Filed October 13, 2009
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
ALLEN BARRY WITZ,
Commission No. 08 CH 59
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on June 17, 2009, at the Chicago offices of the Attorney Registration and Disciplinary Commission before a hearing panel consisting of Henry T. Kelly, Chair, Devlin J. Schoop, lawyer member, and Bernard Judge, public member. The Administrator was represented by Athena T. Taite. Respondent, Allen Barry Witz, did not appear and was not represented by counsel.
PLEADINGS AND PRE-HEARING PROCEEDINGS
On July 2, 2008, the Administrator filed a one-count Complaint pursuant to Illinois Supreme Court Rule 761 alleging misconduct based on Respondent's criminal conviction for conspiracy to commit securities fraud. Respondent was served with a copy of the Administrator's Complaint by Federal Express. Respondent's signed authorization and agreement to accept service in this manner was filed August 5, 2008.
By order of September 9, 2008, Respondent was granted an extension of time, to and including October 10, 2008, to file a responsive pleading to the Administrator's Complaint. At a pre-hearing conference held on December 11, 2008, Respondent advised he was unable to
participate in his disciplinary proceedings due to serious health problems. In addition, he was unable to afford an attorney to represent him. The Chair received Respondent's statements as an oral motion to stay the proceedings for three months and granted Respondent until December 22, 2008, to provide medical documentation of his health problems.
On December 24, 2008, Respondent provided a letter from his treating physician that stated Respondent was recovering from a "normally deadly bout with the bacteria MRSA." In addition Respondent was suffering from circulatory, respiratory, and heart problems in addition to Gout. Respondent's physician also stated as a result of his health difficulties, Respondent could not meaningfully participate in these disciplinary proceedings.
The Administrator agreed to a short stay of the proceedings provided that Respondent continue to provide medical documentation of his health issues. Accordingly, the Chair stayed the matter until March 26, 2009. The Chair also directed Respondent to provide additional medical documentation to support any further stay on or before March 23, 2009.
Respondent failed to file any additional medical documentation and failed to participate at a pre-hearing conference held on March 26, 2009. By order that same day, the Chair lifted the stay and set the matter for hearing on June 17, 2009. As Respondent had failed to file a responsive pleading to the Administrator's Complaint, the Chair also granted the Administrator's Motion to Deem the Allegations of the Administrator's Complaint Admitted Pursuant to Commission Rule 236, thereby limiting the evidence presented at the hearing to matters of aggravation and mitigation.
The Administrator tendered Exhibits 1-5 which were admitted into evidence. (Tr. 11). Those exhibits along with the admitted allegations of the Complaint establish the following facts.
From September 1998 through October 1999, Respondent was a consultant specializing in mergers and acquisitions of publicly traded companies. In December 1998, Respondent became a shareholder of Global Datatel, Inc. ("Global"). Global, which was a publicly traded company in 1999, purported to have expertise in the areas of Internet/intranet implementation, e-commerce, enterprise resource planning and Y2K testing and compliance. eHola.com Online Service Network ("eHola"), a division of Global, ostensibly offered integrated Internet access service and Spanish content information to individuals in North, Central, and South America.
Beginning in February 1999, Respondent conspired with other Global shareholders, the president of eHola, and the president of an Internet website to disseminate or cause the dissemination of false and misleading information about Global and eHola in order to artificially raise and maintain Global's stock price and trading volume. Among other acts in furtherance of the conspiracy, Respondent and his co-conspirators caused Global to issue a press release falsely stating that Global maintained offices that it did not maintain. They also caused Global to issue a press release falsely stating that eHola had a substantial number of subscribers, which it did not. From January 1999 to April 1999, Respondent and his co-conspirators caused the price of Global stock to rise from $7.25 per share to a high of $16.84 per share, increasing the market capitalization from approximately $163 million to approximately $378.8 million. By November 1999 the price of Global stock dropped to approximately $3 per share. (Adm. Exs. 1, 3).
On April 19, 2004, Respondent was charged in a one-count information filed in the United States District Court for the District of New Jersey, docketed as U.S. v. Witz, case no. 04-273-01. The information charged Respondent with conspiracy to commit securities fraud contrary to Title 15 U.S.C. secs. 78j(b) and 78ff, 17 C.F.R. sec. 240.10b-5, and Title 18 U.S.C. sec. 371. (Adm. Ex. 1).
On April 19, 2004, Respondent pleaded guilty to the information and a Plea Agreement was filed. In the Plea Agreement, Respondent agreed to cooperate with the United States Attorney for the District of New Jersey and the government agreed it would not initiate criminal proceedings based upon Respondent's conduct relating to the purchase and sale of securities in three other companies. Respondent also stipulated the amount of loss associated with his offense was more than $2.5 million, but less than $5 million. (Adm. Exs. 2, 3).
On May 12, 2008, the Honorable Joseph A. Greenaway, Jr. sentenced Respondent to five years probation, six months of electronic home monitoring, 3,750 hours of community service, and a $75,000 fine. On May 14, 2008, Judge Greenaway signed a judgment specifically finding Respondent guilty of conspiracy to defraud the United States as described in the information to which Respondent pleaded guilty. (Adm. Ex. 4).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
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); In re Ingersoll, 186 Ill.2d 163, 168, 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. People v. Williams, 143 Ill.2d 477, 484-85, 577 N.E.2d 762 (1991).
Having considered the Complaint, the order deeming the Complaint allegations admitted, and Administrator's Exhibits 1 through 4, we find by clear and convincing evidence that Respondent engaged in the acts alleged and engaged in the following misconduct as alleged in the Complaint. Specifically, we find Respondent:
committed a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, by violating Title
18 U.S.C. sec. 371, in violation of Rule 8.4(a)(3) of the Illinois Rules of Professional Conduct ("Rules");
engaged in conduct which is prejudicial to the administration of justice in violation of Rule 8.4(a)(5) of the Rules; and
engaged in 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.
Having found that Respondent engaged in misconduct, we must determine the appropriate sanction. In making this recommendation, we take into account the goal of the disciplinary process is not to punish the 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, 197, 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).
In this matter Respondent's misconduct arises out of his criminal conviction for conspiracy to commit securities fraud. Criminal conduct of this nature is clearly a serious matter that, when engaged in by an attorney, reflects adversely on the entire legal profession. Accordingly, the Administrator has recommended that Respondent be disbarred.
In making his recommendation, the Administrator relies on the following decisions. In In re Goulding, 91 CH 208, M.R. 13055 (Mar. 21, 1997) the attorney assisted a client, who was actually an undercover IRS Special Agent, in hiding funds from the IRS. The attorney was ultimately criminally convicted of conspiracy to defraud the government, mail fraud, and illegal transportation of currency. In addition, the attorney neglected an unrelated client matter. Because the attorney was not the architect of the scheme, did not seek or receive any profit, and
no harm was caused to the public, the attorney was suspended for four years. The attorney also presented significant character evidence.
In In re Minneman, 98 SH 38, M.R. 17352 (Mar. 22, 2001) the attorney deposited his client's funds in his client trust account thereby enabling the client to substantially under-report earnings to the IRS. The attorney also profited by retaining the interest earned on the funds. As a result, the attorney was convicted of conspiracy to commit income tax fraud. Given the large sum of money involved and the "deliberate, calculated series of individual acts, over an extended time," disbarment was warranted. Minneman, 98 SH 38 (Review Bd. at 6).
The current matter is more similar to Minneman than Goulding. Here, Respondent was a principal architect of a deliberate and calculated scheme to defraud the public in relation to the purchase and sale of securities in four companies. Although the Administrator presented no evidence of his personal financial benefit, his actions led to a loss of between $2.5 and $5 million. Respondent also failed to provide the Panel with any evidence in mitigation of his misconduct. We are mindful Respondent has no prior discipline. However, in light of the egregious nature of the misconduct he engaged in here, we conclude that his lack of prior discipline is entitled to little weight. See In re Lewis, 138 Ill.2d 310, 345-46, 562 N.E.2d 198 (1990).
In addition, Respondent's failure to participate meaningfully in this proceeding is a significant aggravating factor. The Chair afforded Respondent many opportunities to either participate or present evidence as to why he could not participate. Respondent failed to do either. The Court has made it clear that attorneys have a duty to cooperate with the Administrator in the disciplinary process. See In re Smith, 168 Ill.2d 269, 296, 659 N.E.2d 896 (1995). An attorney's failure to cooperate with or participate in his own disciplinary proceeding
is normally viewed as evidencing a lack of respect for the process and is considered a serious factor in aggravation. See In re Samuels, 126 Ill.2d 509, 531, 535 N.E.2d 808 (1989); In re Houdek, 113 Ill.2d 323, 326-27, 497 N.E.2d 1169 (1986); In re Brody, 65 Ill.2d 152, 156, 357 N.E.2d 498 (1976).
Based on the foregoing authority and the aggravating factors present in this case, we agree with the Administrator that disbarment is appropriate. As the Court has recognized, attorneys are held to a higher standard of conduct than the general public, particularly with regard to upholding the law. Scarnavack, 108 Ill.2d at 460-61. When an attorney evidences a lack of respect for the law by engaging in criminal behavior, disciplinary action is warranted in order to "protect the public, the courts, and the legal profession." Id.
For the foregoing reasons, we recommend that Respondent, Allen Barry Witz, be disbarred.
Date Entered: October 13, 2009
|Henry T. Kelly, Chair, with Panel Members Devlin J. Schoop, and Bernard Judge, concurring.|