Filed November 17, 2008
In re Sheldon Bart Nagelberg
Commission No. 04 CH 86
Synopsis of Review Board Report and Recommendation
The Administrator charged Respondent-Appellee, Sheldon Bart Nagelberg, with misconduct, specifically failing to provide competent representation to a client, improperly dividing a legal fee with another lawyer, charging an unreasonable fee, and engaging in conduct that is prejudicial to the administration of justice and conduct that tends to bring the courts or legal profession into disrepute. Nagelberg denied misconduct and some of the facts alleged in the complaint.
The Hearing Board found that the Administrator did not prove that Nagelberg failed to provide competent representation to his client, but did prove the remaining charges of misconduct. The Hearing Board recommended that Nagelberg be suspended for six months, stayed in its entirety by probation for two years. The Hearing Board also recommended various conditions of probation, including that Nagelberg make restitution of $50,000 to his client. Nagelberg had paid that amount of restitution by the time of the proceedings before the Review Board.
The case was before the Review Board on the Administrator's exceptions, objecting to the Hearing Board's sanction recommendation. The Administrator sought a suspension for one year with additional restitution of $25,000 plus interest. Nagelberg sought to have the Review Board uphold the Hearing Board's sanction recommendation or recommend censure. Neither party challenged the Hearing Board's findings of misconduct, which the Review Board affirmed.
The Review Board concluded that probation was not warranted in this case, as Nagelberg did not need monitoring or an opportunity to correct deficiencies in his practice and his misconduct involved an isolated incident. The Review Board concluded that a thirty-day suspension was warranted, given all the circumstances. The Review Board deferred to the Hearing Board's determination as to the proper amount of restitution.
BEFORE THE REVIEW BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
SHELDON BART NAGELBERG,
Commission No. 04 CH 86
REPORT AND RECOMMENDATION OF THE REVIEW BOARD
The Administrator-Appellant charged Respondent-Appellee, Sheldon Bart Nagelberg, with misconduct arising out of his representation of Marek Winniczek. The complaint charged that Nagelberg failed to provide competent representation in violation of Rule 1.1(a) of the Illinois Rules of Professional Conduct (134 Ill. 2d R. 1.1(a)), charged an unreasonable fee in violation of Rule 1.5 (134 Ill. 2d R. 1.5), improperly divided a legal fee with another lawyer in violation of Rule 1.5(f) (134 Ill. 2d R. 1.5(f)), and engaged in conduct that is prejudicial to the administration of justice in violation of Rule 8.4(a)(5) (210 Ill. 2d R. 8.4(a)(5)), and conduct that tends to defeat the administration of justice or bring the courts or legal profession into disrepute in violation of Supreme Court Rule 770 (210 Ill. 2d R. 770). Nagelberg denied misconduct and some of the facts alleged in the complaint.
The Hearing Board found that the Administrator did not prove, by clear and convincing evidence, that Nagelberg failed to provide competent representation to Winniczek. However, the Hearing Board found that the Administrator proved the remaining charges of misconduct. The Hearing Board recommended that Nagelberg be suspended for six months, stayed in its entirety by probation for two years. The Hearing Board recommended certain
probationary conditions, including that Nagelberg make restitution of $50,000 to Winniczek. Nagelberg has paid the $50,000.
The case is before the Review Board on the Administrator's exceptions. The Administrator objects to the Hearing Board's sanction recommendation. He contends that probation is inappropriate in this case and seeks a one-year suspension with additional restitution of $25,000, plus interest. Nagelberg contends that censure is the proper sanction. Alternatively, he seeks to have the Review Board uphold the Hearing Board's sanction recommendation. Neither party challenges the Hearing Board's findings as to the misconduct charged, and those findings are affirmed.
Marek Winniczek, a Polish national, worked as an interpreter for Eastern Europeans seeking to obtain a commercial driver's license (CDL) in Florida. Unlike most states, Florida provided interpreter services for the exam. Many individuals would go to Florida, use a local address, obtain a Florida CDL, and, after returning to their home states, get a local CDL using reciprocity, without further testing.
While interpreting, Winniczek sometimes signaled answers to applicants taking the written CDL exam. Winniczek also referred applicants to an associate who certified applicants on the road test without requiring them to actually demonstrate driving proficiency. In return, applicants paid Winniczek $800 - 1300. Winniczek and his partner grossed between $800,000 and $1 million from this activity.
Winniczek was arrested in April 2000. Assistant United States Attorneys Patrick Collins and Theodore Chung of the Northern District of Illinois went to Florida and questioned Winniczek immediately after his arrest. Collins and Chung were involved in the Operation Safe Roads investigation, a large scale, high profile investigation.
Winniczek provided the federal prosecutors with information about his own activities and those of others, making multiple statements to law enforcement officials. Winniczek also began working for federal law enforcement officials by taping conversations with others involved in illegal activity.
Winniczek was concerned about the risk of going to prison and the immigration consequences of a criminal conviction. Winniczek had been in the United States as a lawful resident alien for approximately 30 years. If convicted of a felony, Winniczek would likely be deported. Although no written promises had been made, Winniczek believed that federal prosecutors would prevent his deportation if he continued to cooperate.1
Winniczek was to be charged in Chicago. He initially retained Chicago attorney Mike Petro, who charged Winniczek a fee of approximately $7,000. Given Winniczek's prior statements, Petro planned to continue cooperating with law enforcement officials.
After retaining Petro, Winniczek continued to seek advice from many other attorneys, including Florida attorney Leo Spivak. Spivak referred Winniczek to Nagelberg.
Winniczek contacted Nagelberg and met with him in Chicago. Winniczek decided to retain Nagelberg instead of Petro. Nagelberg told Winniczek that the total fee would be $50,000 - 75,000.
Nagelberg requested, and received, an initial retainer of $25,000. Nagelberg paid Spivak one-third of the initial retainer in return for the referral. Winniczek did not know of this payment and did not sign a written agreement that disclosed it. Spivak did not provide any services other than the referral.
Nagelberg entered the case in late May 2000. By then, Winniczek had expressed uncertainty as to whether he wanted to continue cooperating with the government. This was
partly because Nagelberg considered it unlikely that federal prosecutors could or would prevent Winniczek's deportation if he were convicted of a felony. Misdemeanor charges were highly unlikely. By then Winniczek had also asserted his innocence, questioned the accuracy of some of the recorded conversations, and raised issues with Nagelberg that cast doubt on the reliability of Winniczek's prior statements.
Winniczek was ultimately indicted on multiple felony charges. Nagelberg told Winniczek that the only way to avoid deportation would be to defend the case successfully or whittle down the charges via motions to dismiss specific counts. Nagelberg proceeded, based on the assumption that Winniczek would not cooperate and that the case would be tried.
After Winniczek was indicted, Nagelberg determined that the case could become more involved than he had originally thought. This was based in part on the seriousness of the Operation Safe Roads investigation. In addition, there were new allegations that Winniczek might have been involved in obtaining fraudulent Social Security cards. Nagelberg requested, and received, further fees from Winniczek totaling $150,000.
Nagelberg had received fees in this range in two other cases. One of those cases involved a lengthy trial. The other involved drug charges and was disposed of by a guilty plea to a reduced charge after Nagelberg presented a successful motion to suppress.
Nagelberg also obtained $20,000 for expenses, which he placed in a separate account. Nagelberg thought the case might involve significant expenses, including sending an investigator to Florida and obtaining translations of recorded conversations. Nagelberg hired investigator Robert Swanson. Nagelberg paid Swanson a retainer of $5,000. Swanson ultimately spent about 10 hours on the case.
Nagelberg met with Winniczek several times, made court appearances, and met with Swanson two or three times. Nagelberg spoke with Winniczek once a week and with Winniczek's wife even more frequently. Nagelberg corresponded and met with federal prosecutors. Nagelberg filed several motions. While some of these motions were form motions, three were case-specific and required research, including computerized research. He also began preparing for Winniczek's trial, which was scheduled for October 2001.
The terrorist attacks of September 11, 2001 caused Nagelberg to be concerned over the possible implications of Winniczek's involvement in assisting foreign nationals obtain truck driving licenses. Consequently, Nagelberg and Winniczek resumed negotiating with federal prosecutors. In November 2001, Winniczek entered a guilty plea.
In February 2002, at Winniczek's request, the court appointed another attorney to represent Winniczek in sentencing.
Winniczek was sentenced to 22 months imprisonment, followed by three years probation, and ordered to pay a $7,500 fine. By the time of the disciplinary hearing, Winniczek had completed all aspects of his sentence. He remained in the United States; the record does not disclose why he remained.
Attorney Marc Kadish testified as an expert witness for the Administrator. Kadish has an extensive background in criminal law. However, mMuch of his practice has been devoted to representing poverty-level clients, either through a law school clinical program or as director of a large law firm's pro bono program.
Kadish considered $150,000 to be a significantly excessive fee. In his opinion, it should have been apparent when Nagelberg was retained that Winniczek should have continued
to cooperate with the government and plead guilty, rather than go to trial. Kadish opined that $25,000 - 50,000 would have been a "very handsome" fee for the case.
Kadish acknowledged, however, that a client had a right to change his mind and decide to go to trial. He also testified that it was not always apparent at the outset of representation whether a case would go to trial or end in a guilty plea. Kadish had not seen Nagelberg's file and did not know the extent of Nagelberg's work.
Kadish testified that criminal attorneys usually charge a flat fee, typically in whatever amount the market will bear. Hourly rates for the partners in Kadish's firm, as well as some independent attorneys, were in the range of $400 - 600.
Nagelberg testified that he had not intended to charge Winniczek an excessive fee and that, when Winniczek retained him, Nagelberg intended to work for and earn the fee. Nagelberg believed that this case could get significantly larger over time. Nagelberg also considered the fact that it was typically very difficult to get out of a case once one had appeared in it. Nagelberg testified that he charged Winniczek $150,000 for several reasons. Those reasons included the high profile nature of the case and the related Operation Safe Roads investigation, Winniczek's potential involvement in procuring fake Social Security cards, and Winniczek's knowledge of the trucking industry and potential related illegal conduct. Nagelberg also considered the seriousness with which the government was approaching the case, evidenced by the fact that Assistant U.S. Attorneys Collins and Chung traveled to Florida to question Winniczek immediately after his arrest.
Because this was a flat fee case, Nagelberg did not keep time records. During the disciplinary proceedings, Nagelberg prepared a time reconstruction at the request of counsel for
the Administrator. This listed some of Nagelberg's activities, but did not estimate the time spent. At the hearing, Nagelberg estimated that he earned about half the fee received, i.e., $75,000.
Although he had not always recognized this, by the time of the hearing, Nagelberg acknowledged that he had not earned $150,000. He expressed remorse.
Winniczek filed a civil lawsuit against Nagelberg. At Nagelberg's request, his insurer settled the case. Winniczek also recovered the referral fee paid to Spivak, without the need for litigation. After deduction of attorney fees, Winniczek received nearly $22,000 from these two sources. Swanson returned the unused portion of his retainer. Nagelberg returned the unused costs to Winniczek.
Nagelberg presented favorable character testimony from two current judges, one former judge, and a law professor.
Nagelberg was licensed to practice law in 1975. At the time of the hearing, Nagelberg's practice consisted of criminal cases, special education matters, a few of which he handled pro bono, and civil rights cases. He has no prior discipline.
While in college, Nagelberg taught basic English and math skills to county jail inmates. He had tutored disadvantaged school children and counseled military veterans who were amputees. He had worked as a VISTA volunteer.
Nagelberg attended law school at night, while working as a juvenile probation officer. Nagelberg worked for five years as a public defender and then began a private practice. Nagelberg practiced in juvenile law, criminal law, and military law. He performed pro bono work; he had represented a sailor in a death penalty case on a pro bono basis.
The only issues presented concern the sanction. The Hearing Board's recommendation as to discipline is advisory. In re Ingersoll, 186 Ill. 2d 163, 178, 710 N.E.2d
390, 237 Ill. Dec. 760 (1999). In choosing the sanction to recommend in a particular case, the Review Board considers the facts and circumstances of the individual case, while remaining aware that the system seeks to impose sanctions consistent with those imposed in other similar cases. Ingersoll, 186 Ill. 2d at 177-78, 710 N.E.2d 390, 237 Ill. Dec. 760; In re Timpone, 157 Ill. 2d 178, 197, 623 N.E.2d 300, 191 Ill. Dec. 55 (1993). Aggravating and mitigating factors are to be considered. In re Witt, 145 Ill. 2d 380, 398, 583 N.E.2d 526, 164 Ill. Dec. 610 (1991). The purpose of discipline is also considered. The purpose of discipline is not to punish the individual respondent, but to protect the public, maintain the integrity of the profession, and protect the administration of justice from reproach. In re Spak, 188 Ill. 2d 53, 719 N.E.2d 747, 241 Ill. Dec. 618 (1999); Timpone, 157 Ill. 2d at 197, 623 N.E.2d 300, 191 Ill. Dec. 55. The deterrent value of a sanction may also be considered. In re Discipio, 163 Ill. 2d 515, 528, 645 N.E.2d 906, 206 Ill. Dec. 654 (1994).
The Administrator objects to the Hearing Board's recommendation of probation.
Probation is provided under Supreme Court Rule 772 (188 Ill. 2d R. 772) for respondents with some type of disability. See Supreme Court Rule 772(a)(3); e.g., In re Migliore, No. 01 CH 68 (Review Board Jan. 31, 2005), petition for leave to file exceptions denied, No. M.R. 20107 (May 20, 2005). In Migliore, on which the Hearing Board relied, probation was imposed on a respondent who, like Nagelberg, had charged an excessive fee. In Migliore, however, the respondent was suffering from ongoing depression that may have contributed to his misconduct and the probationary conditions included a requirement of ongoing treatment. This case does not present similar circumstances. While Nagelberg suffered a period of depression during his representation of Winniczek, there was no evidence that depression affected Nagelberg's misconduct or that depression problems continued.
The Court has also provided probation as an optional form of discipline under In re Jordan, 157 Ill. 2d 266, 623 N.E.2d 1372, 191 Ill. Dec. 486 (1993). Jordan-type probation is intended for attorneys who have engaged in misconduct, but whose right to practice law needs to be monitored or limited, rather than suspended or revoked. Jordan, 157 Ill. 2d at 276, 623 N.E.2d 1372, 191 Ill. Dec. 486.
The Administrator contends that probation under Jordan is, or should be, reserved only for cases involving unique mitigating circumstances. However, probation has been imposed in cases that do not involve unique mitigating circumstances. E.g., In re Smith, 168 Ill. 2d 269, 659 N.E.2d 896, 213 Ill. Dec. 550 (1995); In re Weiland, No. M.R. 20431 (Nov. 22, 2005); In re Jakubowski, No. 93 CH 455 (Review Board May 10, 1996), approved and confirmed, No. M.R. 12728 (Sept. 24, 1996). We decline to so limit the availability of probation.
However, Nagelberg does not need monitoring or an opportunity to correct deficiencies in his practice. Compare Smith, 168 Ill. 2d 269, 659 N.E.2d 896, 213 Ill. Dec. 550. The misconduct here involves an isolated instance, unlikely to recur, and there really is nothing to be gained from probation. See In re Burke, No. 00 SH 61 (Review Board July 5, 2002), petition for leave to file exceptions denied, No. M.R. 18317 (Nov. 26, 2002). Restitution has already been paid. Even if this had not already been accomplished, the need to make restitution is not, in itself, grounds for probation. See In re Tabor, No. 01 CH 08 (Review Board June 25, 2002), approved and confirmed in part, No. M.R. 18318 (Nov. 26, 2002). Given all the circumstances, this case is not one in which probation is warranted.
Discipline for misconduct that involves collection of an excessive fee varies depending on the circumstances of the case. The Administrator seeks a suspension for one year,
relying on In re Gerard, 132 Ill. 2d 507, 548 N.E.2d 1051, 139 Ill. Dec. 495 (1989). Nagelberg seeks censure, relying on In re Kutner, 78 Ill. 2d 157, 399 N.E.2d 963, 35 Ill. Dec. 674 (1979).
Gerard is distinguishable from this case for many reasons. Gerard took serious advantage of an elderly woman who was hospitalized when she retained him. Gerard was able to accomplish his client's objectives quickly and with very little effort. While not apparent at the outset, Gerard's work wound up being extremely routine and not of a type that would warrant a contingent fee. The parties had signed a contingent fee agreement, which yielded a fee of $150,000. Gerard sought to keep the full fee. He continued to assert a right to the full fee during the disciplinary proceedings and demonstrated an attitude which the Court considered extremely disturbing. The manner in which Gerard collected the contingent fee was also improper. All of these circumstances caused the Court to suspend Gerard for one year. Gerard, 132 Ill. 2d at 536, 548 N.E.2d 1051, 139 Ill. Dec. 495.
Winniczek's circumstances are quire different from that of Gerard's elderly, hospitalized client. Winniczek was involved in serious, and quite lucrative, criminal conduct, for which he faced serious penalties. Winniczek was not incapacitated when he contracted with Nagelberg. Quite the contrary, he was able to, and did, seek advice from numerous attorneys, both before and after retaining Nagelberg. Winniczek knowingly entered into an agreement with Nagelberg for a specific flat fee. In hindsight, and only in hindsight, the fee proved excessive. Nagelberg performed considerably more work for Winniczek than Gerard performed for his client. While Nagelberg also initially asserted a right to keep the full fee, by the time of the hearing, he acknowledged that he had received too much for his work. Nagelberg has not displayed the type of improper attitude that the Court found so objectionable in Gerard and did
not engage in any improper collection methods. He has already made restitution in the amount set by the Hearing Board. Nagelberg also presented significant mitigating evidence.
In Kutner, the respondent charged a flat fee of $5,000 to handle a routine battery case. Kutner spent 5 - 6 hours on the case. The charges were dismissed because the complaining witness declined to prosecute, not because of any work performed by Kutner. Kutner refused to return any of the client's money when requested to do so, although he offered to refund $1,000 after proceedings before the Review Board. The Court censured Kutner, given his record of nearly 50 years of practice without discipline and his extensive pro bono work.
Other respondents who have charged excessive fees have received periods of suspension. For example, while the sanction in In re Migliore, No. 01 CH 68 (Review Board Jan. 31, 2005), petition for leave to file exceptions denied, No. M.R. 20107 (May 20, 2005) included a period of probation, the respondent was also required to serve a period of actual suspension for two months. In In re Serritella, No. 03 SH 115 (Review Board April 9, 2007), petitions for leave to file exceptions denied, No. M.R. 21655 (Sept. 18, 2007), the respondent was suspended for 30 days for taking excessive fess in two matters.
There are differences between Serritella and this case, particularly given Serritella's unprofessional and demeaning attitude toward his clients, which Nagelberg does not share. Offsetting this, Nagelberg engaged in misconduct both in charging an excessive fee and improperly dividing legal fees.2
Given all the circumstances, a 30-day suspension is warranted.
Nagelberg has paid the $50,000 recommended by the Hearing Board. The Administrator seeks to have the Review Board recommend additional restitution of $25,000.
The amount of restitution is an equitable determination; it does not require proof by clear and convincing evidence. In re Giamanco, No. 97 SH 27 (Review Board Feb. 17, 1999), approved and confirmed in part, No. M.R. 15818 (May 26, 1999). Setting the amount or restitution is primarily a factual issue, as to which the decision of the Hearing Board, as trier of fact, deserves deference. In re Schildman, No. 00 SH 60 (Review Board July 3, 2003), petition for leave to file exceptions allowed, sanction modified, No. M.R. 18905 (Nov. 24, 2003) (restitution recommended by the Hearing Board unchanged).
The Hearing Board's decision as to the amount of restitution in this case is not against the manifest weight of the evidence. While a client's interests must be protected, the purpose of disciplinary proceedings is not to settle fee disputes between attorneys and clients. See In re Ushijima, 119 Ill. 2d 51, 60, 518 N.E.2d 73, 115 Ill. Dec. 548 (1987). Nagelberg clearly performed some work for Winniczek. While there is not clear detailed evidence of his time, there is also no evidence that Nagelberg engaged in any intentional deception in relation to the evidence of his time. Compare Giamanco, No. 97 SH 27.
The Hearing Board, as trier of fact, was entitled to evaluate the evidence presented and determine the relative weight to give that evidence. This principle applies to the issue of restitution as well as any other factual issue. The Hearing Board was entitled to consider, and accept, Nagelberg's testimony about the work he performed. Similarly, the Hearing Board was entitled to weigh Kadish's testimony in light of his limited experience in charging fees such as those typically charged by private criminal attorneys.
Significantly, too, Winniczek has received back funds totaling nearly $75,000. He received funds through the civil suit against Nagelberg and from the return of the referral fee
paid to Spivak. This undercuts the Administrator's theory that additional restitution should be ordered from Nagelberg.
We find no basis for changing the Hearing Board's recommendation that restitution be $50,000. As Nagelberg has already paid that amount, we decline to reach issues of interest.
One additional matter merits comment. The quality of Nagelberg's representation of Winniczek was at issue at hearing, as the complaint included charges that Nagelberg failed to provide Winniczek with competent representation. The Hearing Board found that this charge was not proven, and the Administrator has not challenged that finding before this Board. Nonetheless, in his brief and at oral argument, the Administrator has sought to cast doubt upon the quality of Nagelberg's representation. We consider this unwarranted.
For the reasons expressed, we affirm the Hearing Board's findings of fact and findings as to the misconduct charged and recommend that Respondent-Appellee, Sheldon Bart Nagelberg, be suspended from the practice of law for thirty (30) days.
Date Entered: 17 November 2008
Daniel P. Duffy
1 While not having authority to stop deportation proceedings, federal prosecutors could affect a person's immigration status in various ways. These included deciding whether misdemeanor or felony charges would be filed, requesting that the Immigration and Naturalization Service (INS) delay or forego deportation, and obtaining a visa under which a person could remain in the United States while federal prosecutors "needed" him. Such need was very broadly defined.
2 The Administrator relies on In re Mendelson, No. 95 CH 339 (Review Board Aug. 2, 1996), petition for leave to appeal allowed, sanction modified, No. M.R. 12894 (Nov. 26, 1996) in arguing the seriousness of this aspect of Nagelberg's misconduct. In Mendelson, however, in addition to improperly accepting a case referral, the respondent created a false document and tendered it to the ARDC. No such conduct is present here.