Filed May 12, 2011
In re Anderson J. Ward
Commission No. 09 CH 37
Synopsis of Review Board Report and Recommendation
The Administrator charged Ward with conversion and dishonesty related to his mishandling of funds deposited in his client trust account purportedly for the use of one of his clients who, unbeknownst to Ward, was engaged in a fraudulent investment scheme. Ward was also charged with employing a disbarred attorney. Ward denied that he committed any misconduct.
The Hearing Board found that Ward converted funds, engaged in dishonest conduct by acting with deliberate indifference to his client's fraudulent activities, assisted a non-attorney in the unauthorized practice of law, and engaged in conduct that prejudiced the administration of justice or tended to defeat the administration of justice or to bring the courts or the legal profession into disrepute. The Hearing Board recommended that Ward, who has been disciplined previously, be suspended for three years and until further order of the court.
On review, Ward argued that the evidence did not support the findings of dishonesty, conversion, or conduct that tends to bring the legal profession into disrepute. He further argued that the Hearing Board's recommended sanction is too harsh. The Administrator contended that Ward should be disbarred.
The Review Board recommended that the Hearing Board's finding of dishonest conduct be reversed. In so doing, the Review Board declined to apply the "deliberate avoidance" standard when considering Ward's intent. The Review Board recommended that the Hearing Board's remaining findings of misconduct be affirmed and that Ward's license be suspended for three years, with the last year of suspension stayed by one year of probation. One member of the Review Board Panel, specially concurring, expressed that misconduct implicating client trust accounts should not be charged as "conversion," which is not defined in the Rules of Professional Conduct, but should be prosecuted under the specific provisions of Rule 1.15.
BEFORE THE REVIEW BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
ANDERSON J. WARD,
Commission No. 09 CH 37
REPORT AND RECOMMENDATION OF THE REVIEW BOARD
The Administrator-Appellee/Cross-Appellant charged Respondent-Appellant, Anderson J. Ward, with four counts of misconduct related to his handling of funds for a client who was operating a fraudulent investment scheme and his employment of a disbarred attorney. Respondent admitted some of the factual allegations, denied others, and denied all allegations of misconduct.
Prior to the hearing, the Chair granted the Administrator's motion to dismiss Count III of the complaint, which alleged that Respondent made false statements to a tribunal. The hearing proceeded on Counts I, II, and IV, which alleged that Respondent committed the following misconduct: conversion (Counts I and II); engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (Counts I, II, and IV); assisting a person who is not a member of the bar in performance of activity that constitutes the unauthorized practice of law, in violation of Rule 5.5(b) of the Illinois Rules of Professional Conduct (Count IV); engaging in conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(a)(5) of the Illinois Rules of Professional Conduct (Count IV); and engaging in conduct that 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 (Counts I, II, and IV).
The Hearing Board found that Respondent committed all of the charged misconduct except for the charge that he acted dishonestly in connection with his employment of a disbarred attorney. The Hearing Board recommended that Respondent, who has previously been disciplined, be suspended for three years and until further order of the court.
This matter comes before the Review Board on Respondent's exceptions to the Hearing Board Report and Recommendation. Respondent contends that the Hearing Board's findings of conversion, dishonesty, and conduct that tends to defeat the administration of justice or bring the courts or the legal profession into disrepute are erroneous. He further contends that a lesser sanction is warranted. The Administrator argues that Respondent should be disbarred.
The evidence presented to the Hearing Board is briefly summarized below. The parties stipulated to some of the relevant facts.
Prior to receiving his Illinois license to practice law in 1993, Respondent spent most of his career working in the field of education. He was licensed to practice law in Pennsylvania in 1986. His practice focuses on criminal defense.
Respondent agreed to represent Kenneth Bivens in November 2005. At that time, the Illinois Secretary of State was investigating Bivens and his business, Christian Dream Builders Financial Planning, Inc. (CDB), for selling unlicensed securities. Respondent assisted Bivens with the investigation and also with other corporate matters.
Bivens told investors that CDB used their money to buy foreclosed homes and resell them for profit. He promised investors that they would receive a 25% return on their
investment every 90 days. In November and December of 2004, the Secretary of State issued stop orders prohibiting Bivens from soliciting any further investments.
Respondent arranged to meet with Assistant Attorney General Dan Carter on January 27, 2006, to discuss the investigation into Bivens' activities. Respondent, Bivens, Carter, and Special Agents Chris Milligan and Dick McDaniel attended the meeting. At the meeting, Bivens stated that he had 369 investors but had purchased only six properties. He admitted that he used new investors' money to pay previous investors and further that he falsified documents and a Cook County Recorder of Deeds stamp to persuade investors and his office staff that his business was legitimate. Bivens also acknowledged that he had continued to solicit investments in violation of the stop orders.
Acknowledging the Secretary of State's concern about the difficulty in documenting amounts that Bivens had repaid to investors given his numerous bank accounts, Respondent and Bivens discussed after the meeting "how to make crystal clear from whom funds were being received and to whom funds were being paid." They decided to use Respondent's client trust account to document the repayments. Respondent testified that, when he asked Bivens where he would get the money to repay his investors, Bivens told him that "he had a group of supporters, friends and family, who were interested in helping him, his phrase was, dig out of this hole." Respondent began accepting funds on Bivens' behalf shortly after Bivens' indictment in March 2006. He gave Bivens the name, account number, and routing number for his client trust account so that individuals could wire funds to the client trust account. Respondent kept a ledger documenting the transactions related to Bivens.
Between March 28, 2006, and September 8, 2006, Respondent disbursed on behalf of Bivens at least $133,000 that third parties had deposited into Respondent's client trust
account. Bivens told Respondent that the deposits were coming from people who wanted to help him, when they actually came from investors that Bivens solicited. Specifically, Maria Farias made a deposit of $100,000; Kathleen Stricker, Kelly Butkowski, and Arianna Farias made deposits of $5000 each; Jovita Chavez made a $10,000 deposit; and Audomaro Farias made an $8000 deposit.
Respondent's ledger credited "Theodore Wilkinson" for all of the foregoing deposits other than the $8,000 deposit, whose source was not identified. When funds were wired into the client trust account, Bivens told Respondent the name of the depositor and Respondent noted the name and amount of the deposit in his ledger. Respondent never checked his bank records to see if the funds actually came from the person identified by Bivens. Respondent testified that he never saw or endorsed checks that were deposited into the account and that the deposit slips used were not the same ones that his office staff used. Respondent testified that he had no reason to believe that Bivens was giving him false information about the source of the deposited funds.
On March 28, 2006, and April 25, 2006, deposits of $50,000 and $100,000, respectively, were made to the client trust account via wire transfer. Bivens told Respondent that these funds came from "Apostle Theodore Wilkinson," a religious person who wanted to help Bivens. On April 7, 2006, and April 24, 2006, Respondent received faxes from Wilkinson1 asking Respondent to make specific disbursements. Among the disbursements requested on April 24, 2006, were $19,250 to Bivens' wife, Calva Bivens, and $4000 to Theodore Wilkinson.
Respondent testified that he called Wilkinson after each fax to confirm that he sent the funds and wanted them disbursed in accordance with the instructions in his fax. Respondent then sent letters to Wilkinson with copies of the checks issued pursuant to
Wilkinson's instructions. One of those checks was made out to Anderson Ward, P.C. for $3000. Respondent testified that Bivens sometimes authorized the payment of legal fees from the client trust account. Respondent did not find it strange that Wilkinson would request a disbursement to himself, because Respondent assumed that Wilkinson was one of Bivens' investors. Respondent further testified that he did not learn until Bivens' sentencing proceedings that the deposited funds were not from Wilkinson but from investors.
On September 8, 2006, Respondent's client trust account was overdrawn by $1867.08.
On December 13, 2006, Ismael Diaz deposited $100,000 in Respondent's client trust account by wire transfer. Bivens told Respondent that Diaz was someone who wanted to help him. Respondent never communicated with Diaz. Disbursements during the time period referred to in Count II included $3000 to Anderson J. Ward, P.C.; numerous "miscellaneous" checks to Calva Bivens; several "miscellaneous" checks to American Express; and checks designated as "Rent" and "Payroll." On March 30, 2007, Respondent's client trust account was overdrawn by $747.41
Pursuant to the Administrator's motion, Count III was dismissed prior to Respondent's hearing.
Respondent employed disbarred attorney Richard A. Hendershot as a legal research assistant from August 2005 until late March 2008. Respondent knew that Hendershot had been incarcerated but did not learn until late 2006 or early 2007 that Hendershot was a
disbarred attorney. Upon learning of the disbarment, Respondent relied on Hendershot's representations that, according to the ARDC and applicable case law, his employment did not violate the Rules of Professional Conduct. Respondent eventually terminated Hendershot's employment because Respondent became concerned that "he might not be on the right side of the line" by continuing to employ Hendershot, and because Hendershot had been behaving improperly in the office.
EVIDENCE IN MITIGATION
Respondent presented three Illinois attorneys, a Wisconsin attorney, and a former co-worker from National Louis University as character witnesses. The witnesses testified that Respondent has a reputation for being honest and trustworthy. Respondent testified that he participates in community activities related to helping people deal with the criminal justice system. He reports 10 to 25 hours of pro bono work per year, but actually does much more. He takes 15 to 20 cases per year where he does not expect to be paid even though he bills the client. Respondent estimated that he spends 300-450 hours per year on such cases. Respondent recognizes that he used poor judgment with respect to both Bivens and Hendershot. Respondent would presently not allow a client to use his client trust account to document the client's financial activities, nor would he employ someone he knew had been disbarred.
EVIDENCE IN AGGRAVATION
Respondent was disciplined on consent on September 20, 2006, for neglecting an employment discrimination case and a criminal appeal. In re Ward, No. M.R. 20953 (Sept. 20, 2006). He was suspended for six months with the suspension stayed after the first thirty days by a one-year term of probation. The conditions of Respondent's probation included the completion of a law office management program and a course in legal ethics.
Respondent argues that the Hearing Board erred when it found that he committed the misconduct charged in Counts I and II of the Complaint. The Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. In re Timpone, 208 Ill. 2d 371, 380, 804 N.E.2d 560 (2004). We defer to the Hearing Board's findings of fact (Timpone, 208 Ill. 2d at 380, 804 N.E.2d 560) but review issues of law de novo (In re Discipio, 163 Ill. 2d 515, 527, 645 N.E.2d 906 (1994)). Consequently, we will not disturb the Hearing Board's factual findings unless the respondent demonstrates that they are against the manifest weight of the evidence. Timpone, 208 Ill. 2d at 380, 804 N.E.2d 560. A finding is against the manifest weight of the evidence only when the opposite conclusion is clearly evident. In re Winthrop, 219 Ill. 2d 526, 542, 848 N.E.2d 961 (2006).
Respondent argues first that the Hearing Board misapplied the law pertaining to dishonest conduct. Respondent argues that there was no showing that he acted with the necessary intent to have violated Rule 8.4(a)(4), which prohibits conduct involving dishonesty, fraud, deceit, or misrepresentation. To prove a violation of Rule 8.4(a)(4), the Administrator must show that a respondent acted with intent to deceive and was not merely negligent. See In re Katz, 05 CH 28 (Review Board, Aug. 11, 2009) at 15, approved and confirmed, No. M.R. 23401 (Jan. 21, 2010). The supreme court has recently noted that "[i]n disciplinary decisions where this court has concluded that the respondent violated Rule 8.4(a)(4), there was some act or circumstances that showed the respondent's conduct was purposeful." Cutright, 233 Ill. 2d 474, 489, 910 N.E.2d 581 (2009). Whether the requisite intent is present is a question of fact. In re
Klytta & Klytta, 06 CH 60/61 (Review Board, Dec. 30, 2009), petition for leave to file exceptions allowed, No. M.R. 23674 (May 18, 2010).
The Hearing Board in this case found that the circumstances surrounding Respondent's conduct established that he acted with deliberate indifference to Bivens' fraudulent activities and, consequently, possessed fraudulent intent for the purposes of Rule 8.4(a)(4). The Hearing Board relied on another Hearing Board decision, In re Ravago, 06 CH 71 (Hearing Board, July 8, 2008), approved and confirmed, No. M.R 22600 (Nov. 18, 2008), which applied the deliberate indifference standard, also referred to as the "deliberate avoidance" or "ostrich" standard. Under this standard, a respondent's actions to deliberately avoid the truth may provide a basis for finding that he acted dishonestly. Ravago, 06 CH 71 at 18. Respondent argues that the deliberate avoidance standard does not comport with Cutright or, alternatively, his conduct did not constitute deliberate avoidance.
We decline to apply the deliberate avoidance standard. The supreme court has articulated the applicable standard, and it is not our role to expand the scope of Rule 8.4(a)(4). The Administrator asserts that the supreme court implicitly approved the deliberate avoidance standard in Ravago by approving and confirming the Hearing Board's Report and Recommendation. See Ravago, No. M.R. 22600 (Nov. 18, 2008). As we have stated in previous cases, we will not infer from a disciplinary order the court's rejection or acceptance of a legal theory that it has not previously addressed. See In re Klytta, 06 CH 60/61 (Hearing Board, Jan. 12, 2009) at 7-10, petition for leave to file exceptions allowed, No. M.R. 23674 (May 18, 2010). For these reasons, we will not consider whether the Administrator met his burden of proof under a deliberate avoidance standard.
Applying the standard articulated in Cutright, we determine that the Administrator failed to establish any purposeful dishonest conduct by Respondent that would constitute a violation of Rule 8.4(a)(4). The Hearing Board made no finding of purposeful conduct or actual knowledge on Respondent's part that could establish intent to deceive by clear and convincing evidence. Respondent's testimony that he had no knowledge of the true identities of the investors and relied on Bivens for information about the funds deposited in the client trust account was uncontradicted. Moreover, the Hearing Board made no finding that Respondent's testimony was not credible, and it is not our role to make such a finding (See In re Winthrop, 219 Ill. 2d 526, 848 N.E.2d 961 (2006) "The Hearing Board is afforded great deference because it is in the best position to observe the witnesses' demeanor and judge their credibility, resolve conflicting testimony, and render other fact-finding judgments.") There is no question that Respondent was careless and used poor judgment but such deficiencies do not, without more, rise to the level of dishonest conduct. See Cutright, 233 Ill. 2d 474, 489, 910 N.E.2d 581 (2009). Consequently, we recommend that the findings as to Counts I and II that Respondent violated Rule 8.4(a)(4) be reversed.
Respondent argues further that the Administrator did not prove conversion. He asserts that he properly relied on the information and instructions he received from Bivens.
Conversion occurs when an attorney commits any unauthorized act that deprives another of his property, either permanently or for an indefinite amount of time. In re Thebus, 108 Ill. 2d 255, 264, 483 N.E.2d 1258 (1985). Respondent was aware that the funds in question did not originate from Bivens. Thus, before disbursing the funds he was required to obtain authority from either the owners of the funds or someone authorized to act on their behalf. Respondent
does not contend and nothing in the record indicates that Respondent received any written or verbal authorization giving Bivens authority to disburse all deposits in any manner he chose, nor was there any evidence that the deposits were unrestricted loans or gifts to Bivens. Consequently, there was no basis for Respondent to believe that Bivens had unlimited authority over the funds, and Respondent was required to obtain authority from the owners of the funds before making disbursements.
Respondent's conduct at the beginning of his arrangement with Bivens, when he received two deposits purportedly from Wilkinson, shows that Respondent knew that the funds in question belonged to the depositors, not Bivens. On two occasions, Respondent confirmed with Wilkinson what disbursements Respondent was to make from the deposits and sent copies of the checks to Wilkinson's address. Respondent fails to explain why he did not take these steps with any subsequent deposits, other than to say that he did not think it was necessary to do so based on the assurances he received from Wilkinson and from a brief conversation with Michael Gaines, who confirmed that he provided funds to help Bivens. We fail to see, and Respondent fails to explain, how his vague conversation with Gaines and his conversations with Wilkinson about two specific deposits would provide Bivens with authority to direct the disbursement of all subsequent deposits, particularly those from persons other than Wilkinson and Gaines. The simple fact is that the conversations upon which Respondent relies could not and did not provide Bivens with the authority over the disbursal of all of the deposited funds.
Respondent rhetorically wonders how one "would have obtained authorization from persons, of whose identity he was not aware, to disburse funds that he did not know were theirs." The record shows, however, that except for the aforementioned conversations about two deposits attributed to Wilkinson, Respondent made no effort to obtain authorization for the
disbursement of funds from any subsequent deposit, whether from Wilkinson or another depositor who was known to Respondent. Respondent admittedly made no effort to contact Ismael Diaz after his $100,000 deposit, nor did he make any inquiry about subsequent deposits attributed to Wilkinson, which totaled $25,000. Thus, he cannot blame his conduct on a lack of accurate information.
Arguments similar to Respondent's have failed in In re Lasica, 07 CH 125 (Hearing Board, Dec. 31, 2008), petition for leave to file exceptions denied, No. M.R. 23734 (May 18, 2010), and In re Lisco, 03 CH 48 (Review Board, April 18, 2007), petition for leave to file exceptions allowed, No. M.R 21687 (Sept. 18, 2007). Lasica converted $78,000 from a client who was incarcerated. Lasica and the client's father claimed that the father authorized Lasica to borrow the money. The Hearing Board found that the father had no documented authority to make a loan on his son's behalf. Thus, the Hearing Board found that Lasica committed conversion. Lasica, 07 CH 125, Hearing Board Report and Recommendation at 14-16.
Lisco agreed to hold funds that a jury awarded to one of his clients, Adolph Litviak. Lisco knew that, pursuant to Litviak's divorce decree, his ex-wife, who was also a client of Lisco's, was entitled to a portion of the funds. Nonetheless, Lisco disbursed to Litviak funds to which his ex-wife was entitled. Lisco contended that he was following Litviak's directions. The Review Board noted that "[t]he supreme court has made it clear that an attorney cannot hide behind the excuse that he was only following his client's instructions when he engaged in misconduct." Lisco, Review Board Report and Recommendation at 10. Similarly, Respondent should not be allowed to blame his misconduct entirely on Bivens when Respondent had no reasonable basis for believing that Bivens had unlimited authority over the funds.
Furthermore, regardless of the propriety of Respondent's reliance on Bivens, Respondent's client trust account was overdrawn on two occasions. Because the balance of the account was less than the amount Respondent was supposed to be holding for clients or third parties, he committed conversion. See In re Demuth, 126 Ill. 2d 1, 12, 533 N.E.2d 867 (1988).
SUPREME COURT RULE 770
Next, we address Respondent's argument that the Administrator did not prove that his conduct violated Supreme Court Rule 770. This argument lacks merit. Although there was no finding that Respondent intentionally helped Bivens commit fraud, Respondent's lack of attention to his bookkeeping obligations and resulting failure to safeguard third party funds entrusted to him brings the legal profession into disrepute. See In re Klytta & Klytta, 06 CH 60/61 (Hearing Board, Jan. 12, 2009) at 12, petition for leave to file exceptions allowed, No. M.R. 23674 (May 18, 2010).
ASSISTING A DISBARRED ATTORNEY IN THE UNAUTHORIZED PRACTICE OF LAW
Neither party challenges the findings as to Count IV that Respondent assisted a disbarred attorney in the unauthorized practice of law, and engaged in conduct that is prejudicial to the administration of justice and tends to bring the legal profession into disrepute.
Turning to the recommendation of discipline, both parties challenge the Hearing Board's recommendation of a three-year suspension until further order of the court. Respondent argues that a three to five-month suspension is appropriate if the Review Board accepts his arguments for reversing the findings of misconduct as to counts I and II, or a one-year suspension is appropriate if the Hearing Board's findings are affirmed. The Administrator contends that Respondent should be disbarred.
The Hearing Board's sanction recommendation is advisory. In re Ingersoll, 186 Ill. 2d 163,178, 710 N.E.2d 390 (1999). The Review Board bases its recommendation on the particular facts and circumstances of this case, including the nature of the misconduct and the aggravating and mitigating factors, while also striving for predictability and consistency in the recommendation of sanctions. See Cutright, 233 Ill. 2d at 491, 910 N.E.2d 581. The purpose of a disciplinary sanction is not to punish an attorney who has committed misconduct, but to protect the public, maintain the integrity of the legal profession, and safeguard the administration of justice from reproach. In re Spak, 188 Ill. 2d 53, 67-68, 719 N.E.2d 747 (1999).
Absent findings of dishonest conduct or knowing participation in Bivens' scheme, disbarment is not appropriate. As the Administrator acknowledges, disbarment has generally been reserved for cases in which an attorney orchestrates or knowingly participates in the fraudulent scheme. See In re Minneman, 98 CH 38 (Review Board, Nov. 29, 2000), petition for leave to file exceptions denied, No. M.R. 17352 (March 22, 2001); In re Hopkinson, 07 CH 132, petition to impose discipline on consent allowed, No. M.R. 22445 (Sept. 16, 2008). This is not the case here. Nonetheless, the supreme court has imposed lengthy suspensions on attorneys who have converted client or third party funds. For the following reasons, we recommend that Respondent receive a three-year suspension, with the last year of the suspension stayed by a one-year period of probation.
Respondent's misconduct was serious. While this case is somewhat unusual in that Respondent did not convert funds for his own use, we cannot overlook the fact that he converted $233,000 and committed the additional misconduct of employing a disbarred attorney for approximately two and one-half years. Respondent exhibited extremely poor judgment and damaged the integrity of the legal profession.
We also consider the evidence in aggravation. Contrary to Respondent's assertion, his conduct did cause financial harm. While the record is silent as to whether the depositors' funds were repaid, it is undisputed that those funds were completely depleted when Respondent's client trust account was overdrawn on two occasions. Thus, financial harm is a proper factor for this Board to consider in aggravation.
Respondent's prior misconduct is a significant aggravating factor (In re Blank, 145 Ill. 2d 534, 554, 585 N.E.2d 105 (1991)), despite his argument to the contrary. Although the prior misconduct was different in nature—neglect of two cases—it was very close in time to the misconduct at issue here and contributes to our impression that Respondent does not fully understand or acknowledge his responsibilities as an attorney or his ethical obligations. The order imposing discipline in Respondent's first disciplinary proceeding was filed on September 20, 2006. It provided that Respondent's thirty-day suspension would begin on October 11, 2006. Thereafter, Respondent was on probation for one year. The conversions at issue in Counts I and II took place a few months before and a few months after Respondent's period of suspension. Respondent's employment of Hendershot began before Respondent's earlier discipline was imposed, continued while Respondent was on probation, and did not end until approximately March 25, 2008, several months after Respondent's probation ended and Respondent had completed a course in legal ethics.
An attorney who has been disciplined is expected to have a "heightened awareness" of the need to comply with the Rules of Professional Conduct. In re Storment, 203 Ill. 2d 378, 401, 786 N.E.2d 963 (2002). It is apparent from the findings of misconduct in this proceeding that Respondent's prior discipline did not have that effect on him. Moreover, the circumstances of Respondent's prior discipline and this proceeding demonstrate a pattern of
inattention and carelessness that Respondent needs to address in order to prevent any future misconduct.
In mitigation, we consider Respondent's cooperation with the Administrator, his evidence of good character and pro bono work, and that he neither acted with a dishonest motive nor converted funds for his own personal use.
Nonetheless, the supreme court looks harshly upon conversion of funds, even in the absence of a dishonest motive. The following cases are instructive.
The respondent in In re Lewis, 118 Ill. 2d 357, 515 N.E.2d 96 (1987), engaged in a pattern of commingling and converting over $100,000 in client funds over a period of four to five years. Despite the absence of a dishonest motive and substantial evidence in mitigation, the court suspended Lewis for three years. In so doing, the court noted that it has "repeatedly stressed the importance of an attorney trust account and the gravity of converting client funds, even if done without an invidious motive." The court further stated that the violation of an attorney's obligation to safeguard funds held in his client trust account "is disreputable not only for the attorney involved, but for the entire legal profession." Lewis, 118 Ill. 2d at 363, 515 N.E.2d 96.
Similarly, the respondent in In re Rooney, 08 CH 46, petition to impose discipline on consent allowed, No. M.R. 23069 (May 18, 2009) was suspended for three years for converting approximately $49,000. Rooney had previously been censured following a conviction for failure to file tax returns.
In In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300 (1993), the respondent was suspended for three years for converting over $70,000 in client funds. Although Timpone did
not have a dishonest motive when he converted the funds, he did engage in other deceitful behavior.
We must also consider Respondent's additional misconduct of employing a disbarred attorney. Similar misconduct has warranted a short period of suspension. In re Banks, 07 CH 78 (Hearing Board, Aug. 11, 2009), approved and confirmed, No. M.R. 23379 (Nov. 17, 2009) (ninety-day suspension for respondent who employed a disbarred attorney as a paralegal for two years). The length of time that the relationship between the respondent and the non-attorney continued is a factor in determining discipline. Banks, 07 CH 78, Hearing Board at 23. Banks employed a disbarred attorney for approximately two years, similar to the length of time that Respondent employed Hendershot. The Hearing Board in Banks favorably noted that Banks terminated the non-attorney's employment immediately, once he learned that it was improper. Respondent cannot be said to have acted in a similarly prompt fashion, and his failure to recognize the impropriety of Hendershot's employment causes us concern. However, Respondent now recognizes his error in judgment and testified that he will not hire a disbarred attorney in the future.
Considering all of the circumstances of this case, we do not believe that Respondent's misconduct was sufficiently egregious to warrant a suspension of three years and until further order of the court. The misconduct appears to have resulted primarily from misplaced trust in Bivens and Hendershot, coupled with Respondent's lack of attention to proper bookkeeping practices. In our view, a lengthy suspension stayed in part by probation adequately addresses these issues. We recognize that Respondent previously completed a term of probation that required him to complete a law office management program. The focus of the prior probation was not handling funds, however, but correcting issues that had led Respondent to
neglect cases. The conditions of probation set forth below will benefit Respondent's practice and protect the public by ensuring that Respondent properly handles funds placed in his client trust account.
We recommend that the Hearing Board's findings that Respondent violated Rule 8.4(a)(4) as charged in Counts I and II be reversed and that the remaining findings of fact and misconduct be affirmed. We recommend that the license of Respondent, Anderson J. Ward, be suspended for three years, with the last year of suspension stayed by one year of probation, subject to the following conditions:
Respondent shall attend meetings scheduled by the Commission probation officer as requested by the Administrator. Respondent shall submit quarterly written reports to the Administrator concerning the status of his practice of law and the nature and extent of his compliance with the conditions of probation;
Respondent shall notify the Administrator within fourteen (14) days of any change of address;
Respondent shall comply with the Illinois Rules of Professional Conduct and shall timely cooperate with the Administrator in providing information regarding any investigation relating to his conduct;
Respondent shall reimburse the Commission for the costs of this proceeding as defined in Supreme Court Rule 773 and shall reimburse the Commission for any further costs incurred during the period of probation;
At least thirty (30) days prior to the termination of the period of probation, respondent shall reimburse the Disciplinary Fund for any Client Protection payments arising from his conduct;
Respondent shall, within the first thirty (30) days of probation, enroll in a law office management program approved by the Administrator and notify the Administrator of the name of the attorney with whom he is assigned to work. Respondent shall successfully complete the law office management program at least thirty days prior to the end of the probation term;
Respondent shall establish and utilize a system for the handling of funds belonging to clients and third parties and the maintenance of records that
conforms to the requirements of Rule 1.15 of the Illinois Rules of Professional Conduct and instructions provided to respondents by the Administrator, including:
Trust Account Procedures;
Basic accounting records that must be maintained daily and accurately;
Account Check Register - List sequentially all trust account deposits and trust account checks and maintain a current and accurate daily balance on the trust account;
Account Receipts Journal - List chronologically all deposits into the trust account. Each deposit will list the date of the deposit, the source of each deposit, the client matter, the deposit number and the amount of the deposit. Maintain a copy of each item deposited;
Account Disbursement Journal - List chronologically all trust account disbursements. Identify each disbursement with the date of the disbursement check, the trust account check number, the payee, the purpose of the disbursement, the client matter and the amount of the disbursement check; and
Client Ledger Journal - List chronologically for each client matter all receipts, disbursements and remaining balances. Prepare a separate page for each client matter and list chronologically all receipts and disbursements and remaining balances for each client matter.
Source documents, which must be preserved for seven (7) years:
Cancelled checks - All trust account checks must have a named payee (no checks written to "cash") and the memo portion of the check must contain a reference to a client matter;
Time and billing records;
Copies of records from client files that are necessary for a full understanding of the lawyer's financial transactions with the client: e.g., retainer and engagement agreements; settlement statements to clients showing the disbursement of the settlement proceeds; bills sent to clients and records of payments to other lawyers or non-employees for services rendered;
There must be a running balance maintained for all ledgers and account books. The balances in the client ledger journal must be reconciled each month with the balances in the trust receipts and disbursement journals, the account checkbook register and the bank statements. Records of each reconciliation must be maintained for seven (7) years.
Respondent shall authorize the attorney assigned to work with him in the law office management program to:
disclose to the Administrator on a quarterly basis, by way of signed reports, information pertaining to the nature of Respondent's compliance with the law office management program and the above describe conditions;
promptly report to the Administrator Respondent's failure to comply with any part of the above described conditions; and,
respond to any inquiries by the Administrator regarding Respondent's compliance with the above-described conditions.
Probation shall be revoked if Respondent is found to have violated any term of probation, and the remaining twelve (12)-month period of suspension shall commence from the date of the determination that any term of probation has been violated.
Date Entered: 12 May 2011
E. Roberts, Jr.
1 It is unclear from the record whether the person who sent the faxes and spoke to Respondent was actually Theodore Wilkinson. For the sake of simplicity, we will identify this person throughout as "Wilkinson," with the understanding that we are referring to the person who purported to be Wilkinson.
In re Ward, No. 09 CH 37
I join in the well-considered majority opinion with regard to the charged 8.4(a)(4) violations contained in Counts I and II. I write separately regarding the charge of "conversion," which the Administrator included in each of Counts I and II, as well.
The majority defines "conversion" as "any unauthorized act that deprives another of his property, either permanently or for an indefinite amount of time." citing In re Thebus, 108 Ill. 2d 255, 483 N.E.2d 1258 (1985).1 There are two principal problems with defining "conversion" - for attorney disciplinary purposes - in the manner forwarded by the majority here, in my opinion. The first, and most basic problem, is one of notice. If, in fact, "any unauthorized act that deprives another of his property . . ." is properly grounds for attorney discipline, there need be some reference to that standard in the Rules of Professional Conduct somewhere.2
The lack of notice raises serious Constitutional due process concerns. (See e.g. ." U.S. v. Farinella, 558 F.3d 695, 698 (7th Cir. 2009) ("It is a denial of due process of law to convict a person of a crime because he violated some bureaucrat's secret understanding of the law. The idea of secret laws is repugnant. People cannot comply with laws the existence of which is concealed.") (quoting Torres v. INS, 144 F.3d 472, 474 (7th Cir.1998)); (citing George Campbell Painting Corp. v. Chao, 463 F.Supp.2d 184, 190-91 (D.Conn.2006); Oppenheimer Mendez v. Acevedo, 388 F.Supp. 326, 335 (D.Puerto Rico 1974)). Those concerns would be completely ameliorated if the subject misconduct was simply charged under the existing rules.
The second - and more far-reaching - problem with defining "conversion" "any unauthorized act that deprives another of his property, either permanently or for an indefinite amount of time" - is without material support in the law. In re Thebus, concerned an attorney
charged with "conversion" for having failed to pay withholding taxes to the IRS for his employees. The Supreme Court, applying former rule 9-102, found that no disciplinary violation could be found based on the failure to pay the taxes, but censured Thebus for having failed to file a timely return.
In arriving at its conclusion, the Supreme Court distinguished between the disciplinary charge of "conversion" and the common law tort of the same name, remarking that though it had considered attorney disciplinary cases involving the charge of "conversion," that the meaning of the term "conversion" in a disciplinary context had never been discussed. The Court then examined the development to the common law tort for "guidance as to the essential elements and nature of conversion." In re Thebus, supra, 108 Ill. 2d at 264.
The Court went on to summarize the history of the tort of conversion, citing to Prosser's commentary, the Restatement of Torts and ninety years of Illinois case law. The quote - "any unauthorized act that deprives another of his property, either permanently or for an indefinite amount of time" - is taken from the Illinois Supreme Court's 1895 decision in Union Stock Yard & Transit Co. v. Mallory, Son & Zimmerman Co., 157 Ill. 554 (1895), and appears in the middle of the summary.
The Supreme Court's analysis concludes with a limiting note that I view as significant:
These general rules as to the elements of the tort of conversion may not fit neatly into the mold of the special relationship between an attorney and his client and . . . may be altered by the requirements of the Code of Professional Responsibility.
In re Thebus, supra, 108 Ill. 2d at 264.
The Code (now Rules) of Professional Responsibility has "altered  the requirements" - and substantially so. Rule 1.15 is so dense it merits its own handbook.
(CLIENT TRUST ACCOUNT HANDBOOK, A Guide to Creating and Maintaining Client Trust Accounts (Revised December 2009 and Updated with Rule 1.15 of the 2010 Illinois Rules of Professional Conduct (eff. Jan. 1, 2010))). Given the breadth and detail of the rule, it is my view that misconduct implicating client trust accounts should be prosecuted under that rule - instead of the short-hand of "conversion."
I am concurring here, rather than dissenting, because there would seem to be little question that the Respondent violated the rule in this case.
Date Entered: 12 May 2011
Daniel P. Duffy
1 The same definition of "conversion" is included in the ARDC publication CLIENT TRUST ACCOUNT HANDBOOK, A Guide to Creating and Maintaining Client Trust Accounts (Revised December 2009 and Updated with Rule 1.15 of the 2010 Illinois Rules of Professional Conduct (eff. Jan. 1, 2010)).
2 The word "conversion," itself, appears nowhere in the Rules of Professional Conduct; however, "conversion" has become the accepted short-hand term used to describe misconduct proscribed by Rule 1.15, entitled "Safekeeping Property." If an attorney's trust account has a negative balance - despite the fact that client funds should still be present in the account - it is said that the attorney has improperly "converted" the funds in the trust account. See e.g. In re Ushijima, 119 Ill. 2d 51, 57, 518 N.E.2d 73, 115 Ill. Dec. 548 (1987); In re Young, 111 Ill. 2d 98, 103, 488 N.E.2d 1014, 94 Ill. Dec. 767 (1986). The Administrator and the Supreme Court have treated this type of "conversion" as one involving strict liability. Id.