and Manger initially wanted to know if Respondent could practice in other jurisdictions. When Respondent indicated he could not, this evolved into Respondent taking on responsibility for putting together a network of attorneys around the country to help consumers in these matters. Respondent built this network by doing research on the internet, cold calling attorneys, and sending out e-mails. By the time CCDN ceased operating, it had a network of over 200 attorneys representing consumer interests throughout the country. (Tr. 372-74, 481).

CCDN was set up so Respondent, through his law firm, Robert K. Lock and Associates ("RKLA"), would enter into a separate agreement with each of the attorneys in the network regarding terms and conditions for the referral of consumer cases. After it received calls from consumers with complaints about debt collection practices, CCDN referred these matters to a network attorney in the consumer's location. Respondent provided network attorneys with all of

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his own materials free of charge, including his research, answers, discovery requests, motions for summary judgment, and motions to dismiss. (Tr. 376-77, 390).

Respondent operated CCDN out of a UPS drop box located in Chicago. As the volume of clients grew, CCDN hired paralegals and a support staff. CCDN's Support Center was originally located at Mr. Webster's home address in Cattaraugus, New York. Mr. Webster was an independent contractor who worked at the CCDN Support Center. Respondent had no knowledge of Mr. Webster's background and had nothing to do with bringing him into CCDN. CCDN later shifted its Support Center to an office in Brick, New Jersey. The Support Center started out with one individual and grew to as many as eight at one time. It was used to answer phone calls and e-mails from customers and provide them with educational materials. The Support Center also built client files with documentation in support of consumer protection claims then referred to lawyers around the country. (Tr. 377, 431-34).

CCDN was organized as a limited liability company in Nevada in 2006. Prior to this, it operated informally and functioned like a partnership between Respondent and Manger. Respondent testified he relied on Manger to run the business. Manger was not a practicing attorney and presented himself as an experienced businessman. (Tr. 482-84).

Respondent acknowledged participating in the creation of certain documents and educational materials provided by CCDN to its customers. These materials covered matters such as what would occur if you tried to negotiate your debts with the debt collector, what type of issues debt collectors would raise, and what would happen if you were sued in state court in a debt collection proceeding. They also included materials Respondent had used to successfully defend consumers in his own law practice, including answers, affirmative defenses, counterclaims, and discovery requests. (Tr. 398-400).

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Respondent acknowledged responsibility for a document titled "Instructions for responding to a State Civil Court Complaint." This document contains references to an "Answer template" and includes step-by-step instructions for preparing and filing an answer to a state court debt collection action. Respondent testified he worked on the preparation of this document with Ms. Devine, CCDN's lead paralegal. (Tr. 401; Adm. Ex. 3). He was also responsible for a document containing a sample answer and list of affirmative defenses, such as estoppel, unclean hands, and lack of standing. Respondent testified this was designed to show CCDN customers how he answered a consumer collection case. CCDN customers were not advised to use this on their own behalf, but were instructed to look at it as an example of an answer that can be filed and affirmative defenses that can be raised. Respondent stated the customer was obligated to research local law and consider the specifics of his or her own case to determine whether to use this as a basis for their response to a state court collection action. (Tr. 442-45; Adm. Ex. 4).

Respondent denied participating in the preparation of the CCDN Enrollment Manual. He also denied he reviewed this document before it was sent out. Respondent testified the Enrollment Manual was produced by Manger in conjunction with John Hagenstein, another individual who worked at CCDN. (Tr. 400-401, 404, Adm. Exs. 1, 2).

According to Respondent, the Enrollment Manual grew out of CCDN's relationship with CAF. CAF had approached CCDN and claimed to be doing work on behalf of consumers. CAF represented it had attorneys and paralegals filing complaints with the Federal Trade Commission ("FTC"). It also claimed to be working on developing information to file claims under the Fair Debt Collection Practices Act and other consumer protection laws. CAF came to CCDN because it wanted access to a network of consumer attorneys who could take on cases it was developing. After Manger conducted his "due diligence" on CAF, he was convinced it had a very strong

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consumer program and believed CCDN should move in this direction. CCDN then began referring a significant number of customers to CAF and paying it substantial sums for these customers' fees. In return, CAF was supposed to do "everything" for the consumer, including dealing with debt collectors, credit reporting agencies, and the FTC. It was also supposed to build consumer protection claims. (Tr. 404-406).

Respondent testified CCDN later discovered CAF was not fulfilling its obligations to CCDN's customers. Respondent began looking into the matter, and he and Manger eventually flew to South Carolina, where CAF was located, to meet with its owner, Jerry Hartso. They discovered CAF was run by only Mr. Hartso and his son, instead of having a team of five to ten paralegals. They also met with an attorney CAF had recently hired, who told them he was convinced "the whole thing was a scam." Respondent testified he then personally called the FBI in South Carolina and reported the matter. Respondent had several subsequent communications with an FBI agent in South Carolina, but never received any further follow-up information. (Tr. 406-409).

Respondent testified the Enrollment Manual was drafted in 2006 or 2007, after CCDN severed its relationship with CAF, and was essentially "copied" from materials put together by CAF. Respondent explained Manger and Mr. Hagenstein liked CAF's materials so they "basically slapped a CCDN logo on it" and used it as CCDN's Enrollment Manual. (Tr. 404, 480-81).

Respondent testified CCDN obtained it clients through various third party lead generators, because CCDN was not set up to be contacted directly by customers. After the lead generators collected the money from the customers, CCDN would get a check from the lead generator. (Tr. 487-89).

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Respondent attributed many of CCDN's problems to affiliations it formed with various organizations which turned out to be "nefarious." Respondent testified he was presented with information at the beginning of each of these relationships that convinced him these were legitimate businesses with consumers in need of attorneys and consumer education. He did not learn until later these companies were not fulfilling the representations they made to CCDN. Respondent testified he could not recall any company with which CCDN entered into a relationship that did not turn out to be a "complete fraud." As a result of these experiences, in 2009 CCDN formed its own lead generation group, called the Legal Debt Cure. Respondent testified this was the only lead generator that did not turn out to be nefarious. (Tr. 445-50, 386-89, 487).

TFC, which is referred to in the Enrollment Manual, was one of the companies CCDN entered into an arrangement with. Respondent testified TFC provided e-books, letters and other educational materials designed to enable the consumer to make legitimate challenges to items in their credit records. Like CCDN, TFC also provided consumers with template dispute letters for customers to send to creditors. (Tr. 450-53).

Respondent testified CCDN has never been a "debt elimination" company and it was never his intent customers be told CCDN would eliminate their debts "no matter what." Respondent explained CCDN was designed to provide educational materials and other support otherwise unavailable to consumers. He noted the credit card agreements consumers are required to enter into are difficult to understand and there is an "incredible dearth" of information with respect to these contractual relationships consumers find themselves bound by. (Tr. 409-11).

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Respondent acknowledged there is some inconsistency in the information sent out by CCDN regarding who would be sending out the debt validation letters. While the Enrollment Manual states "we" send out a series of letters, the CCDN web site indicates CCDN would assist the customer in sending out the letters. Respondent explained he did not really focus on these materials or become aware of this language until after the complaint was filed by the Greenes in 2008. Respondent then reviewed the web site and documentation and revised the materials to make it very clear what CCDN would and would not do. Respondent testified he never intended, at any time during the operation of CCDN, to mislead any CCDN customers regarding the services CCDN would provide. His only intention was to assist consumers in any way CCDN lawfully could to establish the truth surrounding their debts and evaluate any claims they might have. (Tr. 412-13, 478-80).

Respondent testified he does not believe consumers were actually misled by any inconsistencies in the wording of CCDN's materials. He noted CCDN had more than 2,000 customers and received very few complaints. It also heard from many customers who believed the process had worked for them. Respondent stated CCDN referred between 160 to 170 consumer protection claims to attorneys in its network and those consumers received either financial awards or damages. (Tr. 409-10, 413-15, 492-93). Like Mr. Taylor, many other customers obtained significant reductions in their indebtedness in response to the challenges and requests for information sent out regarding the debt. Respondent testified CCDN had dozens of cases where, after consumers sent out dispute letters, the debt collector or original creditor came back and said to "remit zero dollars and zero cents and this matter will be closed." (Tr. 415-16).

Respondent testified he did not view it as part of his job with CCDN to step in and stop abusive debt collection practices as they were happening. He denied CCDN customers were on

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their own in dealing with debt collectors. He stated they were provided with significant education, access to attorneys if they were sued in state court, and access to consumer protection attorneys who could litigate claims for their benefit. (Tr. 438, 440).

Respondent acknowledged CCDN was the subject of a number of lawsuits during its existence. Respondent did not believe Manger kept him apprised of all of the legal issues and litigation CCDN was facing. Respondent acknowledged this does not excuse him from responsibility for those matters. (Tr. 482-83).

Respondent learned about the West Virginia case when he received a telephone call from Manger. He also received a copy of the complaint in the mail. Respondent stated he did not make a conscious decision not to appear in the West Virginia matter. Respondent asked Manger to respond to the West Virginia Attorney General because at the time Respondent was dealing with lawsuits in North Carolina and the Greene matter in Illinois. Manger told Respondent he had been communicating with Mr. Davis, had provided him with documents in response to his requests, and was trying to explain that CCDN was not involved in the debt settlement or debt negotiation business. Mr. Davis was not satisfied and proceeded to seek summary judgment. In retrospect, Respondent believes he was "overwhelmed" in dealing with all of these other matters and "froze." Respondent admitted his actions were "stupid," and he should have been "a lot more aggressive" in dealing with this case and not left it in Manger's hands. (Tr. 471-74; Adm. Ex. 15).

Respondent testified the North Carolina case did not involve dissatisfied CCDN customers, but was brought by Chris Livingston ("Livingston"), one of the network attorneys. Livingston had allowed the statute of limitations to expire on the consumer protection claims of four clients referred to him by CCDN. Respondent believes Livingston filed the suit to deflect

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attention away from his own actions. The court later dismissed the case and imposed $27,500 in sanctions against Livingston for filing frivolous claims. Livingston appealed that decision to the North Carolina Supreme Court and the dismissals were upheld. (Tr. 474-76).

Respondent testified the Greene case was originally filed in federal court by attorneys in Philadelphia as a proposed class action. The attempt to form a class was later abandoned after they were unable to develop enough plaintiffs to obtain class certification. The Greenes were ultimately awarded $1,433 in the case as a partial refund of the fees they paid CCDN for services the court felt they did not receive. (Tr. 416-17; Adm. Ex. 16).

Respondent admitted he received money at various times from CCDN, usually via wire transfers from the CCDN operating account. He testified there was no set schedule for these transfers, and there were many months when he did not receive anything. Respondent could not say how much income he received annually from CCDN and did not know the total amount he received over the life of the company. Respondent has not yet filed federal income tax returns for the years 2006 through 2010 and is currently working on those matters with the IRS. He admitted he has taken the position with the IRS that approximately $200,000 of what he received from CCDN during 2006 through 2009 was in the form of loans. Respondent did not know if his income from CCDN during this time was more or less than this amount. Respondent admitted he has not repaid any of these loans. (Tr. 455-59, 468).

Respondent acknowledged he was entitled to share equally with Manger in any CCDN profits. Respondent testified CCDN never reached the point where it was making a "significant profit." (Tr. 455). Respondent did not know the amount of CCDN's total gross revenues, but believes it was significantly less than 5 million dollars. Respondent did not think CCDN charged $2,500 per customer for all of its 2,200 customers and believed many of the earlier customers

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were charge much lesser amounts. Respondent acknowledged CCDN had gross income every year, but has not filed all of its tax returns and is still working on those matters. (Tr. 463-68).

Respondent testified CCDN's books were handled by Manger. Respondent trusted Manger and did not have anything to do with this aspect of the business. Respondent testified his focus was not on making "a lot of money," but on running a consumer law business. (Tr. 463-64, 469-70).

Respondent testified CCDN was formally dissolved in January 2010 and ceased doing business around this same time. CCDN had "no money" at the time and could not pay its annual registration fee. Since there were still customers at the time in need of support, Respondent testified he continued to take their calls and e-mails and tried to help them in any way he could. (Tr. 470-71, 484-85).

Count IV

Admitted Facts

In or about February 2007, Respondent, on behalf of CCDN and RKLA, an Illinois business entity owned or operated by Respondent, entered into a written referral agreement with Lindsey. Lindsey was then the operator and sole proprietor of TCCS, a business entity located in Texas. Lindsey was neither an employee of Respondent's law firm nor a lawyer licensed to practice law.

The referral agreement recited that "BL and RKLA/CCDN desire[d] to establish a mutually beneficially relationship whereby BL refers clients in need of the legal services offered by RKLA/CCDN, and RKLA/CCDN utilizes the marketing support services of BL to support its provision of high quality legal services to its client base." As part of the referral agreement, Lindsey agreed to provide referrals to CCDN of clients seeking legal services and Respondent

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and Lindsey agreed Lindsey would solicit clients to participate in CCDN's Debt Reconciliation Program. Respondent and Lindsey also agreed Lindsey would charge clients seeking to participate in CCDN's Debt Reconciliation Program up to $5,900, and would remit at least $2,800 of each payment he received from a customer or client to Respondent or CCDN.

Between 2007 and 2009, Lindsey referred at least 243 clients to CCDN pursuant to their referral agreement. The 243 clients solicited by Lindsey were not relatives or close friends of Respondent and neither Respondent nor CCDN had had professional relationships with those clients prior to the times any of them retained the services of TCCS, RKLA, or CCDN. Pursuant to their referral agreement, Lindsey was required to remit at least $2,800 to CCDN for each of the 243 clients he referred to CCDN, or a total of at least $680,400. Between 2007 and 2009, Lindsey remitted approximately $211,365 to Respondent or CCDN. In addition to retaining any amounts in excess of $2,800 he received from the clients referred to CCDN, Lindsey retained at least the remaining $469,035 he was required by the terms of the referral agreement to remit to CCDN and used it for his own purposes.

Respondent

Respondent testified he was introduced to Lindsey by Manger, who was responsible for marketing at CCDN. Respondent had one meeting with Lindsey before they entered into the referral agreement. This took place in Chicago in January 2007 and was also attended by Manger and Lindsey's assistant, Linda Self. They discussed the services Lindsey provided consumers in an effort to determine whether there was a fit between Lindsey and CCDN. Lindsey represented TCCS was involved in assisting consumers by providing educational materials and putting together webinars and videos to educate them on consumer protection statutes. He also represented he was trying to help a number of customers resolve credit card

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debt problems by providing them with educational materials regarding debt collection matters. Respondent learned Lindsey had a fairly substantial ongoing business and was charging for the educational services he provided. This was similar to the work CCDN was doing. Lindsey proposed his company and CCDN work together, because he needed access to a network of attorneys around the country. Lindsey wanted to be able to refer his customers to CCDN to analyze their credit situation and debt collection activities, determine if there were any violations of consumer protection statutes, and refer them to attorneys where appropriate. (Tr. 378-86; Adm. Ex. 10).

Respondent admitted he later entered into a contract, dated February 7, 2007, between RKLA/CCDN and TCCS, a sole proprietorship operated by Lindsey, whereby Lindsey agreed to refer clients to RKLA/CCDN. Respondent testified the agreement with Lindsey was similar to agreements CCDN entered into with what he referred to as other "lead generators." In addition to the referrals to CCDN, Respondent understood Lindsey was providing educational materials to clients on his own. Respondent did not know at the time whether Lindsey had any background in consumer law. (Tr. 391, 453-54, 486; Adm. Exs. 9, 10, 11).

The arrangement with Lindsey lasted approximately one year. During that time, Lindsey referred a large number of customers to CCDN. CCDN never paid any money to Lindsey. Even though the contract with Lindsey refers to RKLA, Respondent testified funds were paid by Lindsey to CCDN, not RKLA. (Tr. 391-92, 396, 489).

Respondent testified he began to "question Mr. Lindsey's character" after he and Manger learned he was telling customers things CCDN was not aware of. These included representations that the network of attorneys knew "special processes" that could eliminate customers' debt. They also discovered Lindsey was charging customers more than he told CCDN and was not

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forwarding customers' fees to CCDN. Although CCDN initially continued to accept these customers even though it was not being paid, it eventually told Lindsey to stop making these referrals. (Tr. 392-93, 396-97).

Respondent testified he contacted the Texas Attorney General's Office on behalf of CCDN after discovering these problems, and advised it of the situation. CCDN also sent a letter to all of its customers who had been referred by Lindsey advising them of these problems and encouraging them to contact the Texas Attorney General's Office. Respondent stated the Texas Attorney General shut down TCCS's operations in Texas on the basis of CCDN's complaint. (Tr. 397).

Respondent testified Lindsey primarily dealt with Manger during the course of his relationship with CCDN. Respondent said he had very little contact with Lindsey other than in connection with the termination of their relationship. (Tr. 453). Respondent acknowledged Lindsey referred approximately 240 customers during the one-year period the agreement was in effect and his referrals accounted for a significant part of CCDN's income during this time. (Tr. 487-88).

Evidence Offered in Mitigation and Aggravation

Except for the time he spent in the criminal division at the State's Attorney's Office, Respondent testified he has focused his entire career on consumer protection matters. He has also spoken on consumer protection issues at various seminars. Respondent testified regarding his extensive involvement in numerous church, school and other community groups and activities. He has also volunteered to assist individuals with foreclosure matters through Chicago Volunteer Legal Services. (Tr. 371-73, 419-21).

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Respondent admitted he has experienced various financial problems. He testified his home is currently in foreclosure and he may be indebted to the Internal Revenue Service. He said a judgment for $29,464.21 was entered against him and his wife in 2006, in a case filed by MNBA, a credit card company. Respondent also currently has two lawsuits pending against him by American Express. Other than a very small amount, Respondent has not been able to pay his counsel to represent him in this proceeding. (Tr. 427-31, 468, 496).

Prior Discipline

The Administrator reported Respondent has not been previously disciplined.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In attorney disciplinary matters, the Administrator must establish charges of misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Ingersoll, 186 Ill. 2d 163, 168, 710 N.E.2d 390, 393 (1999). Clear and convincing evidence constitutes a high level of certainty, which is greater than a preponderance of the evidence but less than proof beyond a reasonable doubt. People v. Williams, 143 Ill. 2d 477, 484-85, 577 N.E.2d 762 (1991). Evidence of suspicious circumstances or the exercise of poor judgment by an attorney, standing alone, are not sufficient to support a charge of misconduct. In re Winthrop, 219 Ill. 2d 526, 550, 555, 848 N.E.2d 961 (2006).

Counts I-III

The charges in Counts I through III are based on Respondent's alleged role in selling the CCDN Debt Reconciliation Program to consumers. The Complaint alleges the program was marketed and sold based upon certain false statements and misrepresentations regarding the services CCDN would provide. Respondent is charged in all three counts with engaging in conduct involving dishonesty, fraud, deceit or misrepresentation in violation of Rule

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8.4(a)(4)(1990) and Rule 8.4(c)(2010), and conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute in violation of Supreme Court Rule 770. With respect to the Rule 770 charges, we note initially the Illinois Supreme Court recently stated, "Rule 770 is not itself a Rule of Professional Conduct" and "one does not 'violate' Rule 770. Rather, one becomes subject to discipline pursuant to Rule 770 upon proof of certain misconduct." In re Thomas, 2012 IL 113035, par. 92 (2012). Accordingly, based upon the wording of the allegation in the Complaint before us, we find no violations of Rule 770. Thus, we focus our discussion on the remaining charge, which is whether Respondent engaged in dishonesty, fraud, deceit or misrepresentation in violation of Rule 8.4(a)(4) or 8.4(c)1 as alleged in each of these three counts.

The admitted facts, together with the evidence, show the CCDN Debt Reconciliation Program was marketed and sold to consumers who were experiencing severe credit card debt problems. In exchange for the payment of a sizable fee, each in the range of $2,500 to $4,800, customers were enrolled in the program and provided various materials and services aimed at addressing and potentially resolving the consumer's outstanding credit card debt. The program, as described on CCDN's web site and in its Enrollment Manual, involved three phases. Phase I, called "Credit Restoration," was designed to restore the individual's credit history with the various credit reporting agencies by taking steps to challenge unverified information and remove negative items from consumer's credit reports. Phase II, called "Reconciliation," had several main components. The first aspect was directed at establishing the validity or the invalidity of the consumer's credit card debts by sending out a series of form letters created by CCDN, requesting the creditor or collector "validate" the debt. According to CCDN's materials, if the creditor or collector was unable to validate the debt, the debt was considered "invalid" and had to

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be forgiven. Phase II also involved the gathering of information by the consumer regarding debt collection practices used by creditors and collectors in order to create a record of potential violations of federal law. Phase III, called "Federal Lawsuit," involved the preparation of a federal complaint based upon the violations discovered during Phase II and referral of the case to one of the CCDN network attorneys for filing. Based on our understanding of the CCDN program, these federal lawsuits were to be used to obtain a judgment against the creditor to offset the indebtedness claimed by it, or to provide bargaining leverage to negotiate a settlement or some other resolution of such claimed indebtedness

Although CCDN materials clearly stated this was not a "debt elimination" process, the evidence showed the program was marketed to consumers as a way to potentially resolve their credit card debt problems and avoid bankruptcy. As stated in the Enrollment Manual, the goal of the process was the consumers' credit scores would "dramatically improve" and their debt would be "resolved." As evidenced by the two witnesses who testified at the disciplinary hearing, however, this outcome was not necessarily achieved. Both witnesses who had participated in the CCDN program, Kimberly Cullen and Christopher Taylor, testified they ended up with outstanding credit card debt at the end of the process, which they were required to pay or otherwise resolve. Furthermore, neither witness had any federal lawsuits filed on their behalf, nor did either experience any improvement in their credit history.

The disciplinary charges in Counts I through III are each based on certain specific alleged misrepresentations contained in either the Enrollment Manual or on the CCDN web site regarding the services to be provided to consumers during the various phases of the program. Count I is based on representations in the Enrollment Manual concerning the nature of CCDN's involvement in Credit Restoration. The Enrollment Manual states this process will begin "as

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soon as you enter our program and will continue for 24 months thereafter." It also states "we will continue to challenge unverified information and monitor all clients' credit reports for the full 24 months." The Complaint alleges these statements were false because no one from CCDN ever took any action to monitor clients' credit reports or challenge unverified information. Rather, CCDN simply referred its clients to a separate entity, TFC, to provide the credit restoration services described in Phase I.

Counts II and III are both based on alleged misrepresentations regarding the nature and extent of CCDN's role and involvement during Phase II of the process, which was said to constitute debt "validation." Count II is based on language in the Enrollment Manual, which suggests CCDN or its employees would be directly involved in the process by sending out letters to creditors requesting they validate the debt and demanding the customer's account be marked as paid if the creditor could not do so. The Complaint alleges these statements were false because CCDN never took any such action on its customers' behalf, but simply provided form letters for the customers to fill out and send to the creditors themselves. Count III is based on a similar alleged misrepresentation which was included on CCDN's web site in 2009. The Complaint alleges the FAQ section of CCDN's web site included the following statement: "In all circumstances CCDN will endeavor to secure validation of the underlying debt from an original creditor and any subsequent owners or holders of the unsecured debt account." Again, the Complaint alleges this statement was false because CCDN did not undertake any such action on behalf of its customers, but simply provided its customers with form letters for the customers to complete and send out themselves.

The Complaint alleges Respondent is responsible for these misrepresentations because he caused or participated in causing these false statements to be included in the Enrollment Manual

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and on the CCDN web site. It further alleges Respondent knew these statements were false and intended to mislead CCDN clients and potential clients regarding the services which would be provided.

As noted, Respondent is charged in all three counts with engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation in violation of Rule 8.4(a)(4). The Supreme Court has emphasized in recent cases that determining whether an attorney's conduct violates this Rule involves a case-by-case determination taking into account facts and circumstances surrounding the attorney's conduct unique to each individual case. See Thomas, 2012 IL 113035; In re Mulroe, 2011 IL 111378 (2011); In re Cutright, 233 Ill. 2d 474, 489, 910 N.E.2d 581 (2009). In this matter, after taking into account the admitted facts and the additional evidence presented, we find the Administrator failed to prove by clear and convincing evidence Respondent violated this Rule. While we believe the evidence showed there was a lack of clarity, as well as certain inconsistencies, in the information disseminated to consumers regarding the services which would be provided by CCDN, we do not believe there was clear and convincing proof Respondent engaged in dishonesty, fraud, deceit or misrepresentation within the meaning of this Rule. In reaching this conclusion, we specifically note the following factors.

First, the evidence clearly established the Enrollment Manual, which was the basis for all of the alleged misrepresentations in both Counts I and II, was not provided to CCDN's customers until after they had already signed up for the program and paid all of their fees. This fact was confirmed by both Ms. Cullen and Mr. Taylor, who testified they did not receive the Enrollment Manual until after they made the decision to enroll in CCDN and paid their fees. Thus, there was no evidence these witnesses or any other consumers relied on or were misled by these alleged misrepresentations when they decided to enroll in CCDN. Regardless of whether it is necessary

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to prove reliance in order to establish fraud under Rule 8.4(a)(4),2 we believe this consideration is relevant in assessing Respondent's actions and his overall intent. The Complaint specifically alleges Respondent knowingly included these misstatements in the CCDN materials with the intent to mislead customers and potential customers regarding the services to be provided. The fact there was no evidence these materials were used to market the program or induce customers to enroll, undermines the Administrator's position these alleged misrepresentations were designed to deceive or mislead consumers.

Nor was it clear from the evidence any customers relied on or were misled by the statements on the CCDN web site that form the basis for the charges in Count III. The allegations in Count III are specifically based upon language appearing on CCDN's web site in 2009. In support of the charges in this Count, the Administrator introduced evidence showing the contents of the web site as it existed in January and September of 2009, but not prior thereto. Since both Ms. Cullen and Mr. Taylor enrolled before 2009, this language was not proven to have been included on the web site at the time either one of them reviewed it and made the decision to enroll, particularly inasmuch as the web site was revised from time-to-time. Ms. Cullen testified she did not think certain other language on the web site in 2009 was on the web site in 2006 when she signed up for program, and her assertion in that regard stands uncontradicted.

Furthermore, while the evidence established many of the CCDN materials were vague and arguably contradictory, we are not convinced there was clear and convincing evidence the particular statements at issue, when viewed together with the materials as a whole, were fraudulent or deceptive. In addition to the specific statements quoted in the Complaint, the evidence established there was other information in the Enrollment Manual and on the CCDN

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web site that arguably clarified or contradicted some of the alleged misrepresentations, as well as some of the witnesses' testimony, regarding what they were led to believe about the program. For example, the charge in Count I is based on the allegation the Enrollment Manual falsely states CCDN would be directly involved in the credit restoration process, when all it did was farm this out to TFC. In addition to the language relied on in support of this charge, however, the Enrollment Manual also specifically refers to TFC and discusses its role and involvement in the credit restoration process. It also included a "Credit Restoration Application" for TFC, which customers were required to complete and submit. Thus, while the materials do not specifically describe the nature of the relationship between these two entities, customers were advised TFC, not CCDN, would be handling this aspect of the process.

The charges in Counts II and III are based on certain language in the Enrollment Manual and on the CCDN web site which suggests CCDN would be directly involved in the debt validation process, when all it did was provide form letters and instructions for the customers to complete and send out. Again, in addition to specific language cited in the Complaint, there was other information in the CCDN materials which indicated customers would be required to take an active role in this aspect of the process. For example, the April 2008 version of the Enrollment Manual included a copy of the form letter to be completed by the customer and sent out to creditors demanding validation of the alleged debts. The web site also included additional language specifically stating CCDN would "help" the customer send out the proprietary letters. Furthermore, while Ms. Cullen and Mr. Taylor were clearly dissatisfied with various aspects of the CCDN program, neither of them testified they were surprised they were required to complete these letters and send them out, or confused by the requirement.

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In addition to the specific alleged misrepresentations relied on in the Complaint, there was evidence regarding other arguably false or misleading aspects of the CCDN program. Notwithstanding CCDN's statements on its web site that it was not providing a debt elimination service, both witnesses testified they were led to believe when they signed up for the program and paid the $4,500 fee CCDN would wipe out or eliminate their debt. They also clearly believed CCDN would be preparing and filing federal lawsuits on their behalf in order to accomplish this. The disciplinary Complaint, however, did not charge Respondent with making false promises or guarantees it would file lawsuits or eliminate customers' debt. Thus, we cannot, and do not, conclude there is an allegation of, nor a sufficient basis in the record, to make a finding of, misconduct on Respondent's part with respect to these other aspects of the program.

We also note the lack of clear and convincing evidence Respondent was involved in deliberately providing false or misleading information to consumers about CCDN's services or the program. While Ms. Cullen and Mr. Taylor both testified they were misled by third party marketers and various other individuals, it was undisputed neither witness ever had any direct contact with Respondent. Although Respondent admitted in his Answer responsibility for the Enrollment Manual and the contents of the web site, he testified he was unaware of the problems with the language used until it was called to his attention as a result of the Greene litigation. He testified he then took action to correct and clarify these matters. There was also evidence Respondent terminated CCDN's relationships with third party marketers such as Lindsey and TCCS, and reported them to the authorities, when he discovered they were misrepresenting the nature of CCDN's services.

Finally, we note the Administrator presented testimony of only two unsatisfied customers out of a total of 2,219 customers who purchased the CCDN program during the five-year period

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from 2005 to 2010. While the Administrator also introduced evidence of civil litigation against CCDN based upon similar complaints regarding the program, these matters accounted for only a relatively small number of additional complaints. Thus, there was no proof of widespread customer dissatisfaction, nor was there evidence of more than a very small percentage of customers claiming to have been misled by CCDN's materials.

With regard to the other litigation, we recognize there were judgments entered against CCDN, Respondent, and Manger in several of these proceedings. The Administrator conceded we are not bound by the findings in these other matters and it is within our discretion as trier of fact to determine the weight we accord this evidence. (Tr. 192-94). See In re Owens, 144 Ill. 2d 372, 378-79, 581 N.E.2d 633 (1991) (judgment in a civil case may not be the only factor in Hearing Board's decision but can be a component in the greater whole). Thus, while we have considered the judgments in these proceedings, along with all of the other evidence presented, in making our findings, we do not believe there is a sufficient basis in this record for finding misconduct under the Rule charged here.

Although we have concluded the charges in Count I through III were not proven by clear and convincing evidence, we emphasize we are not finding Respondent innocent of any wrongdoing or impropriety, but only that the evidence presented was insufficient to establish the charges by the required burden of proof. In other words, we are unable to reach a finding of fraud, dishonesty, or deceit based on the record before us. We also observe the failure of proof was not due to the manner in which evidence was presented, but was due to the apparent lack of existence of such clear and convincing evidence. Further, our findings do not result from not crediting the testimony of the two witnesses who testified regarding their negative experiences

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with CCDN, but are the result of our conclusion there was insufficient evidence to prove the allegations of the Complaint to the extent required by the applicable burden of proof.

For the foregoing reasons, we recommend the charges in Counts I through III of the Complaint be dismissed.

Count IV

The charges in Count IV are based upon the referral arrangement Respondent's law firm and CCDN entered into with Lindsey and TCCS. Most of the facts pertaining to this charge were admitted in the Complaint and are essentially undisputed. The admitted facts and other evidence established Respondent entered into a written Referral Agreement in 2007 on behalf of his law firm and CCDN (RKLA/CCDN) with Lindsey and TCCS. The primary purpose of the agreement was to provide RKLA/CCDN with a "client referral source" for its Debt Reconciliation Program. Pursuant to the terms of the agreement, Lindsey agreed to solicit clients to participate in CCDN's program and refer to RKLA/CCDN clients who were in need of legal services. The parties further agreed Lindsey could charge clients seeking to participate in CCDN's program a maximum fee of $5,900. Lindsey was required to remit $2,800 of that fee to RKLA/CCDN to cover the cost of the program and was allowed to retain any additional amounts collected.

The evidence showed Lindsey marketed CCDN's program through video sales pitches delivered through the internet and charged a fee of $4,500 per client. During the period the referral agreement was in effect, Lindsey referred at least 243 clients to CCDN. Although Lindsey should have paid RKLA/CCDN a total amount of at least $680,400, he actually only paid CCDN a little over $211,000. Lindsey apparently kept not only his share of these fees, but also a significant portion of RKLA/CCDN's share. According to Respondent, he became aware

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at some point Lindsey was not paying CCDN its share of the fees for some of the clients it referred. He also became aware some of the clients referred by Lindsey had received inaccurate information from Lindsey about CCDN's program. Respondent then terminated CCDN's relationship with Lindsey and reported him to the Texas Attorney General's Office, who shut down Lindsey and his company.

Count IV of the Complaint is based on allegations the referral arrangement Respondent entered in on behalf of RKLA/CCDN with Lindsey and TCCS violated various ethical prohibitions contained in the Rules of Professional Conduct, specifically: a.) sharing legal fees with a nonlawyer, in violation of Rule 5.4(a) (1990); b.) giving something of value to a person for recommending or having recommended the lawyer's services, in violation of Rule 7.2(b) (1990); and c.) soliciting professional employment from a prospective client who is neither a lawyer nor a person with a family, close personal, or prior professional relationship with the lawyer, in violation of Rule 7.3 (1990).3 Based upon the terms of the agreement, the admitted facts, and the other evidence presented at the hearing, we find each of these charges was proven by clear and convincing evidence.4

Rule 5.4(a) generally prohibits a lawyer from sharing legal fees with a nonlawyer. Although it is subject to certain specified exceptions, none are applicable here. The evidence clearly established the referral arrangement at issue involved the sharing of legal fees with a nonlawyer and thereby violated this rule. The evidence showed Lindsey and TCCS were engaged to solicit clients on behalf Respondent's law firm and CCDN and to sell them CCDN's Debt Reconciliation Program. That program clearly involved the provision of legal services. The agreement itself expressly provided the client referrals were for the purpose of providing "legal services." The agreement also identified Respondent's firm as "an Illinois legal services

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provider," and stated the arrangement involves the referral of clients "in need of the legal services offered by RKLA/CCDN."

The evidence also showed Respondent and CCDN agreed to share the fees paid for these legal services with Lindsey and TCCS. The agreement required Lindsey to pay RKLA/CCDN a fee of "$2,800.00 per client" at the time he submitted clients for admission into the program. The agreement further allowed Lindsey to add a "premium" to that fee to cover the costs of "lead generation and commissions." The parties also agreed Lindsey could "sell the program" for a maximum price of $5,900. Thus, the agreement established Lindsey could charge up to $5,900 for the CCDN legal services program and keep any amount over $2,800 as his share of the fee. Although Lindsey made the initial sales pitch to, and may have gathered some information from, these clients, there was no evidence he provided any services to the clients in exchange this fee. Based upon all of the evidence presented, we find this arrangement constitutes improper sharing of legal fees with a nonlawyer in violation of Rule 5.4(a).

In his defense to the fee sharing charge, Respondent relies heavily on In re Tagler, 04 CH 69 (June 6, 2006). As here, the respondent in Tagler was charged with improper fee sharing, as well as additional misconduct stemming from his referral arrangement with a nonlawyer who operated a separate business. The Hearing Board in Tagler concluded the fee sharing and other charges were not proven by clear and convincing evidence and recommended the charges be dismissed. The Review Board upheld those findings.5 Although there are some superficial similarities between these two cases, after careful review of the facts in Tagler, we conclude the arrangement at issue there is clearly distinguishable from the one involved in this case.

The attorney in Tagler entered into a referral arrangement with a nonlawyer who operated a business called Property Foreclosure Consultants ("PFC"). PFC provided financial advice and

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other services to individuals whose homes were in foreclosure. PFC identified potential customers by reviewing court records of foreclosure suit filings and then sent a series of mailings offering the company's services. PFC charged customers a flat fee of $1,500 for its services, which included meeting with the clients, collecting financial information and documents, and completing forms. PFC determined most of these cases required negotiation with the homeowner's current lender. PFC's owner initially attempted to handle this himself, but later began referring the matters to the respondent after determining this could be better handled by an attorney. PFC paid the respondent a flat fee ranging from $250 to $500 per case for his services. PFC referred about two thirds of its customers to the respondent, who essentially took over the matter from there.

Unlike this case, the facts in Tagler clearly indicate the nonlawyer provided certain services to its customers apart from its referral of these individuals to the respondent attorney. In making its finding on the fee sharing charge, the Hearing Board in Tagler specifically noted the fee charged by the nonlawyer appears to have been for these non-legal, financial services. As already noted, there is no evidence Lindsey or TCCS did anything of consequence for the clients it referred to CCDN other than signing them up for the program and collecting the fee. This is supported by the testimony of Mr. Taylor, who signed up for CCDN through Lindsey and TCCS. According to Mr. Taylor, after he responded to Lindsey's sales pitch and paid his $4,500 fee, he received the Enrollment Manual from CCDN and CCDN took over from there. The terms of the referral agreement also make it clear Lindsey and TCCS were nothing more than a marketing tool and referral source for CCDN clients. There is no indication in the agreement either Lindsey or TCCS had any additional or ongoing responsibilities with respect to the clients they

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signed up and referred to CCDN. The fee provision also makes it clear the amount of the fee retained by Lindsey was simply a "premium" or commission for selling the CCDN program.

Based upon Tagler, Respondent also relies on the fact the fees in this case were initially collected by Lindsey and TCCS and then later paid to Respondent. Respondent seemingly suggests improper fee sharing cannot be established unless the attorney himself collects the fee and then "shares" it with the nonlawyer. Although the Hearing and Review Boards in Tagler noted the attorney had not been the one to collect the fee, we do not believe Tagler stands for the proposition that fee sharing cannot be established because the fee is initially collected by the nonlawyer. This idea was essentially rejected in In re Komar, 125 Ill. 2d 427, 532 N.E.2d 801 (1988), in which the Court found improper fee sharing in circumstances similar to those here, where a flat fee was collected by the nonlawyer corporation and a portion then paid to the attorney. See also In re Bartoli, 96 CH 739, M.R. 18021 (May 24, 2002). We also note the evidence in this case clearly established CCDN customers were required to submit their fees to the third party marketer and could not pay CCDN directly. Thus, the payment procedure here was obviously and deliberately set up in such a way that the fees would not have been transmitted from the lawyer to the nonlawyer, and therefore not shared by the lawyer with the nonlawyer. We decline to adopt an interpretation of Rule 5.4(a) that would enable attorneys to circumvent the prohibition on fee sharing by simply having the non-attorney collect the fee and then transmit part of it to the lawyer.

We also find this arrangement involved the payment of improper referral fees in violation of Rule 7.2(b). Rule 7.2(b) prohibits a lawyer from giving anything of value to a person for recommending or having recommended the lawyer's services. Although this rule also contains certain exceptions, none are applicable here. The amounts Lindsey and TCCS were allowed to

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retain under the agreement with RKLA/CCDN constituted improper payments for referrals within the meaning of this rule. The agreement itself is labeled a "Referral Agreement" and its terms make it abundantly clear its sole purpose was to refer clients to RKLA/CCDN. Among other things, the agreement explicitly states RKLA/CCDN desired to obtain a relationship with a "client referral source" such as Lindsey, and the parties wanted to establish a mutually beneficial relationship whereby Lindsey "refers clients" in need of legal services to RKLA/CCDN. Respondent also admitted in his Answer Lindsey agreed to provide referrals of clients seeking legal services to Respondent and CCDN and referred at least 243 clients to CCDN pursuant to their referral agreement. As already discussed, in exchange for these referrals, Lindsey was permitted to keep a substantial portion of the fee he charged for the program. Based upon all of the evidence presented, we find this arrangement involved improper payments for referrals in violation of Rule 7.2(b).

Finally, we find this arrangement also involved improper solicitation in violation of Rule 7.3. Rule 7.3 prohibits a lawyer, either directly or through a representative, from soliciting professional employment when a significant motive for doing so is the lawyer's pecuniary gain. Soliciting is defined in the rule to mean contact "in person, by telephone or telegraph, by letter or other writing, or by other communication directed to a specific recipient." Although there are also certain specified exceptions to this rule, none is applicable to the facts in this case. The arrangement at issue in this case involved solicitation of clients by Respondent through his representative, Lindsey. Respondent admitted he agreed Lindsey would "solicit clients to participate in CCDN's Debt Reconciliation Program." The evidence showed Lindsey accomplished this by various communications disseminated to potential clients via the internet.

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Further, there is no doubt Respondent was motivated to enter into this arrangement by pecuniary gain, as evidenced by the fees he was guaranteed to receive for each client referred.

RECOMMENDATION

Having found Respondent engaged in misconduct, we must determine appropriate discipline. In making this recommendation, we take into account the goal of the disciplinary process is not to punish Respondent, but to safeguard the public, maintain the integrity of the profession, and protect the administration of justice. In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300 (1993). We also consider the nature of the misconduct, the aggravating and mitigating factors, the deterrent value of the sanction, and whether the sanction will help preserve public confidence in the legal profession. In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194 (2003). Although each case is unique and must be resolved in light of its own facts and circumstances, predictability and fairness require we recommend sanctions consistent with those imposed in cases involving comparable misconduct. In re Howard, 188 Ill. 2d 423, 440, 721 N.E.2d 1126 (1999); In re Chandler, 161 Ill. 2d 459, 472, 641 N.E.2d 473 (1994).

The Supreme Court has recognized improper fee sharing with nonlawyers is a "serious transgression that harms both the public and the legal profession." In re Discipio, 163 Ill. 2d 515, 529, 645 N.E.2d 906 (1994). The Court noted this practice can readily lead to a variety of harms, including providing an incentive for a referral based on the layperson's financial interest in sharing in the fees, rather than concern for the legal welfare of the client. Discipio, 163 Ill. 2d at 529; O'Hara v. Alghren, Blumenfled and Kempster, 127 Ill. 2d 333, 342, 537 N.E.2d 730 (1989). The Court has also characterized fee sharing with nonlawyers as "reprehensible and harmful in that it encourages and promotes further solicitation." In re Krasner, 32 Ill. 2d 121,

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130, 204 N.E.2d 10 (1965). The payment of improper referral fees to nonlawyers presents similar concerns.

Some of the dangers inherent in improper fee sharing and improper referral payments can be specifically seen in the facts in this case. The evidence showed Lindsey was a persuasive sales person who aggressively marketed and promoted the CCDN program to financially distressed individuals. In doing so, he was undoubtedly motivated by his desire to earn the sizable fee he collected for each referral, rather than by any concern for the welfare of these clients. In an effort to make these sales and earn his fees, Lindsey apparently provided potential clients with false and misleading information regarding what they could expect from the CCDN program. Respondent conceded he eventually terminated this relationship after learning from clients they had been misled by Lindsey.

We also note Respondent's misconduct was not an isolated transaction or a momentary lapse in judgment, but was a program in place for well over a year and constituted an improper arrangement formalized by contract, and involved extensive activity. Respondent admitted Lindsey was a significant source of business during the course of their relationship and referred at least 243 clients to CCDN. The arrangement clearly involved substantial sums of money and resulted in financial gain to both Respondent and Lindsey. Respondent admitted if Lindsey had adhered to the terms of their agreement and paid CCDN $2,800 per client, CCDN would have received over $680,000 for these referrals. Although Lindsey apparently kept a significant portion of CCDN fees, as well as his own, CCDN still received over $210,000 from the arrangement. Thus, there is no doubt Respondent's involvement with Lindsey was motivated by financial gain.

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In mitigation, we note Respondent did take some action when he learned of Lindsey's improper conduct. Respondent testified he not only terminated the relationship, he also reported Lindsey to the Texas Attorney General's Office, which then shut Lindsey's business down. Respondent also wrote his clients, informed them of these problems, and encouraged them to contact the Texas Attorney General.

We also consider in mitigation that Respondent has been practicing law for 23 years and has not been previously disciplined. He also testified regarding his extensive involvement in various community organizations, activities, and charitable causes, and has also been involved in some pro bono legal and other volunteer work.

With regard to a specific sanction, the Administrator argues the totality of Respondent's misconduct warrants disbarment. Respondent argues no sanction is warranted because no misconduct was proven. In the event misconduct is found, he contends disbarment is too harsh and he should at most receive a suspension in the range of six months.

We observe the Administrator's argument in support of disbarment is based in part on the assumption Respondent engaged in all of the misconduct charged in the Complaint. Since we have concluded only the charges in Count IV were proven by clear and convincing evidence, at least part of the Administrator's argument regarding sanction is inapposite.

Our specific findings of misconduct include improper fee sharing, improper payment of referral fees, and improper solicitation arising out of Respondent's business relationship with a nonlawyer. As evidenced by the cases discussed below, the Court has disciplined attorneys on a number of occasions for fee sharing and other misconduct stemming from such improper arrangements. Although sanctions have varied, attorneys have typically received a significant sanction, including suspensions ranging from one to three years. The severity of the sanction has

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been influenced by various factors, such as the duration of the arrangement, the number of cases involved, and the extent of the financial benefit. Where the arrangement also involves additional misconduct, such as fraud, misrepresentation, or assisting in the unauthorized practice of law, harsher sanctions have typically been imposed. Although we recognize no two cases are identical, we note in particular the following cases, which we find generally instructive in determining a proper sanction in this case.

In Krasner, 32 Ill. 2d 121, the respondent was suspended for one year for paying a nonlawyer to refer him personal injury cases. The arrangement lasted for two and a half years and involved approximately 70 to 75 cases. The specific misconduct included improper payment for referrals, improper fee sharing with a nonlawyer, and improper solicitation. In mitigation, the Court noted the respondent's cooperation, positive character evidence, and his voluntary cessation of the improper relationship.

In Discipio, 163 Ill. 2d 515, the respondent was suspended for two years for misconduct that included sharing fees with a disbarred lawyer and assisting him in the unauthorized practice of law. The respondent was involved in a lengthy arrangement with the disbarred lawyer whereby he accepted workers' compensation referrals in exchange for payment of a portion of the fees earned in the cases. The respondent also permitted the disbarred lawyer to engage in the unauthorized practice of law by performing certain preliminary work in the matters. The arrangement lasted for about 13 years, resulted in approximately 200 referrals, and involved the payment of approximately $170,000 in referral fees.

In In re Komar, 125 Ill. 2d 427, 532 N.E.2d 801 (1988), the respondent was suspended for three years based upon his participation in an arrangement with nonlawyers that included fee sharing. The respondent was a part owner of a business that sent out mass mailings to

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individuals who were the subject of pending mortgage foreclosure proceedings. The company offered to provide various "solutions" to these homeowners' problems in exchange for the payment of a $1,000 fee. The company signed up 1,000 individuals for the program and paid the respondent $200 of the fee it collected in exchange for reviewing the foreclosure petition, meeting with the customers, and providing a legal analysis of their case. The evidence showed that in most instances the "solution" provided was to simply refer the customer to another attorney to file a Chapter 13 bankruptcy petition. In addition to improper fee sharing, the respondent was found to have committed numerous additional ethical violations, including aiding in the unauthorized practice of law, engaging in conflicts of interest, collecting unreasonable fees, disseminating deceptive letters of solicitation, and engaging in dishonest conduct.

In addition to the foregoing, we also note the following cases, which generally support the imposition of a substantial suspension for fee sharing and other related misconduct. See e.g., In re Zenner, 01 CH 126, M.R. 18727 (May 22, 2003) (attorney suspended two years for improper solicitation, paying nonlawyer $68,000 in referral fees for 150 cases, and commingling funds); In re McAvoy, 00 CH 04, M.R. 17866 (Mar. 26, 2002) (attorney suspended two years for aiding nonlawyers in the practice of law, dividing legal fees with nonlawyers, and engaging in conflicts of interest based on relationship with company that sold living trusts); In re Hoffman, 98 CH 122, M.R. 18006 (Mar. 26, 2002) (attorney suspended one year and until further order for three-year relationship with nonlawyers that included improper fee sharing, assisting in the unauthorized practice of law, and other misconduct in another matter); In re Ulbert, 98 CH 123, M.R. 16579 (Mar. 22, 2000) (attorney with substance abuse problem suspended for 18 months

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and until further order for improperly sharing fees and aiding in unauthorized practice based upon his referral arrangement with entity operated by non-lawyers).

Based upon the foregoing authority, as well as our findings of misconduct and the aggravation and mitigation present, we conclude a suspension for a period of one year is appropriate discipline in this matter. This sanction is clearly within the range of discipline imposed in the cited cases. While it is on the lower end of that range, Respondent's misconduct was not as extensive as in many of the cases cited in which lengthier suspensions were imposed. We find this case most comparable to Krasner, in which the attorney's misconduct was also limited to solicitation, improper fee sharing, and improper referral fee payments. Although Discipio also involved an improper fee sharing arrangement, the arrangement was of a much longer duration and the misconduct included assisting a disbarred attorney in the unauthorized practice of law. While the misconduct in Komar was similar in many respects to the misconduct alleged in this case, unlike there, we have found the more serious charges involving fraud and dishonesty were not proven.

We have also reviewed the cases cited by both parties and find them distinguishable. Most of the cases cited by the Administrator in support of disbarment involved fraudulent schemes that are arguably similar to the misconduct charged in Counts I through III, which was not proven. See, e.g., In re Demasi, 08 CH 110, M.R. 23482 (Jan. 21, 2010) (attorney disbarred based upon fraudulent conduct in operating 16 million dollar commodities trading pool); In re Kessel, 2010PR00043, M.R. 25049 (Jan. 13, 2012) (attorney disbarred based upon operation of fraudulent investment scheme which resulted in over $1.8 million in investor losses); In re Castagnoli, 07 CH 57, M.R. 24472 (May 18, 2011) (attorney disbarred based on fraudulent scheme to collect unauthorized fees from clients in bankruptcy matters and dishonesty in another

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matter). Although In re Bartoli, 96 CH 739, M.R. 18021 (May 24, 2002) (disbarment), involved a fee sharing arrangement with a nonlawyer, the misconduct in that case was far more extensive and egregious than what we have found here.

Most of the cases relied on by Respondent in support of a lesser sanction also involved misconduct dissimilar from the misconduct we found in this case. See In re Rukavina, 2010PR00099, M.R. 24818 (Sept. 26, 2011) (attorney suspended six months for false and misleading advertising regarding fees and failure to disclose financial interest in title company); In re Demuth, 2010PR00122, M.R. 24908 (Nov. 17, 2011) (attorney reprimanded for practicing while license suspended and related misrepresentations regarding status). Although In re Stranke, 2010PR00048, M.R. 23872 (Sept. 20, 2010) (six month suspension), bears some factual similarity to this matter, it is clearly distinguishable because the fee sharing arrangement there was very brief and the attorney collected only a small amount in fees.

Considering all of the evidence received in this case, including evidence presented in mitigation, as well as the cases discussed above, we believe the purposes of the disciplinary process, including the safeguarding of the public, maintaining the integrity of the profession, and protecting the administration of justice, would be well served by Respondent's suspension from the practice of law for one year. In addition to a one-year suspension, we also recommend Respondent be required to complete a course aimed at improving his Legal Professionalism skills prior to resuming the practice of law. Based upon our findings of misconduct as well as the record as a whole, we have concerns Respondent does not fully understand or appreciate the ethical issues that necessarily arise when an attorney enters into a business arrangement with a nonlawyer. Thus, we believe it will be beneficial to Respondent as well as the public if he

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receives education and instruction in the area of Legal Professionalism before he again engages in the practice of law.

For the foregoing reasons, we recommend Respondent, Robert Kenneth Lock, Jr., be suspended for a period of one year and until he has completed the ARDC Professionalism Seminar.

Respectfully Submitted,

Michael C. Greenfield
Thomas P. Young
Frederich J. Bingham

CERTIFICATION

I, Kenneth G. Jablonski, Clerk of the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois and keeper of the records, hereby certifies that the foregoing is a true copy of the Report and Recommendation of the Hearing Board, approved by each Panel member, entered in the above entitled cause of record filed in my office on July 17, 2012.

Kenneth G. Jablonski, Clerk of the
Attorney Registration and Disciplinary
Commission of the Supreme Court of Illinois

_______________________
1 Rule 8.4(c) of the Rules of Professional Conduct of 2010 is virtually identical to Rule 8.4(a)(4), which is the prior version of this same Rule. Since nearly all of the conduct at issue here took place prior to the effective date of the new Rules, for the sake of simplicity, we will refer to Rule 8.4(a)(4) in our discussion of this charge. 

2 See Comment 5 to Rule 8.4(c), Rules of Professional Conduct of 2010 (noting it is not necessary that anyone has suffered damages or relied on the misrepresentation in order to establish fraud under the Rules). 

3 Count IV also included a charge under Supreme Court Rule 770.  As we have already noted, pursuant to the Illinois Supreme Court's recent decision in Thomas, this Rule cannot serve as the basis for a separate finding of misconduct.  The fact we did not find a violation of Supreme Court Rule 770 does not affect our recommendation as to sanction.  In re Gerard, 132 Ill.2d 507, 548 N.E.2d 1051 (1989). 

4 To the extent that any conduct occurred on or after January 1, 2010, Respondent was also charged with violating these same rules under the Rules of Professional Conduct of 2010.  Because the Complaint alleges this referral arrangement ended in 2009 and there was no

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evidence at the hearing to indicate it extended beyond that date, we limit our findings and discussion to the Rules in effect at that time. 

5 The dismissal of the charges was apparently not reviewed by the Illinois Supreme Court.