Filed August 22, 2011
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
EUGENE C. STAHNKE,
Commission No. 08 CH 101
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on October 6, 2010 at the Chicago offices of the Attorney Registration and Disciplinary Commission ("ARDC") before a Panel of the Hearing Board consisting of Terrence M. Burns, Chair, Jerry D. Brown and Nicole Okerblad. Gina M. Abbatemarco appeared on behalf of the Administrator. George B. Collins appeared on behalf of the Respondent, who was present at the hearing.
On August 29, 2008, the Administrator filed a two-count complaint charging Respondent with breach of fiduciary duty, undue influence, overreaching, preparing an instrument that gave him a prohibited substantial gift and other misconduct in relation to his representation of Adam Urban and Anton Urban. In his answer, Respondent admitted some of the complaint's factual allegations, but denied other factual allegations. Respondent denied any misconduct.
Subsequently, with leave of the Hearing Board, the Administrator filed an amended complaint, adding two counts arising out of Respondent's representation of two other persons
and charging conversion and related misconduct. Respondent admitted most of the allegations of the two additional counts, but denied misconduct.
The Administrator presented testimony from Janelle Reynolds, Hollie Poirier, Shawn M. Bolger, Mark Hroncich, M.D., Donna Johnson, David L. Cwik and Respondent. Administrator's Exhibits 1 through 38 were admitted into evidence. Respondent testified on his own behalf and presented character testimony from Shawn Bolger. Respondent's Exhibits 1 through 8 were admitted into evidence.
At the time of the hearing, Respondent was 63 years of age and in poor health. (Tr. 231-32). Respondent attended law school after working for a number of years. He was admitted to practice law in Illinois in 1983. Initially, Respondent worked as an in-house corporate attorney. Following a lay-off, Respondent began a sole practice in 1991, focusing on litigation, real estate and corporate work. (Tr. 193-94, 232-35).
Counts I and II
Adam Urban ("Adam") and Anton Urban ("Anton") were elderly brothers. Neither had ever married nor had children. They lived in Cicero, Illinois, in the home in which they had been raised. (Tr. 238-39, 245). For a time, their sisters, Mary Urban ("Mary") and Helen Boucher ("Boucher") also lived in the home. Mary died on June 9, 1994. Boucher moved to Michigan to live with her daughter, Sandra Reach ("Reach"), in the mid-1990's. Boucher died in 1998. (Tr. 40-41; Adm. Ex. 24 at 30, 31).
After Boucher moved to Michigan and before she died, Boucher and Reach occasionally visited Adam and Anton. Reach had two daughters, Janelle Reynolds ("Reynolds") and Leslie
Young ("Young"). (Tr. 42-45, 245-46). Another relative, Julie Urban, died in 2000; she was survived by her daughter, Pamela Facenda (Tr. 46-47).
After Boucher died, Reynolds and Young tried to maintain a relationship with Adam and Anton, but Adam and Anton were very reclusive and did not appear to want contact with the remaining family members. Adam and Anton typically did not answer their telephone or their door. They only occasionally allowed visitors into their house. (R. 42-45, 139-40, 151, 245-46). Reynolds testified Adam and Anton threatened her and Young, when each had attempted to visit them. Reynolds last tried to visit Adam and Anton in 2001. (Tr. 43-45, 59-62, 245-46). Thereafter, the family had minimal contact with Adam and Anton and decided to leave them alone. (Tr. 44, 63).
While not socializing with relatives or with other neighbors, Adam and Anton were very close friends with Respondent's brother, Dale Stahnke ("Dale"), and a neighbor, Matt Gembala ("Gembala"). Dale visited with Adam and Anton once or twice a week, sometimes going with them to a ball game or the race track. Dale also did grocery shopping for Adam and Anton. (Tr. 238-41, 244-45). Gembala also assisted Adam and Anton and took them to church. (Tr. 250).
Respondent had a close relationship with Dale. In 1996, Respondent met Adam and Anton and covered the tasks Dale usually did for them while Dale was out of town. Over time, a close friendship also developed between Adam, Anton and Respondent. (Tr. 241-42).
In 1998, Respondent prepared wills for Adam and Anton, at their request. He did not charge them a fee. Anton was the sole beneficiary under Adam's 1998 will. In a prior will executed in 1989, other relatives, including nieces and great-nieces, were among the beneficiaries. Adam and Anton told Respondent they had two nieces, but were not in contact
with them. Adam, Dale and Gembala were the beneficiaries under Anton's 1998 will. (Tr. 243-44; Adm. Ex. 1).
Title to the house in which Adam and Anton lived was held in a land trust. Originally, Adam and Mary owned the beneficial interest in the trust as joint tenants. Over time, the Trust Agreement was modified. Respondent prepared an Amendment to Trust Agreement, which Adam executed on May 5, 2001. Under this Amendment, Adam added Anton to the Trust Agreement as a joint tenant. (Adm. Ex. 6; see Adm. Exs. 4, 5).
On July 1, 2004, Adam executed a Durable Power of Attorney. This document named Respondent as Adam's personal representative and gave Respondent broad powers to deal with Adam's property. (Adm. Ex. 8). Respondent's wife, Roberta Stahnke ("Roberta"), was one of the witnesses to Adam's signature on this document. Respondent notarized the signatures on the Durable Power of Attorney. (Adm. Ex. 8). Under Illinois law, a notary cannot properly notarize a document in which he or she has been named as a party. (Adm. Ex. 12). 5 ILCS 312/6-104.
Anton had an account at UBS Financial. Prior to July 2004, this account was structured so that upon Anton's death, Dale and Gembala would be co-owners of that account. (Adm. Ex. 10 at 1-2). In July 2004, Anton signed a document designating Respondent as his agent on the UBS account. (Adm. Ex. 9 at 8). At the bottom of the document, in a space provided for stating the reasons for the agency, Respondent handwrote: "(very important) Mr. Urban is 88 years of age, doesn't hear well. I handle all his financial affairs." (Adm. Ex. 9 at 8).
In 2005, Dale became ill. At that time, Respondent assumed the tasks Dale had been performing for Adam and Anton. These included grocery shopping, taking them to doctor's appointments and similar tasks. The friendship between the men also continued. (Tr. 247-50).
Dale died in September 2005. (Tr. 247-48). By that time, Gembala resided in an assisted living facility and was no longer able to actively provide help to Adam and Anton. (Resp. Ex. 1).
Respondent prepared a new will for Anton, which Anton executed on September 30, 2005. Respondent's wife and son witnessed the will. Jacqueline Innocenti, who worked for Respondent, notarized the document. (Adm. Ex. 2). The will named Respondent as executor and as one of three beneficiaries of Anton's estate, along with Adam and Gembala. (Adm. Ex. 2).
Around this same time, Respondent arranged to have a paid caregiver for Adam and Anton. (Tr. 250). Donna Johnson ("Johnson") learned of the position through an acquaintance and met with Respondent. (Tr. 125-26). Respondent explained the daily tasks involved, including grocery shopping, straightening up, taking out trash and driving Adam and Anton to doctors' appointments. Johnson went with Respondent to the house and met Adam and Anton. Johnson described the house as dark, dirty, sad and lonely. (Tr. 126-28, 130, 132, 251-52). After Johnson was hired, Adam paid her for her work. (Tr. 132).
Johnson worked for Adam and Anton until their deaths about a year later. (Tr. 132). During that time, Johnson endeavored to improve their living conditions. She cleaned thoroughly, painted the interior of the house and did yard work. Johnson's testimony evidenced a genuine affection and friendship for Adam and Anton, as she did many things to brighten up the home. (Tr. 132-34, 140-41, 251-52).
Johnson testified Adam and Anton never left the house alone. They typically did not accompany Johnson on errands such as grocery shopping. Johnson did take Adam and Anton to the bank once or twice a month. (Tr. 134). Adam once discussed the possibility of adding
Johnson to his bank account, so she could do the banking without him, but she was never added to the account. Later, Johnson learned Respondent had been added. (Tr. 136-37).
After Johnson was hired, Respondent continued to visit Adam and Anton and to look after them. The frequency of his visits varied depending on how things were going. (Tr. 252-53, 258). Johnson testified Respondent came a couple times a month. Johnson thought Respondent usually came to do paperwork, although she believed their discussions were not her business and she left the room when Respondent came. (Tr. 135-36).
Respondent was Johnson's contact person for Adam and Anton. Johnson and Respondent spoke a couple of times a week. Johnson testified Respondent monitored her work and responded to her concerns. (Tr. 150, 154). Respondent also maintained contact with Adam to ensure things were going well. (Tr. 250-51). Respondent was the contact person designated on an emergency alert service that had been set up previously for Adam and Anton. (Tr. 263-65).
Johnson testified while she worked for Adam and Anton, no one other than Respondent inquired about them. (Tr. 154). Johnson was not aware of any contact by Adam and Anton with relatives. As far as she knew, Adam and Anton did not want any contact with their relatives. (Tr. 137-38).
Johnson admired the house in which Adam and Anton lived. She testified she commented to Adam about the quality of the woodwork as she was cleaning it one day and he told her he would leave the house to her when he died. (Tr. 148). Johnson testified she made light of this remark, as she did not want to think of Adam dying. However, she later mentioned the conversation to Respondent, who responded by telling her Adam had told Respondent to take care of Johnson. (Tr. 148-49).
In November 2005, Anton signed a Transfer on Death Agreement concerning the UBS account. In this document, Anton named Respondent, Gembala and Adam as equal beneficiaries upon his death. (Adm. Ex. 10 at 3-4). By that time, Dale was deceased. (Tr. 257).
Respondent testified Dale had been Adam and Anton's heir. Consequently, after Dale died, Respondent asked Adam and Anton what they wanted to do with their property after their deaths. Respondent testified Adam and Anton stated they wanted him to replace Dale and therefore, Respondent modified their wills and other documents, such as the UBS Transfer on Death Agreement, to accomplish this purpose. (Tr. 257-58).
Respondent testified around this time, he spoke with Adam about reconnecting with his family. Respondent testified he attempted to locate relatives, came up with a number of addresses, which were obtained via the Internet, and sent several letters to persons he thought might be relatives in November 2005. The letters stated Adam and Anton were trying to contact their relatives and requested the recipients contact Respondent. (Tr. 254-55; Resp. Ex. 8). In January 2006, Respondent sent Adam and Anton a letter stating some letters were returned, while others were delivered, but he had not received responses. (Resp. Ex. 8).
Conflicting evidence was presented as to which missing relatives might have been located and the sufficiency of Respondent's efforts to locate relatives. (Tr. 46-47, 50, 255).
Reynolds testified, due to errors in the names and addresses used, none of their relatives received Respondent's letters. (Tr. 52). However, attorney David Cwik ("Cwik"), whom the family hired to probate the estates, testified Reach received some correspondence from Respondent. Cwik did not have the letter with him at the hearing and the letter was neither offered as nor admitted into evidence. (Tr. 178-79).
Respondent testified he was not aware of an address book in Adam and Anton's home and Adam and Anton told Respondent they did not have a way to contact their nieces. In contrast, Reynolds and Johnson each testified an address book containing actual addresses of relatives was in Adam and Anton's home. Using a telephone number contained in the address book, Johnson had telephoned a woman named Julie, at Anton's request. Johnson left a message, but was not aware of any response to the message. There was also evidence that actual addresses were available to Respondent on documents of which he had possession or to which he had access. (Tr.46-47, 50-52, 137-39, 254-57; Resp. Ex. 8).
In January 2006, Adam and Anton opened an account at Park National Bank. They designated Respondent and Gembala as their beneficiaries upon their deaths. (Adm. Ex. 11).
Respondent prepared a will for Adam, which Adam executed in June 2006. Respondent's wife and son witnessed this will, which Respondent notarized. (Tr. 201; Adm. Ex. 3). Under this will, Respondent would receive all of Adam's property. if Anton did not survive Adam by thirty (30) days. (Adm. Ex. 3).
Adam died on October 5, 2006, at the age of 88. (Adm. Ex. 15). Before he died, Adam was hospitalized and later transferred to a nursing home. (Tr. 142). During this time, Respondent visited more frequently, alternating between the house and the hospital or nursing home. Johnson visited Adam every day and was with him when he died. (Tr. 142-43, 253-54).
Two days after Adam died, Respondent took Anton to the bank to get money to pay for Adam's funeral. While they were at the bank, Anton also added Respondent to Anton's account at Park National Bank as a joint tenant. (Tr. 209-10; see Adm. Ex. 14; Resp. Ex. 6).
After Adam's death, his UBS account, worth approximately $52,000, was transferred to Anton's account. (Tr. 204; Adm. Ex. 9). In October 2006, Anton also executed another UBS
Transfer on Death Agreement, which removed Gembala's name from the UBS account and named Respondent and his wife as equal beneficiaries. (Tr. 204; Adm. Ex. 10). At that time, Anton's UBS account was worth approximately $244,902.00, including the amount received from Adam's account. (Answer to First Amended Complaint para. 39).
Respondent testified he spoke with Anton about Gembala and Anton suggested removing Gembala, since he could no longer take them to church, but leaving him as a joint tenant on a separate savings account. (Tr. 270-71). Respondent testified he and Anton agreed to add Respondent's wife as a beneficiary because of Respondent's poor health. (Tr. 268-70).
In October 2006, Hollie Poirier ("Poirier") was employed as a legal assistant to Shawn Bolger ("Bolger"), the attorney with whom Respondent shared office space. On October 16, 2006, Respondent asked Poirier to notarize a document for one of the "elderly brothers." Poirier knew Respondent represented and was friends with Adam and Anton. (Tr. 68-70, 72-73). Bolger also knew Respondent was taking care of two elderly gentlemen and did "a myriad" of things for them, including taking them to doctors' appointments and the store. Bolger testified Respondent often received urgent phone calls to go to their home. (Tr. 93, 95).
Respondent's request to Poirier was unusual; Respondent had never asked Poirier to notarize any other document and Respondent had an employee, who was a notary. (Tr. 71-73). The notarized document was the UBS Transfer on Death Agreement, although Poirier did not realize it at the time. Poirier notarized the document, even though it was not signed in her presence and Anton was not present at the time. (Tr. 74-75; see Tr. 195-96). This was improper; Anton should have been present and Poirier should have determined he was in fact the person, who signed the document. (Adm. Ex. 12). 5 ILCS 312/6-102.
After notarizing the Transfer on Death Agreement, Poirier became concerned about having done so. Poirier immediately spoke with a co-worker and later that day with Bolger. In response, Bolger spoke with Respondent. (Tr. 75-76, 78). Bolger testified she told Respondent she did not want him to use the document, given Poirier's concerns. Bolger testified Respondent told her he would destroy the document and not use it. (Tr. 84-85). Bolger assumed Respondent would not use the document. Bolger informed Poirier of the conversation and told Poirier not to worry. (Tr. 79, 85). However, the document was not destroyed and was used by Respondent.
Dr. Mark Hroncich ("Dr. Hroncich") saw Anton on October 19, 2006, two weeks after Adam's death. At that time, Anton's appetite was very poor and he had lost weight. Anton was dizzy, weak and anemic. He had been falling and was becoming withdrawn. (Tr. 104-07, 110-12, 144-45).
Dr. Hroncich, a specialist in internal medicine and geriatrics, had been Anton's primary care physician since 2004. (Tr. 101-02, 104). Dr. Hroncich testified Anton had various medical problems, including cognitive and memory difficulties, which had been present since childhood. Among other things, Anton had difficulty forming words and expressing his thoughts. Dr. Hroncich believed Anton's cognitive and memory problems affected his ability to make financial decisions and rendered him susceptible to suggestions from others. (Tr. 104-08; see R. 43).
Dr. Hroncich knew Respondent took care of Anton, was the agent on Anton's power of attorney for health care and was the person to call, if Anton needed anything. (Tr. 110, 115-17). As far as Dr. Hroncich knew, Johnson and Respondent were the only people in Anton's life. Anton never mentioned relatives to Dr. Hroncich. (Tr. 118).
After Adam's death, Respondent advised Anton the land trust should also be amended. (Tr. 198). Respondent prepared an Amendment to the Trust Agreement. He took Anton to the
bank to have the Amendment notarized on November 8, 2006. (Tr. 199). The Amendment made Respondent and his wife, Roberta, joint tenants with the right of survivorship on the land trust. (Adm. Ex. 7).
Respondent testified by having Anton sign the UBS Transfer on Death Agreement in October 2006 and the November 8, 2006 Amendment to the Land Trust Agreement, the need for probate was eliminated. (Tr. 206-07). These documents also effectively eliminated any interest by third parties in the Urban brothers' estates. If the October 2006 UBS Transfer on Death Agreement and the November 2006 Amendment to the Land Trust had not been prepared, Gembala would have shared in the UBS account and the proceeds of the sale of the Urban brothers' house. (Tr. 206, 211-12).
From the time of Adam's death to late November 2006, Dr. Hroncich frequently spoke with Respondent regarding health care options for Anton. (Tr. 111-12). In particular, they discussed whether to hospitalize Anton or arrange for hospice care, when Anton began to rapidly decline. Respondent decided on hospice care, rather than aggressive measures such as a ventilator and a feeding tube. (Tr. 112). At the time, Anton was 90 years of age. Dr. Hroncich considered hospice the correct decision and testified it was within reasonable standards of medical care not to undertake heroic efforts to aggressively treat Anton's condition. (Tr. 118-19).
Respondent testified he tried to honor Anton's wish to die at home and hospice care began at home. However, Anton fell on November 18, 2006. Johnson found Anton and called Respondent. After Respondent arrived, they called an ambulance and Anton was hospitalized. Anton died two days later. (Tr. 111, 113, 145-47, 265-66; Adm. Ex. 15).
Johnson cleaned the house after Anton died in preparation to sell it. The house was listed for sale with a realtor. (Tr. 147).
Respondent testified, after Adam and Anton died, he paid their outstanding bills. In January 2007, Respondent and Gembala divided the proceeds from a bank account on which Gembala and Respondent were joint tenants. Gembala received $7,239.16 from that account. (Tr. 260; Resp. Ex. 7).
Although he had possession of the wills of Adam and Anton at the time of their deaths, Respondent did not file those wills with the Clerk of the Court prior to March 2007. As the person in possession of the wills, Respondent was legally obligated to file the wills with the Clerk of the Court within thirty (30) days of Adam and Anton's deaths. (Adm. Ex. 13). See 755 ILCS 5/6-1.
On April 4, 2007, Respondent and his wife directed UBS to transfer all assets in Anton's UBS account into a joint account in their names. (Adm. Ex. 9 at 13). Subsequently, Respondent used the funds he received from Adam and Anton's accounts for a variety of personal purposes, including paying off credit card debt for his wife and purchasing a car for his son. (Tr. 212, 214-15). Respondent testified he did not consider the UBS funds to be Adam and Anton's, as they were dead and he was the beneficiary on their accounts. (Tr. 214-15). Other than reimbursement for expenditures Respondent made on their behalf, Respondent testified he did not receive any money from Adam and Anton during their lives. (Tr. 258-59).
The account at Park National Bank was closed on April 30, 2007. As of that date, the account balance was $484.98. (Adm. Ex. 14).
Respondent did not notify Adam and Anton's relatives of their deaths. The family was unaware Adam and Anton had died until an acquaintance saw a "For Sale" sign in front of the
Urban house and called Reach. After obtaining Respondent's telephone number through the realtor, Reynolds called Respondent and learned Adam and Anton had died. Reynolds testified Respondent told her Adam and Anton had changed their wills and left their money to caretakers. Reynolds testified Respondent did not identify himself as a caretaker. (Tr. 48-50).
The family hired Cwik to probate the estates and locate assets. Subsequent investigation revealed there had been a large transfer of assets, including the interest in the land trust. The house had been emptied of its contents and had been listed for sale. (Tr. 53-57).
Cwik opened an estate in late September 2007. (Adm. Ex. 16). Respondent contacted Cwik shortly after he was served with a citation to discover assets. (Tr. 163). Cwik met with Respondent, who told Cwik of the relationships between him, Adam, Anton, Dale and Gembala. This meeting occurred within a month after Cwik opened the estate. Respondent informed Cwik that Adam and Anton had instructed him to prepare their wills and other documents, including the land trust, which he did. (Tr. 164-65, 167-68). Based on his conversation with Respondent and his investigation into the handling of Anton Urban's estate, Cwik advised Respondent to get a lawyer and Cwik contacted the ARDC. (Tr. 169-70).
When Cwik became involved, a contract was pending to sell the house, but no closing had occurred. Ultimately, the sale proceeded, as the parties decided the price was fair. (Tr. 190-91). The net sale proceeds were approximately $190,900.00 (Resp. Ex. 1).
Cwik testified Adam and Anton had accounts at a bank that underwent multiple re-organizations in a short time. Given the re-organizations, Cwik could never ascertain what happened to those accounts. (Tr. 172).
Adam and Anton each also had an account at UBS Financial. The total value of those accounts was approximately a quarter of a million dollars. (Tr. 172-73). Cwik testified, in the
period between Adam's death and Anton's death, Respondent used a power of attorney to designate himself and his wife, as the beneficiaries of Anton's UBS account upon Anton's death. The proceeds of Adam's UBS account had been deposited into Anton's UBS account after Adam died. While the power of attorney would have permitted him to do so, Cwik's investigation did not indicate Respondent had accessed the account before Anton died. (Tr. 173, 189-90, 204). Cwik did not find any indication that Respondent had taken any money from Anton during Anton's lifetime. (Tr. 190). However, Cwik testified, after Anton died, Respondent and his wife, Roberta, opened accounts at UBS and transferred all of Adam and Anton's money into those accounts. Most of the money had been withdrawn by the time Cwik located the accounts. (Tr. 173).
While Cwik opined Adam and Anton did not have testamentary capacity, he was aware they had intended to benefit Dale during his lifetime and had made him a beneficiary many years earlier. (Tr. 184-85). Cwik knew Respondent and Dale were brothers and they had been very close friends with Adam and Anton. (Tr. 181-86). Cwik was not aware of anything that may have caused this relationship to terminate. (Tr. 186). He also learned Adam and Anton had become very reclusive and depended on Dale, Respondent and Gembala for their contact with the outside world. (Tr. 183). He also testified Dale had died and Gembala had become disabled. (Tr. 182).
Respondent and his wife, Roberta, each had debt. (Adm. Exs. 18-23). Respondent never discussed their debt, particularly Roberta's, with Adam and Anton (Tr. 200), as he did not see the need to do so. (Tr. 203). Respondent was employed and had earnings, although his own practice was not particularly lucrative. His wife, to whom he had been married for 40 years, was a clinical psychologist with substantial independent income. (Tr. 235-37).
Respondent acknowledged he prepared wills and powers of attorney for Adam and Anton. He also helped them complete the UBS Transfer on Death Agreements. (Tr. 197). Respondent did not advise Adam and Anton to obtain independent advice about those documents nor was he aware they obtained such advice. (Tr. 199-200). Respondent testified he did not ask another attorney to prepare these documents as Adam and Anton did not want to pay another attorney to prepare these documents. Respondent did not explain to Adam and Anton the conflict of interest inherent in his preparation of documents in which he would receive a benefit. (Tr. 200-01).
Respondent testified he was not intentionally trying to take money that belonged to others. He acknowledged he made a mistake, but testified it was not an intentional situation. (Tr. 262). Respondent testified he considered himself to be Adam and Anton's friend, rather than their attorney. He testified within one year, he lost both of them and his brother and they were his closest friends. Respondent testified he never intended to harm Adam or Anton. (Tr. 263).
In September 2005, Trudy Jordan-Anders ("Jordan-Anders") hired Respondent to represent her as the seller in a real estate transaction. The buyer was EIE Possibilities, Inc. ("EIE"); Hisaski Suzuki ("Suzuki") was the president of EIE.
The sale closed on October 13, 2005. The parties agreed Jordan-Anders could remain in possession of the property until October 18, 2005. The parties also agreed Respondent would hold $1,000.00 in a possession escrow. (Adm. Ex. 30). Under the terms of the escrow agreement, if Jordan-Anders vacated the property by 6:00 p.m. on October 18, 2005 and subject to the buyer's final walk-through, the escrow funds would be released to Jordan-Anders. If
Jordan-Anders did not vacate the property in timely fashion, a per diem amount would be deducted from the escrow funds. (Adm. Ex. 30).
Consistent with the agreement of the parties, Respondent received a check for $1,000.00, dated October 13, 2005. (Adm. Ex. 31). Respondent did not have authority to use the escrow funds for his own purposes.
Respondent deposited that check into his personal checking account on October 24, 2005. Respondent used this account for various personal purposes. At that time, Respondent did not maintain a client trust account. (Tr. 226-27; Adm. Ex. 32).
Respondent testified, before depositing the escrow check into his account, he wrote a check to Jordan-Anders and mailed it to her. (Tr. 226-27). The Administrator's Exhibits include a check on Respondent's account payable to Jordan-Anders for $1,000.00, dated October 30, 2005. Respondent's bank paid that check on November 4, 2005. (Adm. Ex. 33).
On October 24, 2005, the date Respondent deposited the escrow check, the balance in Respondent's personal checking account was $969.91, less than the $1,000.00 due to Jordan-Anders. As of October 26, 2005, the balance in the account was only $32.22. By October 27, 2005, the account balance was $1,112.12, and the account balance remained above $1,000.00 through November 4, 2005. (Adm. Ex. 32).
On May 3, 2003, George McElree ("George") retained Respondent to represent him in a lawsuit against George's brother, John McElree ("John"), to collect an unpaid portion of a loan. Respondent filed suit. As a result of the lawsuit, judgment was entered on March 24, 2004, against John and in favor of George, for $1,470.00 plus costs of $170.60. Judgment was stayed for 14 days to permit John to pay the $1,640.60 due to George. (Adm. Ex. 34).
Respondent received a cashier's check dated April 2, 2004 for $1,640.68, representing payment of the judgment. The check was payable to Respondent. (Adm. Ex. 35).2
On April 9, 2004, Respondent deposited the check into his personal checking account. (Adm. Ex. 36). This was not a client trust account and Respondent used this account for personal purposes. George had not authorized Respondent to use his funds for Respondent's own purposes.
Between April 12 and April 14, 2004, the balance in Respondent's personal checking account was less than the amount Respondent should have been holding on behalf of George. (Adm. Ex. 36 at 5). From April 14, 2004 until April 29, 2004, when it fell to $8.25, the account balance remained above the amount due to George. (Adm. Ex. 36 at 5, 11). From April 29, 2004 through May 7, 2004, the account balance was below the amount Respondent should have been holding for George. The balance in the account again dropped below $1,640.60 from May 11, 2004 until May 17, 2004. On May 25, 2004, the account balance was $1,601.02. (Adm. Ex. 36 at 11).
Respondent wrote George a check for $1,600.00 on March 31, 2005, which cleared Respondent's bank on April 6, 2005. (Resp. Ex. 2).
Evidence in Aggravation and Mitigation
Respondent, through counsel, negotiated a settlement with Cwik on behalf of Adam and Anton's heirs. Cwik testified he received a very good accounting prior to settlement. George Collins, Respondent's attorney in these proceedings, also represented Respondent in the probate case, entering an appearance in the probate case in December 2007. (Adm. Ex. 16). Cwik testified he and Collins "got right to the point" in discussing settlement and did not have a long negotiation. (Tr. 174-75, 180).
The settlement was finalized in March 2008. (Resp. Ex. 1). Under the settlement, the heirs obtained approximately 75% of the assets, including the proceeds of the sale of the house and Respondent received 25%. (Tr. 174-75). Gembala received approximately $10,000.00 pursuant to the settlement, in addition to the bank account proceeds he had received previously. (Tr. 207). The settlement agreement was approved by the probate court. (Tr. 181, 189; Adm. Ex. 16 at 12). Respondent paid the settlement funds in full. (Tr. 261-62).
On cross-examination, Cwik testified Respondent's position as an attorney made it significantly easier for Cwik to pursue his clients' claims. Cwik acknowledged it would have been harder for the estranged relatives to successfully void property distributions to a person, who provided caretaking services to an older person, but was not the attorney who drafted the instruments under which the distributions were made. (Tr. 186-87).
Respondent acknowledged he deposited client money into his personal checking account. (Tr. 225). Respondent testified if he received funds on behalf of a client, his normal procedure was to deposit the funds into his account, after he wrote the client a check for funds Respondent owed to that client. (Tr. 223-24).
Bolger has known Respondent since 1987. They have shared office space since 1991. Respondent represented Bolger when she was divorced. Bolger testified Respondent handled her case very well. (Tr. 81-83, 88-89, 92-93).
Over the years, Bolger had come to know some of Respondent's clients. Bolger testified Respondent was "very, very good to his clients," keeping an open door policy such that clients would just walk in to see Respondent. Bolger testified Respondent had a good reputation with clients for honesty, integrity, truthfulness and veracity. (Tr. 90-92, 94-95).
Bolger testified the legal community in the area in which she and Respondent practiced was relatively small. Thus, she had not spoken with many attorneys about his reputation. However, Bolger had spoken with attorneys about Respondent's reputation over the last 20 years. Bolger testified Respondent had a reputation within the legal community for being very fair, reasonable and balanced. Bolger occasionally asked Respondent to cover real estate closings for her. Bolger testified she often received positive feedback about Respondent from attorneys involved in those closings. (Tr. 92, 96-98).
Respondent has no prior discipline. (Tr. 333).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In a disciplinary case, the Administrator bears the burden of proving the misconduct charged by clear and convincing evidence. In re Ingersoll, 186 Ill. 2d 163, 168, 710 N.E.2d 390 (1999). While less stringent than the criminal standard of proof beyond a reasonable doubt, clear and convincing evidence requires more than the usual civil standard of a preponderance of the evidence. Bazydlo v. Volant, 164 Ill. 2d 207, 213, 647 N.E.2d 273 (1995); People v. Williams, 143 Ill. 2d 477, 484, 577 N.E.2d 762 (1990). There must be a high level of certainty to meet this burden. In re Stephenson, 67 Ill. 2d 544, 556, 367 N.E.2d 1273 (1977). Clear and convincing evidence means a degree of proof which, considering all the evidence, produces a firm and abiding belief it is highly probable the proposition at issue is true. Cleary & Graham, Handbook of Illinois Evidence, sec.301.6 (9th ed. 2009).
Counts I and II
Attorneys stand in a fiduciary relationship toward their clients, as a matter of law. In re Imming, 131 Ill. 2d 239, 252-53, 545 N.E.2d 715 (1989); In re Schuyler, 91 Ill. 2d 6, 11, 434
N.E.2d 1137 (1982). This is equally true where, as here, the attorney and client are also friends. See In re Saladino, 71 Ill. 2d 263, 269, 375 N.E.2d 102 (1978). While Respondent regarded himself as primarily Adam and Anton's friend, he does not dispute an attorney-client relationship also existed. Respondent prepared numerous legal documents for Adam and Anton. The attorney-client relationship was clearly established and continued at all times relevant to this case.
An attorney's fiduciary duty toward his or her client requires the attorney to act with undivided fidelity in dealings with the client. See In re Vrdolyak, 137 Ill. 2d 407, 422, 560 N.E.2d 840 (1990). As a result of the fiduciary relationship, any transactions between the attorney and the client are subject to the closest scrutiny. Schuyler, 91 Ill. 2d at 11. The level of good faith required of an attorney dealing with a client is much higher than the good faith required of parties engaged in an ordinary arms' length transaction. Id.
Given these principles, if an attorney engages in a transaction with a client and benefits thereby, the attorney bears the burden of showing the transaction was fair, equitable and just, and did not proceed from undue influence. Id.; see Imming, 131 Ill. 2d at 258. A presumption of undue influence likewise arises whenever the attorney receives a gift from a client, drafts a document under which the attorney receives a substantial benefit or writes him or herself into a client's will. Imming, 131 Ill. 2d at 259; Schuyler, 91 Ill. 2d at 15.3 The presumption is sufficient to establish the Administrator's prima facie case and to shift to the Respondent, the burden of rebutting the presumption. Imming, 131 Ill. 2d at 259; Schuyler, 91 Ill. 2d at 15.
Overreaching is a similar concept. An attorney engages in overreaching when he or she takes undue advantage of the position of influence the attorney holds vis a vis the client. In re Rinella, 175 Ill. 2d 504, 516, 677 N.E.2d 909 (1997); see Imming, 131 Ill. 2d at 258-59.
When the presumption arises, the attorney must present evidence to show that the gift was made or the document executed, as a result of the client's free deliberation and the deliberate exercise of the client's judgment. Saladino, 71 Ill. 2d at 272. Usually, this involves the attorney presenting evidence of such things as the client having obtained independent advice before completing the transaction or at least the attorney having advised the client to obtain independent advice, and the attorney making a full and frank disclosure of all relevant facts and circumstances. In re Barrick, 87 Ill. 233, 239-40, 429 N.E.2d 842 (1981); Saladino, 71 Ill. 2d at 270-71.
The presumption of undue influence was not overcome in this case.
Beginning in 2004 and continuing through 2006, Respondent prepared, and Adam and Anton executed, a series of documents under which Respondent was given the right to deal with Adam and Anton's property, was named as their beneficiary and received an increasing share of their property.
Specifically, in 2004, Adam executed a Durable Power of Attorney under which Respondent was appointed Adam's agent and given broad powers to deal with Adam's property. Also in 2004, Anton executed a document designating Respondent as agent on Anton's UBS account. In 2005, Respondent prepared, and Adam executed, a will under which Respondent was named executor and one of three beneficiaries of Adam's estate. Also in 2005, Anton executed a Transfer on Death Agreement naming Respondent as one of three beneficiaries of his UBS account upon his death. In January 2006, Adam and Anton designated Respondent and Gembala as the sole beneficiaries of their bank accounts at the time of their deaths. A few months later, Respondent prepared a will, which Adam executed. Under this will, while Anton
remained a beneficiary, all of Adam's estate would pass to Respondent, if Anton did not survive Adam by 30 days.
After Adam died in October 2006, his UBS account and his share of the bank account passed to Anton. Anton made Respondent a joint tenant on the bank account when he and Respondent went to the bank to transfer funds to pay for Adam's funeral. Shortly thereafter, Respondent had Anton execute a document designating Respondent and his wife the sole beneficiaries of the UBS account upon Anton's death. The following month, November 2006, Anton executed a document, prepared by Respondent, making Respondent and his wife joint tenants of the land trust, which held title to the Urbans' home.
These above-referenced transactions entailed significant financial benefit to Respondent. As a result of these transactions, Respondent and his wife were positioned to receive all of Anton's property upon his death, except Gembala's joint tenancy share of a modest savings account.
Adam and Anton were elderly, reclusive and estranged from their family. They had a very small social circle, consisting of Respondent, Respondent's brother Dale and their neighbor, Gembala. By September 2005, Dale had died and Gembala had moved out of the neighborhood. From that time on, the only people with whom Adam and Anton had regular contact were Respondent and Johnson. These circumstances rendered Adam and Anton vulnerable to exploitation. Anton was especially vulnerable, given his long-standing cognitive and memory problems, which Anton's doctor testified affected his ability to make financial decisions and rendered him susceptible to suggestions from others.
After Adam died, Anton was in an even more weakened state, both physically and psychologically. Respondent's conduct at that time is especially troubling. Within a few weeks
after Adam died, despite Anton's condition, Respondent arranged for Anton to execute a series of documents under which Respondent and his wife would receive almost all of Anton's property when Anton died. These documents also eliminated almost all of the remaining rights of third parties to Anton's estate. Specifically, Anton added Respondent as a joint tenant on Anton's bank account. Anton executed a Transfer on Death Agreement for his UBS account, which removed Gembala and named Respondent and his wife as the only beneficiaries upon Anton's death. Respondent had Poirier notarize the signature on this document, even though Anton was not present, and Poirier did not see him sign the document. Respondent also prepared and had Anton sign a document, which amended the terms of the land trust to add Respondent and his wife as joint tenants with Anton.
Adam or Anton did not have any independent advice concerning any of the documents Respondent prepared or presented to them for signature, which left their property or the right to direct its disposition to Respondent. Respondent did not advise Adam or Anton to obtain independent legal advice, explain the conflict of interest inherent in his preparation of documents under which he would benefit or inform them of the risks his preparation of such documents would entail. As to at least some of the documents, no one other than Respondent was involved at all. Respondent's wife and son witnessed some of the documents, including Adam's 2004 Durable Power of Attorney, Adam's 2006 will and Anton's 2005 will. Although it was improper for him to do so, 5 ILCS 312/6-104, Respondent notarized certain documents, such as Adam's 2004 Durable Power of Attorney and 2006 will. Respondent improperly had Poirier notarize Anton's 2006 UBS Transfer on Death Agreement, even though she could not verify the identity of the signer. See 5 ICLS 312/6-102.
Most of the evidence concerning Adam and Anton's intent came from Respondent's own testimony. Johnson provided some information about Adam and Anton's general mental status, but she did not know specifics in relation to the transactions at issue. There was little evidence if any to corroborate Respondent's testimony as to Adam and Anton's intent. In fact, Johnson's testimony casts doubt on the notion that Adam and Anton intended to benefit Respondent to the exclusion of anyone else. See In re Vogel, 92 Ill. 2d 55, 63-64, 440 N.E.2d 885 (1982). Johnson testified Adam told her he would leave her the house and Respondent told Johnson Adam had told Respondent to take care of her.
It is very difficult to overcome the presumption of undue influence, overreaching and breach of fiduciary duty where, as here, there is no third party available to testify to the transaction. Schuyler, 91 Ill. 2d at 13. There was a genuine friendship between Respondent, Adam and Anton and we believe Respondent was sincere in his concern for Adam and Anton. However, those facts alone are not sufficient to overcome the presumption of undue influence and demonstrate Adam and Anton voluntarily, of their own free will and in the deliberate exercise of their own independent judgment, decided to execute these documents and transfer virtually all their property to their attorney. See Imming, 131 Ill. 2d at 255-57; Saladino, 71 Ill. 2d at 272.
Respondent stood to gain substantially from the documents executed by Adam and Anton. He had a clear conflict of interest, which interfered with his ability to objectively assess Adam or Anton's intentions or objectively evaluate Anton's legal capacity, both before and after Adam's death.
Respondent's conduct in relation to the 2006 UBS Transfer on Death Agreement and having Poirier notarize it was dishonest; a dishonest intent in relation to that document is
apparent from Respondent's subsequent misrepresentations to Bolger that he would destroy, and not use, the document. This dishonesty is present even if he believed he was effectuating Anton's intentions. By having Poirier notarize the document, Respondent was having her vouch for the authenticity of the signature on it. Because Anton was not present and Poirier did not see the document signed, Poirier could not honestly attest the signature was Anton's.
Given all the circumstances, we find Respondent's delay in filing Adam and Anton's wills, see 755 ILCS 5/6-1, constituted a failure to act with reasonable diligence and promptness in representing his clients. Illinois Rules of Professional Conduct of 1990, Rule 1.3.
There was a genuine friendship between Respondent, Adam and Anton. However, ethical principles apply even when attorneys represent their friends. Those ethical principles serve to avoid both the reality and the appearance of unethical behavior.
We do not believe Respondent initially intended to take advantage of Adam and Anton, but a situation such as presented herein, poses an enormous risk of abuse. Respondent prepared documents under which he received a very substantial financial benefit. The clients for whom Respondent prepared those documents were vulnerable at the time and are now deceased. Transactions between attorneys and clients are closely scrutinized. Klaskin v. Klepak, 126 Ill. 2d 376, 386, 534 N.E.2d 971 (1989). In situations in which an attorney prepares a document for a client in which the attorney receives a substantial benefit, there is a particularly strong presumption of undue influence. Id., at 386-87. Respondent is the only person available to testify as to his clients' intentions. Given all the circumstances in this case, Respondent's testimony does not suffice to rebut the presumption of undue influence.
As a result of Respondent's conduct, probate litigation and these disciplinary proceedings have ensued. The probate litigation was settled. Pursuant to the settlement, Adam and Anton's
estranged relatives received a substantial portion of their estates. If Adam and Anton truly intended, as Respondent testified, to leave most of their property to him and his wife, their plan was thwarted by Respondent's failure to follow the applicable ethical rules.
The remaining misconduct alleged in Counts I and II was established by the evidence considered as a whole.
Therefore, we find the Administrator proved Respondent, as charged in Counts I and II:
breached his fiduciary duty to Adam and Anton;
engaged in undue influence and overreaching;
failed to act with reasonable diligence and promptness in representing a client in violation of Rule 1.3 of the Illinois Rules of Professional Conduct of 1990;
represented a client when the representation of that client may be materially limited by his own interests, in violation of Rule 1.7(b);
prepared an instrument giving himself a prohibited substantial gift in violation of Rule 1.8(c);
engaged in conduct involving dishonesty, deceit, fraud or misrepresentation, in violation of Rule 8.4(a)(4);
engaged in conduct that is prejudicial to the administration of justice in violation of Rule 8.4(a)(5); and
engaged in conduct which tends to defeat the administration of justice or bring the courts or legal profession into disrepute in violation of Supreme Court Rule 770.
Counts IV and V
As to each of these Counts, the Administrator presented very limited evidence. The evidence consisted solely of documents and limited testimony from Respondent. Neither Trudy Jordan-Anders nor George McElree testified.
The Administrator bears the burden of proving the misconduct charged by clear and convincing evidence. Ingersoll, 186 Ill. 2d at 168. As noted above, clear and convincing evidence requires a high level of certainty and contemplates a degree of proof, which produces a
firm and abiding belief that it is highly probable the proposition at issue is true. In re Coladarci, 07 CH 79, M.R. 23909 (Apr. 19, 2010). Suspicious circumstances are not sufficient to meet the Administrator's burden. In re Mitgang, 385 Ill. 311, 324, 52 N.E.2d 807 (1944).
The evidence regarding Count IV demonstrates on October 13, 2005, Respondent received a check for $1,000.00, which he was to hold as a possession escrow in the Jordan-Anders real estate transaction. Under the escrow agreement, Jordan-Anders could remain in possession of the real estate until 6:00 p.m. on October 18, 2005. She was not entitled to receive the $1,000.00 until after she delivered possession of the property to the buyer in a timely manner and subject to the buyer's approval of the condition of the premises. While Jordan-Anders ultimately did receive the full $1,000.00, the evidence does not establish when the buyer had his final walk-through or when Respondent learned the conditions precedent to release of the escrow funds had been met.
Respondent, who did not have a client trust account, deposited the escrow check into his personal checking account on October 24, 2005. On that day, the balance in Respondent's account was below $1,000.00. It remained less than $1,000.00 until October 27, 2005. Respondent wrote a check to Jordan-Anders for $1,000.00 dated October 30, 2005. The check cleared Respondent's bank on November 4, 2005.
Thus, as to Count IV, the balance in Respondent's checking account was below the escrow amount for three days. Jordan-Anders received her money, in full, within three weeks of the date Respondent received the escrow funds. The evidence does not clearly establish an earlier date by which all conditions precedent to release of the money were met. The check to Jordan-Anders was presented to Respondent's bank a few days after its date. The check appears to have been paid by Respondent's bank upon presentment.
As to Count V, Respondent received a cashier's check for $1,640.68 representing payment of a judgment due to his client, George, on April 2, 2004. Respondent deposited the cashier's check into his personal account one week later on April 9, 2004, as he did not have a client trust account. Within the next six weeks, the balance in Respondent's account fell below $1,640.68 four times, albeit for relatively short periods of time. On May 25, 2004, the balance in Respondent's account was $1,601.02. The evidence did not establish Respondent's account balance thereafter. On March 31, 2005, Respondent wrote George a check for $1,600.00, which was $40.68 less than the amount Respondent received. The evidence does not indicate how the amount Respondent paid George was determined. Respondent and George had agreed Respondent would receive fees on an hourly basis. However, the evidence did not establish whether any fees or costs were due to Respondent. The check to George cleared Respondent's bank on April 6, 2005. Thus, George did not receive his money for a year after Respondent received the cashier's check. The evidence did not reveal the reasons, if any, for this delay.
Rule 1.15(a) clearly and unequivocally directs lawyers holding property of another in connection with a representation to keep that property separate from the lawyer's own property. By failing to deposit the funds at issue in Counts IV and V into a client trust account, and instead depositing them into his personal checking account, Respondent violated Rule 1.15(a).
Respondent issued checks on his account to each of the two clients for the amount due them. However, in each instance before the check cleared Respondent's account, the balance in the account dropped below the amounts Respondent should have been holding for these clients. This constitutes conversion. In re Holz, 125 Ill. 2d 546, 556, 533 N.E.2d 818 (1988).
Commingling and conversion bring the legal profession into disrepute. In re Lewis, 118 Ill. 2d 357, 362-63, 515 N.E.2d 96 (1987). Thus, the Administrator has proven a violation of Supreme Court Rule 770.
Counts IV and V also charge additional misconduct.
Under Rule 1.15(b), a lawyer must promptly deliver to a client any funds in the lawyer's possession the client is entitled to receive. The Administrator did not prove this charge in relation to Count IV, but did prove this charge as to Count V.
By the plain language of Rule 1.15(b), the lawyer's obligation to deliver the funds is not triggered until the client becomes entitled to receive the funds. Thereafter, the lawyer is obligated to deliver the funds "promptly."
In this case, there were conditions precedent before Jordan-Anders was entitled to receive the escrow funds. The evidence did not show when those conditions occurred. There is no evidence Jordan-Anders demanded her money and Respondent refused to release it. The evidence does show Jordan-Anders received her money and the check was honored upon presentment.4 Jordan-Anders received her money within approximately three weeks after Respondent received the check for the escrow amount. Under these circumstances, the Administrator has not proven, by clear and convincing evidence, Respondent failed to promptly deliver funds in violation of Rule 1.15(b), as alleged in Count IV.
The circumstances as to Count V are different. The money Respondent received represented payment of a judgment in George's favor. A year passed between the time Respondent received the cashier's check and the time he paid George. There was no evidence of any condition that had to occur before Respondent was obligated to release the money to George
or any facts to justify Respondent holding the money. Therefore, Respondent did not promptly deliver funds George was entitled to receive and, as to Count V, violated Rule 1.15(b).
Under Rule 8.4(a)(4), a lawyer shall not engage in conduct involving dishonesty, fraud, deceit or misrepresentation. To prove a violation of this Rule, the Administrator must prove intentional dishonesty by the respondent. In re Cutright, 233 Ill. 2d 474, 489, 910 N.E.2d 581 (2009). The Administrator must clearly and convincingly show the attorney's conduct was knowing or at least so reckless as to be considered knowing. In re Klytta, 06 CH 60, M.R. 23674 (May 18, 2010) (Review Bd. at 7).
While Respondent's failure to maintain a client trust account
was highly improper, the failure to maintain a client trust account is not
dishonest per se. In re Mayster, 99 CH 59, M.R. 18008 (May
24, 2002). Not every attorney error, even in relation to a client trust account,
is dishonest as a matter of law. See Klytta, 06 CH 60 (Review Bd.
at 5-11). Conversion is not always accompanied by dishonest intent. In re
Clayter, 78 Ill. 2d 276, 283, 399 N.E.2d 1318 (1980). Thus, a finding of
conversion, in and of itself, does not require a finding of dishonesty. In re
Feeley, 03 CH 78, M.R. 20740 (Dec. 30, 2005) (Review Bd. at 13 n.3); In
re Petti, 00 CH 28, M.R. 18446 (Jan. 23, 2002). A finding of dishonest
intent or a violation or Rule 8.4(a)(4) cannot be based simply on a showing,
through bank records, of a technical conversion, particularly where the evidence
does not demonstrate the respondent was actually aware of the conversion. In
re McNamara, 94 CH 687, M.R. 13994 (Sept. 29, 1997); In re Fritzshall,
02 CH 89 M.R. 20187 (Sept. 26, 2005)5
The Administrator presented limited evidence as to Counts IV and V. Given the limited evidence presented, the Administrator did not prove dishonest intent by clear and convincing
evidence as to either Count IV or Count V and therefore, we find no violation of Rule 8.4(a)(4) as to either Count IV or Count V.
Under Rule 8.4(a)(5), a lawyer shall not engage in conduct that is prejudicial to the administration of justice. To prove a violation of this Rule, the Administrator must prove actual prejudice to the administration of justice. Vrdolyak, 137 Ill. 2d at 425; In re Hoffman, 08 SH 65, M.R. 24030 (Sept. 22, 2010) (Review Bd. at 15-16). Where the Administrator fails to prove actual prejudice to the administration of justice, the Administrator has not met his burden of proving a violation of Rule 8.4(a)(5). In re Storment, 203 Ill. 2d 378, 399, 786 N.E.2d 963 (2002).
There was no evidence as to Count IV or Count V of any impact on any judicial proceeding. We conclude the Administrator did not meet that burden as to Count IV or Count V by the requisite standard of clear and convincing evidence and, consequently, did not prove Respondent violated Rule 8.4(a)(5) as to Count IV or Count V. Our conclusion as to Count IV is reinforced by the short time involved and the lack of any showing of harm to the client. See In re Dahlgren, 07 CH 91 (Hearing Bd. at 55).
In summary of our findings regarding Counts IV and V, the Administrator proved Respondent engaged in:
failure to hold property of clients or third persons in his possession separate from his own property in a separate identified account in violation of Rule 1.15(a);
failure to promptly deliver funds to a client the client was entitled to receive (Count V only); 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.
In determining the sanction to recommend in any given case, consideration is given to a number of factors. Predictability and fairness require some consistency in the discipline imposed for similar misconduct. In re Saladino, 71 Ill. 2d 207, 375 N.E.2d 102 (1978). Each case, however, is unique and the sanction must be based on its own particular facts and circumstances. In re Spak, 188 Ill. 2d 53, 68, 719 N.E.2d 747 (1999). The sanction must serve the purposes of the disciplinary system, which are to safeguard the public, maintain the integrity of the legal profession, and protect the administration of justice from reproach. Saladino, 71 Ill. 2d at 275.
The misconduct involved is a significant consideration in determining the discipline. In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194 (2003). Aggravating and mitigating factors are also considered. Gorecki, 208 Ill. 2d at 361. In cases involving misconduct similar to Respondent's, discipline has ranged from censure, see In re Vogel, 92 Ill. 2d 55, 440 N.E.2d 885 (1982), to disbarment. See In re Hirschtick, 05 CH 32, M.R. 21668 (2007); In re Haneberg, 00 CH 22, M.R. 19673 (2004).
The Administrator seeks disbarment. Disbarment is not warranted in this case, given the circumstances of Respondent's misconduct and the mitigating factors.
Respondent had a genuine warm and close friendship with Adam and Anton. This is highly significant in our conclusion that disbarment is not warranted. See In re Beaupre, 03 SH 32, M.R. 20233 (Sept. 26, 2005); see also Vogel, 92 Ill. 2d at 65-66; Saladino, 71 Ill. 2d at 272-273. Respondent was one of the few people close to Adam and Anton, particularly in their declining years. A sincere friendship existed and was in place before any document benefiting Respondent was prepared or executed. The relationship between them may arguably support Respondent's testimony that Adam and Anton would have wanted to benefit Respondent in some
way. See e.g., Vogel, 92 Ill. 2d at 65. In addition to their friendship, Respondent took care of Adam and Anton in numerous ways. He did errands for them, arranged for a paid caregiver to assist them and was their emergency contact person. In doing these things, it appears to us Respondent was motivated by friendship, not greed, and we do not believe Respondent initially intended to induce Adam and Anton to leave all their property to him.
These factors distinguish this case from the cases on which the Administrator relies. In those cases, attorneys have been disbarred for misconduct similar to the misconduct in Counts I and II. Moreover, the attorneys clearly acted with dishonest motives. The actions of those attorneys also caused significant financial losses to their clients and significant financial benefit to the attorneys, during the clients' lifetimes. E.g., Hirschtick, 05 CH 32; In re Carillo, 02 CH 45, M.R. 20517 (Dec. 14, 2005); Haneberg, 00 CH 22; In re Kramer, 99 CH 93, 94, M.R. 16746, 16748 (May 17, 2000); In re Bartley, 96 SH 879, M.R. 15176 (Sept. 28, 1998); In re Neswick, 93 CH 3, M.R. 13703 (May 30, 1997).
Kramer exemplifies such cases. The Kramers, who were husband and wife, engaged in multiple sham transactions over several years with an older couple, the Frys. In these transactions, the Kramers received "loans" totaling over $250,000.00 from the Frys, of which they repaid only $137,000.00. The Kramers obtained title to real estate, ostensibly purchased from the Frys, but did not pay fair market value or even the stated purchase price. The Kramers' land was contiguous to land the Frys continued to own. After Mr. Fry died, the Kramers represented Mrs. Fry in selling her real estate to a third party. As part of the transaction, the Kramers sold their contiguous parcel, at a higher per-acre selling price than the price Mrs. Fry was receiving for her land, even though Mrs. Fry's land was more valuable. The Kramers did
not disclose to Mrs. Fry their involvement in the transaction, the potential conflict of interest or the fact they received attorney fees of $275,175.00 from the transaction.
Many of the cases on which the Administrator relies also involve serious aggravating factors not present here. Bartley had been previously disciplined. Haneberg and Hirschtick did not participate in their disciplinary hearings. Neswick was disciplined for misconduct arising out of a criminal conviction in addition to misconduct involving property of an elderly client.
The Administrator also relies on In re Rotman, 136 Ill. 2d 401, 536 N.E.2d 243 (1990). Rotman was disbarred for converting over $15,000.00 from the estate of an incompetent person. to cover his own losses from commodities trading.
While Respondent also converted funds, we have found those conversions to be technical rather than intentionally dishonest, as were the conversions in Rotman. The $15,000.00, which Rotman converted, was significantly greater than the amount converted by Respondent, which totaled approximately $2,600.00. The Court observed Rotman had expressed regret over the adverse impact of his misconduct on Rotman's own career, rather than on his disabled client. Noting the very basic nature of the prohibition against stealing money from clients, the Court rejected Rotman's attempt to characterize his misconduct as a product of youth and inexperience. Rotman also presented no character evidence other than his own testimony. Rotman, 136 Ill. 2d at 421-23.
The Administrator has also cited two cases in which the respondents were suspended for three years and until further order of the Court. In re Holst, 01 CH 12, M.R. 18175 (Sept. 19, 2002); In re Garside, 98 CH 105, M.R. 17527 (June 29, 2001). Those cases exemplify the seriousness with which the Court views misconduct involving vulnerable clients, which
personally benefits the attorney. Each of those cases, however, involves circumstances different than those presented herein and do not indicate this case warrants disbarment.
Holst's underlying misconduct included, but was not limited to, misconduct in relation to an impaired, elderly woman. Holst prepared documents for the woman to sign, which enabled two men with whom Holst had ties, to obtain control over much of the woman's property. While some of the property was later recovered, approximately $100,000.00 was never recovered. Thus, there was a significant loss to Holst's client during her lifetime. In addition, Holst displayed an extremely lax attitude toward the disciplinary proceedings, Holst, 01 CH 12 (Hearing Bd. at 13), which is a significant aggravating factor. In re Brody, 65 Ill. 2d 152, 156, 357 N.E.2d 498 (1976).
In Garside, while the Hearing Board recommended a suspension for 18 months, Garside, 98 CH 105, the Court denied the Administrator's motion to approve the recommendation and suspended Garside for three years and until further order of the Court. Garside, M.R. 17527. Garside's client added him as a joint tenant to her bank accounts. At the time, the client was 91 years of age and living in an assisted living facility. She put Garside on her accounts, so he could pay her bills. Shortly thereafter, Garside wrote six checks to himself, totaling $51,000.00, on the client's account. Garside promptly reimbursed the client before disciplinary proceedings were initiated. The Hearing Board found Garside took his client's money for his own purposes, with a dishonest motive and without his client's knowledge or consent. The Court issued a summary order in Garside, which did not explain the reasons for the Court's decision. We do not view Garside as warranting disbarment or a longer suspension than we recommend in this case.
In determining the length of the suspension, we have also considered In re Singer, 95 CH 946, M.R. 14064 (Nov. 25, 1997) and In re Netzky, 96 CH 686 (Apr. 27, 1998).
In Singer, the respondent had access to a bank account belonging to the client. Singer withdrew funds from the account on multiple occasions over time, obtaining a total of approximately $17,000.00. Singer took the money for his own purposes and without the client's knowledge. Singer considered these withdrawals to be loans and intended to repay them. By the time of the Court's order, Singer had made restitution. Singer was suspended for 18 months.
Netzky had represented his friend and medical doctor, Dr. Marc Monitz, for a number of years. Monitz wanted Netzky to prepare various documents under which Netzky would inherit significant property, be executor of Monitz's estate and trustee of his trust. Monitz declined Netzky's advice to obtain independent legal advice. Associates at Netzky's law firm prepared the documents. Netzky was agent under a durable power of attorney for Monitz, who was terminally ill. Netzky engaged in a series of transactions involving Monitz's property, including preparing a check to himself for $100,000.00 immediately prior to Monitz's death, preparing a deed to Monitz's house transferring title from Monitz to Netzky and Monitz's parents, removing jewelry and approximately $16,500.00 in cash from Monitz's home shortly after Monitz died and converting $30,000.00 of Monitz's funds. The Hearing Board recommended Netzky be suspended for two years. However, Netzky died before a final order of discipline was entered.
In this case, mitigating factors include Respondent's lack of prior discipline. See Gorecki, 208 Ill. 2d at 369. The clients whose funds were at issue in Counts IV and V received their money in full. Respondent promptly settled the claims with the Urban heirs. Prompt restitution is a mitigating factor. In re Freethy, 99 CH 95, M.R. 18830 (Sept. 19, 2003) (Review Bd. at 10-11). In addition, favorable character evidence was presented, which is mitigating.
Gorecki, 208 Ill. 2d at 369. We particularly note Bolger's comments concerning Respondent's goodness to and concern for his clients, as well as his long-standing favorable reputation in the community in which they practice. Respondent also acknowledged his conduct was improper. This is also a mitigating factor. See In re Adams, 05 CH 30, M.R. 22150 (Mar. 17, 2008) (Review Bd. at 10).
In some cases in which an attorney has prepared documents for a client, who is also a friend, and the attorney benefits, a censure or short suspension has been imposed. E.g., Vogel, 92 Ill. 2d at 65-66; Saladino, 71 Ill. 2d at 276; Beaupre, 03 SH 32; In re Narmont, 94 SH 41, M.R. 9785 (Mar. 30, 1994). Those cases provide a benchmark for determining the quantum of discipline here.
However, as Respondent recognizes, this case does not warrant censure or a short suspension. More severe discipline is warranted here for a number of reasons.
Respondent engaged in serious additional misconduct by mishandling client funds and not maintaining a client trust account. Compare Saladino, 71 Ill. 2d at 274-76; In re Oklepek, 00 CH 2, M.R. 18353 (Nov. 26, 2002); Beaupre, 03 SH 32 (Hearing Bd. at 27). This is a basic, long-established principle. In re Timpone, 157 Ill. 2d 178, 198, 623 N.E.2d 300 (1993). Even where, as here, the attorney does not act with an invidious motive, commingling and converting client funds is a matter of significant concern, as it places the client's money at risk and is disreputable for the profession as a whole. Timpone, 157 Ill. 2d at 198.
The conduct of respondents, who have been censured or given a short suspension, generally has not suggested an intent to obtain a major share of the client's estate for themselves. E.g., Vogel, 92 Ill. 2d at 65-66. While we do not believe Respondent intended to steal money
from Adam and Anton or abuse his relationship with them, his conduct, especially after Adam died, appeared designed to secure for himself and his wife, virtually the entire Urban estates.
Another important factor is the extent to which the respondent's conduct did, or did not, cause the client actual harm or expose the client to an unreasonable risk of harm. See Saladino, 71 Ill. 2d at 277. Respondent's conduct did not cause Adam or Anton actual financial harm during their lifetimes. However, as a result of Respondent's failure to comply with simple, basic ethical rules, his clients' intentions as to the disposition of their property, whatever those intentions were, have been thwarted.
We accept Respondent's description of his friendship with Adam and Anton. Respondent took care of Adam and Anton, with compassion, as one would for two close friends, who had few other people in their lives. We do not doubt Adam and Anton would have wished to leave at least part of their property to Respondent. The close relationship between the men may have led Respondent to believe he was carrying out their wishes, without recognizing other considerations. However, Respondent's judgment was clouded and he did not act in accordance with ethical principles, as he was required to do.
Given all the circumstances, we recommend a suspension for 18 months and until Respondent completes the ARDC Professionalism Seminar.
Date Entered: August 22, 2011
|Terrence M. Burns, Chair, with Jerry D. Brown and Nicole Okerblad, Hearing Board Members.|
1 The amended complaint does not contain a Count III. The additional counts are Counts IV and V.
2 The evidence reflects an eight-cent differential between the amount of the judgment and the amount of the cashier's check.
3 Under Rule 1.8(c), certain exceptions are made when the lawyer and client are related. Those exceptions are not applicable here.
4 Therefore, the fact that the balance in Respondent's account was below the amount due to Jordan-Anders for three days, while a technical conversion, does not establish a failure to promptly deliver funds.
5 In re Mulroe, 07 CH 59, M.R. 111378, currently pending before the Illinois Supreme Court, involves the level of scienter required for a Rule 8.4(a)(4) violation arising out of an attorney's misconduct in relation to a trust account. However, our recommendation as to sanction is based on the actual conduct involved, rather than the number of disciplinary violations proven, In re Gerard, 132 Ill.2d 507, 532, 548 N.E.2d 1051 (1989). Therefore, our recommendation as to discipline would not change even if the Supreme Court ultimately decides, in Mulroe, that all conversions violate Rule 8.4(a)(4).