Filed August 26, 2013

In re Kevin R. Peters
Attorney-Respondent

Commission No. 2012PR00048

Synopsis of Hearing Board Report and Recommendation
(August 2013)

The Administrator's one-count complaint alleged Respondent converted funds when he made a $1,500 loan to his brother from his client trust account. Respondent admitted he engaged in misconduct and affirmatively stated he made the loan to help his brother pay medical bills.

The Hearing Board found Respondent converted funds, acted dishonestly, and engaged in conduct prejudicial to the administration of justice. Relying on Respondent's genuine remorse, his unblemished thirty-year legal career, impressive character testimony, and the absence of a dishonest motive, the Hearing Board recommended censure.

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

In the Matter of:

KEVIN R. PETERS,

Attorney-Respondent,

No. 6184460.

Commission No. 2012PR00048

REPORT AND RECOMMENDATION OF THE HEARING BOARD

INTRODUCTION

The hearing in this matter was held on April 18, 2013, at the Chicago offices of the Attorney Registration and Disciplinary Commission ("ARDC"), before a Panel of the Hearing Board consisting of Stephen S. Mitchell, Chair, Cynthia A. Cohan, and David A. Dattilo. Meriel R. Coleman appeared on behalf of the Administrator. Respondent appeared and was represented by George B. Collins and Kathryne R. Hayes.

PLEADINGS

Complaint

The Administrator filed a one-count Complaint on May 29, 2012, alleging Respondent converted settlement funds from his client, Alfonso Cazares. The Administrator further alleged Respondent acted dishonestly and that his conduct was prejudicial to the administration of justice.

Answer

Respondent's Answer to Complaint admitted almost all of the factual allegations and admitted Respondent engaged in conversion. However, Respondent denied he acted dishonestly

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and denied the remaining charges of misconduct. Respondent also affirmatively stated he disbursed funds from his client fund account in order to assist his brother with a medical issue.

ALLEGED MISCONDUCT

The Administrator alleged Respondent engaged in 1) conversion; 2) conduct involving dishonesty, fraud, deceit or misrepresentation; 3) conduct that is prejudicial to the administration of justice; and 4) conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute1 in violation of Rules 8.4(a)(4) and 8.4(a)(5) of the 1990 Illinois Rules of Professional Conduct and Rules 8.4(c) and 8.4(d) of the 2010 Illinois Rules of Professional Conduct.

EVIDENCE

The Administrator called Respondent as an adverse witness and Administrator's Exhibits 1 through 13 were received in evidence. (Tr. 5). Respondent testified on his own behalf and presented the testimony of the Honorable Vincent Gaughan, the Honorable Ann Finley Collins, the Honorable Geary W. Kull, Julie Aimen, and Susan Shatz. Respondent's Exhibits 1 through 3 were received in evidence. (Tr. 129-30).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Background Admitted Facts

In attorney disciplinary proceedings, the Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. Illinois Supreme Court Rule 753(c) (6); see also,In re Ingersoll, 186 Ill. 2d 163, 710 N.E.2d 390 (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. See, e.g., People v. Williams, 143 Ill. 2d 477, 577 N.E.2d 762 (1991). It is the responsibility of the Hearing Panel to determine the

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credibility of the witnesses, weigh conflicting testimony, draw reasonable inferences and make factual findings based upon all the evidence. In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300, 308 (1993).

I.    Respondent is charged with conversion, engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, and engaging in conduct that is prejudicial to the administration of justice in violation of Rules 8.4(a)(4) and 8.4(a)(5) of the 1990 Rules of Professional Conduct and 8.4(d) of the 2010 Rules of Professional Conduct.

A. Evidence Considered

In July 2007, Alfonso Cazares was arrested and charged with assault and resisting a peace officer. The charges were later dismissed. In January 2008, Respondent agreed to represent Mr. Cazares in a claim of false arrest and excessive force against the arresting officers and City of Chicago on a contingent fee basis. The claim was settled in March 2009 for $10,000. (Resp. Ans.; Tr. 17-18, 116-17).

On May 4, 2009, Respondent deposited the settlement check in his client fund account. On May 7, 2009, Respondent drew three checks from the client fund account totaling $2,587.23. Those checks represented attorney's fees and costs. Respondent then disbursed a check in the amount of $1,110 to referring counsel. (Resp. Ans.; Tr. 20-21, 117-19; Adm. Ex. 2).

Initially, Respondent was unable to locate Mr. Cazares, but later learned he was incarcerated. During a visit at the jail, Respondent and Mr. Cazares agreed Respondent would leave Mr. Cazares' portion of the settlement proceeds in Respondent's client trust account. They also agreed Mr. Cazares would instruct Respondent, in writing, as to any disbursements of Mr. Cazares' funds. At Mr. Cazares' direction, on June 10, 2009, Respondent withdrew $50 from the client fund account to purchase a money order for Mr. Cazares. (Resp. Ans.; Tr. 21-22, 118-19, 128; Adm. Ex. 3).

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Mr. Cazares then retained Respondent for representation on a separate criminal matter at an

agreed fee of $4,500. (Tr. 23-24, 119-22). On June 24, 2009, Respondent withdrew $4,500 from his client fund account. (Adm. Ex. 3).

In July 2009, Respondent's brother, Tom Peters, asked Respondent for a loan so that he could pay medical bills for his children. Tom, who was also an attorney and shared office space with Respondent, promised to return the money in two days. On July 29, 2009, Respondent gave Tom a check in the amount of $1,500 written from Respondent's client trust account. Tom was unable to repay the funds until March 2010. (Tr. 17, 24-25, 27-28, 37-43, 125; Adm. Exs. 1, 4).

Respondent admitted he knew at the time he made the loan to his brother that it was wrong to loan client money from his client trust account. (Tr. 25-26, 126-28; Adm. Ex. 1). He also stated that at the time he made the loan to his brother he had enough funds in his business account to make the loan from those funds. He had no explanation as to why he loaned funds from his client trust account rather than his business account. (Tr. 26, 142-43).

Respondent withdrew fees he was owed from the client trust account in August, September, and October 2009. In October 2009, Respondent disbursed $1,000 to Tom for fees owed after the resolution of a criminal matter. He had no explanation as to why he did not leave his fees or Tom's fees in the client trust account to cover the prior loan to Tom. (Tr. 30-36; Adm. Exs. 5-7).

At Mr. Cazares' direction, on September 24, 2009, Respondent withdrew $50 from his client fund account to purchase a money order for Mr. Cazares. (Resp. Ans.; Tr. 119; Adm. Ex. 6). At that point, Respondent should have been holding the remaining portion of Mr. Cazares' settlement, $1,702.77, in his client fund account. On several occasions from September 2009 to

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March 2010, the balance in Respondent's client trust account was less than $1,702.77. On March 2, 2010, the balance was $385.18. (Adm. Exs. 6, 10, 11, 12).

According to Respondent, Tom repaid the loan in March 2010 and Respondent deposited those funds in his client trust account. (Tr. 37-43; Adm. Ex. 1). In a letter dated March 4, 2010, Mr. Cazares requested Respondent send his remaining funds to a friend. Respondent complied with this request and sent a check in the amount of $1,702.77 to the friend on March 10, 2010. (Tr. 129-30; Resp. Exs. 1-3).

According to Respondent, Mr. Cazares did not cash the check sent on March 10. After his criminal conviction and incarceration, Mr. Cazares contacted Respondent and requested he send another check to him at the Illinois Department of Corrections. Respondent then stopped payment on the first check and sent Mr. Cazares nine money orders representing the funds owed. (Tr. 131-33).

B. Analysis and Conclusions

Conversion is defined as any unauthorized act, which deprives someone of his property permanently or for an indefinite time. See In re Rosin, 156 Ill. 2d 202, 620 N.E.2d 368 (1993). In disciplinary matters, conversion is established upon a showing that the balance in a lawyer's client trust account fell below the amount entrusted to the lawyer. In re Holz, 125 Ill. 2d 546, 555, 533 N.E.2d 818 (1988).

Respondent admits he converted client funds when he loaned his brother $1,500 from his client trust account. He should have been holding $1,702.77 on behalf of Mr. Cazares in his client trust account as of September 2009. However, Respondent's bank records show the amount in his client trust account fell below that amount on several occasions from September 2009 to March 2010. Accordingly, we find clear and convincing evidence that Respondent converted client funds.

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The Court has stated that in determining whether certain conduct violates Rule 8.4(a)(4) each case is unique and the circumstances surrounding the respondent's conduct must be taken into consideration. In re Cutright, 233 Ill. 2d 474, 910 N.E.2d 581 (2009). In this matter, Respondent admitted he knew at the time he made the loan to his brother that it was wrong to loan client money from his client trust account. Knowing something is wrong and doing it anyway certainly involves an element of dishonesty. For that reason, we find Respondent violated Rule 8.4(a)(4).2

The Administrator argues Respondent's dishonesty was more extensive. He points to the length of time that elapsed between the loan and the repayment, as well as the fact that Respondent and Tom took disbursements from the client trust account before the loan was repaid. However, we find this argument unsupported by the totality of the evidence presented.

Respondent's testimony was candid and credible. He did not benefit financially from the loan and testified he had the funds available from another source to cover the amount of the loan. There was no scheme to misuse Mr. Cazares' funds or any client's funds. He made no misrepresentations at any time. It is true Respondent had no explanation for his actions after he made the loan. However, that does not make his actions dishonest, deceitful or fraudulent.

Although the act of making the loan from his client trust account was wrong, Respondent was not motivated by dishonesty. Rather, he was motivated by a misguided attempt to help his brother. During this hearing, whenever Respondent was questioned about Tom or his reasons for helping him, he was overcome by emotion and was barely able to speak. He had no explanation for his actions other than to provide unconditional support for his brother. While we do not condone his actions, we find his explanations and demeanor consistent with his motive to help his brother without question or reservation.

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By converting funds from his client trust account, Respondent placed the interests of his clients in jeopardy. Such misconduct is prejudicial to the administration of justice. In re Thomas, 2012 IL 113035 para. 123. As the funds were missing from July 2009 through March 2010, Respondent violated Rule 8.4(a)(5) of the 1990 Rules of Professional Conduct and 8.4(d) of the 2010 Rules of Professional Conduct.

EVIDENCE OFFERED IN AGGRAVATION AND MITIGATION

Respondent

After working his way through college, Respondent worked for the Illinois Department of Labor for approximately four years. He decided to go to law school because his brother Tom, who was an attorney at the time, encouraged him to go. Respondent attended law school at night and worked during the day. (Tr. 103-105).

Respondent was licensed in 1983 and began employment as an assistant state's attorney for DeKalb County. After about one year, Respondent went to the Cook County Public Defender's Office where he was employed for approximately 10 years. During the last two years of that employment he was assigned to the Homicide Task Force where he defended several capital cases. Shortly before he left the Public Defender's Office, Respondent was attacked by a client in a courtroom. He then went into private practice and shared office space with Tom. (Tr. 15-17, 106-14).

In private practice, Respondent concentrates primarily on criminal defense. He also handled civil rights cases with Tom. Respondent handles pro bono cases and accepts appointments from the Council of Lawyers for a reduced fee. He also volunteers with the Chicago Bar Association's "lawyer call-in days" and makes charitable contributions. (Tr. 114-15, 133-35).

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Respondent testified he is very sorry for his actions. He admitted his misconduct during his first interaction with the ARDC. He testified he has never done anything like this before and never will again. Tom's misfortune affected him very deeply. Tom passed away in July 2011. (Tr. 17, 137-39; Adm. Ex. 1).

Character Evidence

The Honorable Vincent Gaughan was appointed to the bench 22 years ago and presides over criminal matters in the Circuit Court of Cook County. He met Respondent while both were working at the Cook County Public Defender's Office. According to Judge Gaughan, Respondent has a very high reputation for honesty and integrity. (Tr. 49-53).

The Honorable Ann Finley Collins was elected to the Circuit Court of Cook County in 2010 and currently presides over matters at the Maybrook courthouse. She met Respondent in 1986 while both were working at the Cook County Public Defender's Office. Judge Collins "looked up" to Respondent at that time and stated he was an excellent lawyer. Respondent's reputation now is that of an excellent lawyer and a truthful, honest man. Judge Collins acknowledged Respondent violated the Rules of Professional Conduct when he took the funds from his client trust account, but described this act as an aberration. (Tr. 59-63).

The Honorable Geary W. Kull was appointed to the bench in 2009 and serves in the Maywood courthouse. Judge Kull met Respondent through Tom Peters. He testified Respondent has a high reputation for truth, veracity, honesty, and integrity. This disciplinary matter does not change that opinion. (Tr. 66-74).

Julie Aimen is a sole practitioner and has been practicing law for 30 years. Respondent and she share offices in the same suite. According to Ms. Aimen, Respondent has a very fine reputation for honesty, integrity, truth, and veracity. Respondent accepts appointments from the

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Indigent Panel, is a skilled litigator, and relates to his clients very well. Ms. Aimen testified, "Kevin would give his shirt off his back for the people when they need it." Despite the disciplinary charges, Ms. Aimen believes Respondent to be scrupulously honest. She described his misconduct as an aberration. (Tr. 81-88).

Susan Shatz has been an attorney since 1989. She has shared office space with Respondent for about 20 years. Ms. Shatz testified Respondent has a stellar reputation for honesty, integrity, truth, and veracity. He is hardworking, excellent lawyer who represents his clients vigorously and ethically. (Tr. 90-93).

Prior Discipline

Respondent has no prior discipline.

RECOMMENDATION

The purpose of the attorney disciplinary system is not to punish the attorney for his or her misconduct, but "to protect the public, maintain the integrity of the legal profession, and protect the administration of justice from reproach." In re Winthrop, 219 Ill. 2d 526, 559, 848 N.E.2d 961 (2006). In determining the appropriate sanction, we consider the nature and seriousness of the misconduct and any aggravating and mitigating circumstances shown by the evidence. See In re Gorecki, 208 Ill. 2d 350, 802 N.E.2d 1194 (2003).

Respondent presented significant evidence in mitigation. From the initial inquiry, Respondent admitted he had no authority to use client funds. His remorse was considerable and genuine. No client was harmed financially by Respondent's misconduct and he disbursed Mr. Cazares' funds within days after they were requested.

Respondent has never been disciplined in almost 30 years of practice. He presented impressive character testimony from distinguished members of the bar and bench who have known and practiced with Respondent for many years. Their high opinion of his character was

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not changed by this proceeding and his misconduct was believed to be an aberration. We also consider that during his legal career, Respondent has provided service to an underrepresented segment of the community. See In re Jordan, 157 Ill. 2d 266, 623 N.E.2d 1372 (1993).

We may consider in aggravation the potential harm to Respondent's clients. See In re Saladino, 71 Ill. 2d 263, 375 N.E.2d 102 (1978) (discipline should be closely linked to the harm caused or the unreasonable risk created by attorney's lack of care). Converting client funds certainly created the potential for harm. The Administrator presented no other factors in aggravation.

In support of his recommendation of a four-month suspension, the Administrator relies on In re Freiman, 118 Ill. 2d 341, 515 N.E.2d 78 (1987), In re Cole, 93 CH 419, M.R. 11012 (May 26, 1995), and In re Mitchell, 2011 PR 111, M.R. 25344 (Sept. 17, 2012). In Cole, the attorney forged his clients' signatures on settlement checks in two separate matters, deposited the checks in his business account and then used the proceeds, a total of approximately $1,600, for his own purposes. In one of these matters, Cole then falsely told his law partner that the client had requested he hold the funds and attempted to enlist the assistance of his client to support him in his lie. During this time period, Cole was experiencing financial difficulties. He was suspended for two years. In Mitchell, the attorney converted $1,380 in escrow funds and did not make complete restitution for several years. In mitigation, Mitchell expressed remorse, had no prior discipline and had retired from the practice of law for medical reasons. The Court accepted the parties' petition to impose discipline on consent and ordered a ninety-day suspension.

In Freiman, the attorney deposited a settlement check in his "special funds account" and drew a check that same date payable to the client for her portion of the settlement proceeds. The client did not deposit the check for one year and when she did, it was dishonored due to

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insufficient funds. After the attorney deposited the settlement check but prior to the client's attempt to negotiate her check, Freiman's bank withdrew funds from his "special funds account" to satisfy a garnishment. After Freiman advised the bank the account was a trust account, the bank returned the funds. The attorney repaid the principal two years after the check was dishonored and interest an additional two years after that. There was evidence that the attorney was experiencing financial difficulties and deposited personal and business funds in the "special funds account" to shield it from garnishment. He then satisfied his debts with his own money and client funds. The Court suspended Freiman for four months.

Respondent suggests censure is the appropriate sanction and provided 18 cases to support his recommendation. While we reviewed each case, we discuss only those that we found instructive in determining the sanction in this matter.

In In re Lenz, 108 Ill. 2d. 445, 484 N.E.2d 1093 (1985), the attorney used $3,500 from his client trust account to purchase a special vehicle for a disabled client. The client's husband promised to repay the funds within a few days, but was unable to do so. As a result, for several weeks the balance of the attorney's client trust account was below the amount he should have been holding on his clients' behalf. In censuring Lenz, the Court relied on the fact that Lenz did not convert funds for his personal use. Moreover, he "openly admitted his guilt and appeared before this court not with excuses but merely to contest the type of discipline to be imposed." Lenz, 108 Ill. 2d at 452. The Court also noted Lenz's statement:

I know that lawyers should not do what I did. Those were [client] funds that I advanced. At the time I did it, I felt a great urgency to help this young woman. She had this personal tragedy and family complications and it was my belief that would be taken care of on the following Monday.

Id. at 453.

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The Court also imposed a censure in In re Clayter, 78 Ill. 2d. 276, 399 N.E.2d 1318 (1980). As Clayter did not maintain a client trust account, he deposited escrow funds in the amount of $1,000 in a business account and then transferred the funds to a savings account. He then converted the funds for his personal use. In mitigation, the attorney did not act with a dishonest motive, had no prior discipline after 20 years of practice, and presented positive character testimony. See also In re Young, 111 Ill. 2d 98, 488 N.E.2d 1014 (1986) (commingling and converting approximately $3,200 in escrow funds warranted censure where there was no dishonest motive, the attorney was candid and remorseful, had no prior discipline, and presented evidence of good character and community work).

The attorney converted a total of $17,300 from two clients in two separate matters in In re Mayster, 99 CH 59, M.R. 18008 (May 24, 2002). Even though the attorney did not maintain a client trust account, he always had sufficient funds available and no client was deprived of any funds for any length of time. Noting substantial mitigating factors including no dishonest motive, "extraordinary remorse and humility," no prior discipline, and impressive character evidence, the Review Board rejected the Administrator's suggestion of a three-month suspension and recommended censure. Mayster, 99 CH 59 (Review Board at 11-12). The Court agreed and ordered censure.

Respondent also directs us to several matters in which the Court allowed petitions to impose discipline on consent where the parties requested censure. In In re Lauer, 97 CH 41, M.R. 14117 (Nov. 25, 1997), the attorney often left his fees in his client trust account and then used the account to pay his business and personal obligations. Prior to disbursing $1,000 in client funds in a real estate transaction, his account balance fell to $217.30. In mitigation, during the time of the conversion the attorney experienced several personal difficulties including the

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loss of a child. He had no prior discipline, engaged in pro bono work, promptly admitted his misconduct, and expressed remorse. The petition also noted the attorney performed all duties related to the representation and no party was harmed. See also In re Lee, 96 SH 413, M.R. 12611 (June 12, 1996) (converting $550 earmarked to pay client's medical provider warranted censure where neither the client nor the provider suffered any permanent financial loss, the attorney had sufficient funds from other sources to pay the provider, no dishonest motive was found, and the attorney cooperated, expressed remorse and made full restitution).

After reviewing the precedent submitted by the parties, we find no support for the Administrator's recommendation of a four-month suspension in this matter. The misconduct found in the Administrator's cases is completely dissimilar. In Cole, the attorney engaged in forgery, converted client funds for his own benefit, and then compounded his misconduct by lying to his partner and client. In Freiman, the attorney hid his assets in his client account and then used client funds to pay his personal debts. Both Freiman and Mitchell took several years to make restitution.

The cases submitted by Respondent in support of censure are more persuasive as they involve analogous misconduct and include similar mitigating factors. Specifically, and most importantly, there was no delay in providing Mr. Cazares with his funds and he suffered no harm. Although Respondent's misconduct was serious, it was an isolated act. There is also no evidence of a dishonest motive and Respondent did not benefit from the conversion.

Respondent has been candid, contrite, and cooperative throughout these proceedings. As in Lenz, he openly admitted his guilt and appeared before this Panel not with excuses but merely to contest the type of discipline to be imposed. We believe he poses no risk to the public; the effect of these proceedings will deter him from any future misconduct. To impose a suspension

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would serve no purpose other than to punish Respondent for an isolated lapse of judgment. In re Mulroe, 2011 IL 111378 (primary goal in imposing sanctions is not to punish attorney, but to protect the public and maintain the integrity of the legal profession).

Accordingly, after considering the nature of the Respondent's misconduct, the evidence in mitigation, and the precedent discussed above, we recommend that the Respondent, Kevin R. Peters, be censured.

Respectfully Submitted,

Stephen S. Mitchell
Cynthia A. Cohan
David A. Dattilo

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 August 26, 2013.

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

______________________

1 Although it does not specifically include the Rule number, this charge relates to Illinois Supreme Court Rule 770.  The Illinois Supreme Court has stated that "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, para. 92.  Accordingly we make no findings relative to this charge.

2 As our finding is based only on Respondent's conduct in July 2009, we find no corresponding violation of Rule 8.4(d) of the 2010 Rules of Professional Conduct.