Filed November 25, 2014
In re Charles William Helmig
Commission No. 2013PR00019
Synopsis of Review Board Report and Recommendation
This matter arises out of the Administrator's two count Complaint. In Count I, the Administrator charged Respondent with taking more than $95,000 from an elderly client after the client became mentally incompetent. Respondent used a power of attorney to write checks to himself from the client's bank account. In Count II, the Administrator alleged that Respondent failed to timely pay the nursing home where the client resided resulting in an action by the nursing home to recover the delinquency.
The Hearing Board dismissed certain charges pursuant the Court's decision in In re Karavidas. At hearing, the Respondent characterized the payments to himself as loans. The Hearing Board rejected the Respondent's position and concluded that Respondent engaged in dishonest conduct in violation of Rules 8.4(a)(4)(1990) and 8.4(c)(2010). With respect to Count II, the Hearing Board found that Respondent violated 1.3 and 8.4(d) by failing to comply with orders in the lawsuit that was filed because of the delinquency to the nursing home. The Hearing Board recommended that Respondent be suspended for three years.
Bothe parties filed exceptions to the Hearing Board's Report. Upon review, Respondent contended that the Hearing Board findings were against the manifest weight of the evidence and that the Court's decision in In re Karavidas mandated dismissal of the disciplinary matter. The Administrator disputed the sanction recommendation and asked that the Review Board recommend that Respondent be disbarred. The Review Board affirmed the findings of the Hearing Board. The Review Board agreed that the Respondent was acting as an attorney when he took the funds and that, even if he was not acting as an attorney, his actions were so dishonest as to warrant a sanction. The Review Board considered the mitigating and aggravating factors and recommended that Respondent be suspended for a period of three years and until further order of the Court.
BEFORE THE REVIEW BOARD
ILLINOIS ATTORNEY REGISTRATION
In the Matter of:
CHARLES WILLIAM HELMIG,
Commission No. 2013PR00019
REPORT AND RECOMMENDATION OF THE REVIEW BOARD
When Respondent's retired elderly secretary, Generose Schweickert ("Schweickert"), became ill in 2005, she asked Respondent for assistance in handling her financial affairs. Respondent prepared, and Schweickert executed, two powers of attorney giving Respondent power to handle Schweickert's finances. Beginning in 2005, Respondent actively managed her affairs and he paid himself attorney fees for performing those services. In or about 2009, Schweickert became mentally incompetent. Thereafter, over several years, Respondent took $95,000 of Schweickert's funds and used the money for his own personal purposes. In addition, Respondent failed to timely pay the nursing home where Schweickert resided resulting in an action by the nursing home to involuntarily transfer Schweickert and recover the delinquency. Respondent, acting as Schweickert's attorney, failed to appear at a status conference and failed to comply with an agreed order entered in the matter.
The Hearing Board found Respondent deliberately and intentionally took Schweickert's money, thereby engaging in dishonest conduct in violation of Rules 8.4(a)(4)(1990) and 8.4(c)(2010). The Hearing Board also concluded that Respondent violated
Rules 1.3(2010) and 8.4(d)(2010) by failing to comply with orders in the action brought by the nursing home. Given the seriousness of the misconduct, the Hearing Board recommended that Respondent be suspended for three years. In July 2014, the Court issued an order pursuant to Supreme Court Rule 774 suspending Respondent until further order of the Court pending the outcome of the disciplinary proceeding.
Both parties filed exceptions to the Hearing Board's report. The Administrator challenges only the sanction recommendation and asks that Respondent be disbarred. The Respondent primarily contends that in light of the Supreme Court's decision in In re Karavidas, the charges against Respondent must be dismissed. For the following reasons, we affirm the findings of the Hearing Board and recommend to the Court that Respondent be suspended for three years and until further order of the Court.
While this matter was under advisement before the Hearing Board, the Supreme Court's rendered its decision in In re Karavidas, 2013 IL 115767 (Nov. 15, 2013). As a result of the Court's decision, the Hearing Board dismissed some of the charges of misconduct. Accordingly, we analyze Respondent's conduct with respect to the remaining charges. We conclude that the Hearing Board's findings on the remaining charges are not against the manifest weight of the evidence and are well supported in law.
Count I: Taking Schweickert's Money
Schweickert was Respondent's secretary from 1964 until 1984 when she retired. She never married and had few close relatives. In 2005, Schweickert was at least 83 years old and had been hospitalized. Eventually both of her legs were amputated, her condition
deteriorated and by 2009 she was not mentally competent. From 2005 until her death in March 2013 Schweickert was either in the hospital or a nursing home.
While she was in the hospital in 2005, Schweickert asked Respondent to prepare a Power of Attorney for Healthcare and a Power of Attorney for Property for her. The parties stipulated that Schweickert was competent when she signed the documents although Respondent testified he was concerned about her abilities. According to Respondent, he read and explained the documents to her before she signed them. As admitted in Paragraph One of the Administrator's Complaint, Respondent agreed to represent Schweickert in managing her financial affairs.
Pursuant to his agreement with Schweickert, Respondent began to manage Schweickert's business affairs. He sold her home and gathered her assets. From 2005 through 2013, Respondent, by his own admission, charged Schweickert over $27,000 in "legal fees". Respondent also admits that by 2009, Schweickert was not mentally competent and was unable to recognize Respondent.
Starting in 2009 and continuing through 2012, Respondent took over $95,0001 from Schweickert's account which he used for his own personal and business expenses. Respondent admits he did not ask for or obtain Schweickert's authority to use the money; Schweickert was not competent to give her consent. At the time he took the money, Respondent was in "a very bad financial condition." He had defaulted on loans of more than $1.2 million dollars and he had federal tax liens against him for several hundred thousand dollars. Respondent claimed the $95,000 were loans and presented at his sworn statement, for the first time, a series of promissory notes that the Hearing Board declined to believe were executed contemporaneously with the "loans" to himself.
Respondent contends that the Hearing Board's finding that Respondent violated Rules 8.4(a)(4)(1990) and 8.4(c)(2010) by taking Schweickert's money is against the manifest weight of the evidence or is contrary to the Court's decision in In re Karavidas. We strongly disagree. In Karavidas, the respondent was acting solely as trustee for a family trust and was not found to have an attorney client relationship with the beneficiaries and thus could not be found to have violated Rule 1.15. The Court further concluded that while the respondent mishandled funds and breached his fiduciary duties, he did not act with dishonest intent and thus there was no violation of Rule 8.4(a)(4) or other violation of the Illinois Rules of Professional Conduct. The Court pointed out that there was no suggestion that Karavidas acted to deceive or defraud. He was, at most, careless in his duties. Id., pars. 100-101. The Court declined to impose discipline because the conduct occurred outside of the attorney-client relationship and because the accusation of misconduct was not "tethered" to an alleged violation of a specific Rule of Professional Conduct. Id., pars. 78,79.
In contrast to Karavidas, Respondent was acting as Schweickert's attorney at law when he took her funds. Most notably, Respondent admitted the allegation in the Administrator's Complaint that he agreed to represent Schweickert in managing her financial affairs. An admission in an Answer is a binding admission. See, e.g., In re Kakac, 07 SH 86 (Review Bd., Feb. 8, 2010), petition for leave to file exceptions denied, No. M.R. 23785 (May 18, 2010). See also, Renshaw v. Black, 299 Ill.App.3d 418, 701 N.E.2d 553 (5th Dist. 1998). When asked at hearing, "And both as her attorney and as her power of attorney, you were a fiduciary, correct?", Respondent answered, "Yes." In fact, he did not claim at hearing that he was not acting as her attorney. Rather, he submitted a document showing that he charged over $27,000 in "Legal fees" from 2005 until Schweickert's death in 2013. (R. Ex. 2).
Further, even if Respondent had not been acting within the attorney client relationship, his taking of Schweickert's money involved dishonesty in violation of Rule 8.4(a)(4).2 In Karavidas, the Court stated that "discipline for conduct occurring outside the attorney-client relationship should be limited to situations where the attorney's conduct violates the Rules by demonstrating ?a lack of professional or personal honesty which render[s] him unworthy of public confidence,'" citing In re Bruckner, 00 CH 12 at 30 (Hearing Bd., Aug. 8, 2001), approved and confirmed, No. M.R. 17722 (Nov. 28, 2001). Cases make clear that attorneys who engage in dishonest conduct outside the attorney client relationship will be sanctioned. See, e.g., In re Golden 09 CH 88, (Review Bd., July 23, 2012), respondent's petition for leave to file exceptions denied, No. M.R. 25509 (Nov. 19, 2012)(attorney disbarred for submitting false applications for financial aid to his daughter's school); In re Chandler, 161 Ill.2d 459, 641 N.E.2d 473 (1994)(attorney suspended for three years and until further order for submitting false information on a personal mortgage application); In re Connors, 04 CH 122 (Hearing Bd., Aug. 9, 2012), approved and confirmed, No. M.R. 25584 (Nov. 19, 2012)(attorney disbarred for smuggling Cuban cigars into the United States). We conclude that Respondent's actions in deliberately taking $95,000 for his own use from an incompetent, elderly woman to whom he owed a fiduciary duty demonstrates just such a lack of honesty and constitutes a violation of Rule 8.4(a)(4).
Before this Board, Respondent continued to contend that he took the money from Schweickert as "loans" but was unable to cite to any business or other justification for making the "loans." Respondent pointed to 77 promissory notes purportedly documenting each withdrawal Respondent made from Schweickert's funds. However, the Hearing Board did not believe Respondent's testimony that he created the promissory notes contemporaneously with
the taking of the money, noting that Respondent kept the existence of the promissory notes a secret until the disciplinary investigation in an obvious belated attempt to justify his actions. The Hearing Board also noted that the notes provided no security, and therefore provided no protection for Schweickert. Indeed, Respondent could not offer any security given his financial condition. Not surprisingly, Respondent could provide no business or other justification for making the "loans" to himself.
The Hearing Board was in the best position to weigh Respondent's testimony and judge his credibility. In re Woldman, 98 Ill. 2d 248, 254, 456 N.E.2d 35 (1983). We give deference to their findings of credibility and reject the argument that Respondent's takings were legitimate loans. Moreover, even if the withdrawals were loans to Respondent, the taking of unsecured loans, given his financial condition, violated the terms of the power of attorney as they were not loans made with Schweickert's interests in mind but were made only to benefit Respondent.
Count II: Respondent's Conduct in Failing to Pay
Schweickert's Nursing Home Bills
and His Conduct in the Illinois Department of Public Health Hearing Matter
Respondent received regular invoices from the nursing home where Schweickert resided which, on numerous occasions, he failed to timely pay. In December 2011, the nursing home hired counsel to file a "Notice of Involuntary Transfer or Discharge and Opportunity for Hearing" with the Illinois Department of Public Health, because Schweickert owed the nursing home more than $30,000. The counsel for the nursing home explained at hearing that the action was brought to try to obtain payments from Respondent rather than to actually force Schweickert out of the home.
Respondent appeared, as Schweickert's attorney and as her agent under the Power of Attorney, at a prehearing conference on the matter on January 4, 2012. A.Ex. 7. At that time,
the Administrative Law Judge entered an agreed order that included a provision that Respondent would relinquish control to the nursing home all of Schweickert's direct funding sources and that Respondent would provide an accounting of Schweickert's funds within 14 days. The Judge set a status hearing for February 8, 2012.
Respondent failed to provide the accounting and he failed to appear at the status hearing. Because of his failure to appear, the judge set another status conference for April 4, 2012. Despite receiving notice, Respondent did not appear at this status conference. Opposing counsel indicated to the Judge that Respondent had not complied with the agreed order and that the nursing home had decided to withdraw the transfer pleading and pursue other avenues to try to obtain payment for Schweickert's care.
The Hearing Board found that Respondent's failure to appear for the status conferences and comply with the agreed order constituted a lack of reasonable diligence in violation of Rule 1.3. In addition, because Respondent's conduct caused the administrative hearings to be delayed, caused inconvenience to opposing counsel and to the ALJ, and caused delay to the nursing home in its ability to seek other options for the delinquent account, the Hearing Board found that Respondent engaged in conduct prejudicial to the administration of justice in violation of Rule 8.4(d).
The Hearing Board's findings are not against the manifest weight of the evidence. Respondent admitted he represented Schweickert. His failure to cooperate in the proceedings and comply with the judge's orders prevented the nursing home from resolving the dispute and prolonged the efforts to resolve Schweickert's delinquent accounts. Respondent argument that the amount owed to the nursing home exceeded the balance of Schweickert's funds even when considering the amounts of the loans to Respondent misses the point. Schweickert retained
Respondent to handle her financial affairs and pay her bills. Instead, Respondent routinely disregarded Schweickert's interests in favor of his own interests in covering up his misdeeds.
The Sanction Recommendation
In determining the appropriate sanction, this Board considers the nature of the misconduct charged and proved, and any aggravating and mitigating circumstances shown by the evidence. In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194, 1200 (2003). The Hearing Board found Respondent's conduct to be "of the most egregious type." For a three year period, he knowingly and fraudulently took more than $95,000 from a client who was elderly and infirm.
In mitigation, the Hearing Board noted that Respondent has practiced law for fifty years and has never been disciplined. He has been involved in community service and once served as president of the Putnam County Bar Association. He was in the United States Marine Corps Reserves in the 1960s. Four character witnesses, including two judges, testified that Respondent has a good reputation in the legal community.
While restitution is ordinarily considered as a mitigating factor, the Hearing Board stated it gave less weight to Respondent's restitution because, during a significant time period where Respondent was making restitution, he was taking more money than he was paying back. Respondent began pay small amounts of restitution in 2010. However, even after the ARDC initiated its investigation and even after Respondent appeared for a sworn statement and admitted that the taking of the funds was wrong, he continued to take Schweickert's money for his own purposes. Respondent did not complete what he believed was full restitution until July 2013, after Schweickert's death and about four years after he started taking the funds.
In aggravation, the Hearing Board found that 1) Respondent acted with a selfish and self-serving motive; 2) he took advantage of a vulnerable client; 3) he engaged in a pattern
of misconduct over a lengthy period of time; 4) the amount converted was substantial; 5) Respondent's financial condition was extremely poor and jeopardized the potential for repayment; 6) he was not credible when he testified that he documented the transactions as loans with promissory notes and when he testified he sent an accounting to the counsel for the nursing home; and 7) he filed a false application for medical benefits for Schweickert in applying for Medicaid that failed to list the amounts he had taken from her.
Although each disciplinary case "is unique and must be resolved in light of its own facts and circumstances," the sanction imposed should be "consistent with those imposed in other cases involving comparable misconduct." In re Howard, 188 Ill. 2d 423, 440, 721 N.E.2d 1126, 1135 (1999); In re Chandler, 161 Ill. 2d 459, 472, 641 N.E.2d 473, 479 (1994). The Court has long held that the intentional conversion of client funds warrants disbarment, absent mitigating circumstances. In re Uhler, 126 Ill.2d 532, 535 N.E.2d 825 (1989). Harsher sanctions are imposed when the amount converted is substantial, there is a continuing pattern of misconduct, and aggravating factors are present. In re Rotman, 136 Ill. 2d 401, 556 N.E.2d 243 (1990)(disbarment warranted for conversion of $15,000 used to cover the attorney's losses as a trader). See also, In re Levin, 04 CH 133 (Hearing Bd., Apr. 22, 2005), approved and confirmed, No. M.R. 20236 (Sept. 26, 2005)(attorney disbarred for converting $204,000 from one client's settlement proceeds); In re Gwiazdzinski, 95 CH 726 (Hearing Bd., June 27, 1996), approved and confirmed, No. M.R. 12828 (Sept. 24, 1996)(disbarment for attorney who converted more than $100,000 in funds he was given to hold in trust as an owner of a title insurance company).
In recommending a suspension of three years, the Hearing Board relied on several cases including In re Garside, 98 CH 105 (Hearing Bd., March 27, 2001), motion to approve and confirm denied, No. M.R. 17527 (June 29, 2001). Garside represented an elderly client who had
no family members to assist in her care. The respondent considered himself to be like a grandson to the client. He performed some services for the client, including services unrelated to the practice of law. While he received payment for his services, he also took about $51,000 of her money without her authorization. He claimed the money was a loan, but the client denied it. He was found to have engaged in conversion, overreaching and a breach of his fiduciary duty. He repaid the funds to the client with interest in a timely manner. He was suspended for three years and until further order of the Court. See also, In re Williams, 2011PR0089, petition for discipline on consent allowed, No. M.R. 25559 (Nov. 19, 2012)(attorney consented to disbarment for using about $95,000 of his client's money while she was in a nursing home and after she appointed him to act as her agent; the attorney made restitution but was also convicted of financial exploitation of a disabled person.); In re Lasica, 07 CH 125 (Review Bd., Jan. 22, 2010), petition for leave to file exceptions denied, No. M.R. 23734 (May 18, 2010)(attorney disbarred for converting $78,000 from a client who was incarcerated; still owed $8,000 plus $2000 in interest as of the hearing date).
While Respondent's conduct could support a sanction of disbarment, we agree with the Hearing Board's recommendation that Respondent's misconduct warrants a three year suspension. However, we recommend that the suspension continue until further order of the Court. Respondent's failure to fully understand the impropriety of his acts, as evidenced by his continued insistence that the takings were loans and his poor financial condition, support the necessity of a future assessment before he resumes the practice of law.
Jill W. Landsberg
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 Review Board, approved by each Panel member, entered in the above entitled cause of record filed in my office onNovember 25, 2014.
Kenneth G. Jablonski, Clerk of the
1This figure is derived from adding the 77 checks Respondent wrote on Schweickert's account made payable to Respondent.
2Respondent argued in his brief that his due process rights were violated because the complaint was not specific enough in describing all the indicia of his dishonesty so he could not present a defense. The fact is that the Respondent clearly understood at the hearing that his taking of the funds was the dishonest conduct at issue and he presented a defense that the funds were actually loans to himself that he was authorized to make under the power of attorney he held.