Filed May 27, 2011
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
ELLEN FRANCES LANG,
Commission No. 2010PR00120
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on February 24, 2011, at the offices of the Attorney Registration and Disciplinary Commission ("ARDC") in Chicago, Illinois before a Hearing Panel consisting of Henry T. Kelly, Chair, William M. Dickson and Albert C. Baldermann. Alicia F. Duncan represented the Administrator of the ARDC. Respondent did not appear at hearing and was not represented by counsel.
THE COMPLAINT AND PRE-HEARING RECORD
On August 25, 2010 the Administrator filed a two-count Complaint against Respondent. The Complaint alleged that Respondent breached her fiduciary duty, engaged in fraudulent conduct, and failed to respond to the Administrator's requests for information.
On September 17, 2010 Respondent was personally served with copies of the Complaint, notice of Complaint, order assigning Hearing Panel Chair, Memorandum regarding Pre-hearing Conference Procedures, and the Supreme Court Rules. Respondent did not file an answer or otherwise respond to the Complaint.
On December 10, 2010, the Hearing Panel Chair entered an order deeming the allegations of the Complaint admitted and barring Respondent from presenting any witnesses at hearing.
The Administrator presented one witness and Exhibits 1-20 which were admitted into evidence. The evidence, along with the admitted allegations of the Complaint, established the following facts.
In or prior to 2006, Lenore S. Lang ("Lenore") allowed Respondent to reside in a home Lenore owned at 1530 Tower Road in Winnetka under the terms that Respondent would pay rent and other expenses normally paid by tenants and Lenore would pay expenses normally paid by landlords. At the time Respondent resided at the Winnetka house, Lenore was residing in La Jolla, California.
In or about 2006, Respondent told Lenore she was suffering from cancer and needed a place to live near her cancer treatment center in Evanston. Respondent's statements to Lenore were false and Respondent knew they were false because she never had cancer. Respondent's statements were made for the purpose of inducing Lenore to purchase a house in Evanston to be used for Respondent's benefit. (Adm. Ex. 9).
In or about 2006, in reliance upon Respondent's statements, Lenore decided to sell the Winnetka house and use some of the proceeds from the sale to purchase a smaller house in Evanston where she would allow Respondent to reside as a tenant under terms similar to that for the Winnetka house. Respondent acted as Lenore's attorney for the sale of the Winnetka house and the purchase of the Evanston house.
By reason of the trust and confidence that Lenore placed in Respondent pursuant to the attorney-client relationship, Respondent stood in a position of a fiduciary to Lenore. As such, Respondent owed Lenore the fiduciary duties attendant to the attorney-client relationship, including the duty to perform the requested services with the highest degree of honesty, fidelity, and good faith, a duty of undivided loyalty, a duty to avoid placing herself in a position where her interests would conflict with the interests of her client, and a duty of care, including but not limited to a duty to ascertain if the actions she was taking on behalf of Lenore accurately reflected Lenore's desires and protected Lenore's legal interests.
In late 2006, Respondent negotiated the purchase of property located at 2228 Grant Street in Evanston for $532,000. Between October 20, 2006, and November 24, 2006, at Respondent's request, Lenore gave Respondent $118,000 for what Respondent represented to be the amount of the earnest money and cash balance required to purchase the Evanston house. Of the $118,000, Respondent used $109,679.14 to pay the equity portion of the purchase price and closing costs for the Evanston house. (Adm. Ex. 4).
In order to close on the Evanston house, Lenore obtained a mortgage for bridge financing from ING Direct in the principal amount of $425,600. The ING Mortgage was secured by the Evanston house and was paid off at the time of the closing of the Winnetka house, which was sold on or about July 18, 2007. The ING Mortgage was in the name of Lenore as Lenore was the owner of the Winnetka house and was to be the sole owner of the Evanston house. All of the funds for the purchase of the Evanston house were furnished by Lenore and title to the Evanston house was to be in the name of Lenore only. (Adm. Exs. 2-5).
On or about November 29, 2006, the date of the closing on the purchase of the Evanston house, Respondent directed the sellers of the Evanston house to furnish a Warranty Deed
conveying the property to Respondent, not Lenore. Respondent did not have Lenore's authority to direct the sellers of the Evanston house to furnish a Warranty Deed conveying the property to Respondent rather than to Lenore. On December 14, 2006, Respondent caused the Warranty Deed to be recorded as document number 0634802136. (Adm. Ex. 6).
On or about October 24, 2007, Respondent executed a mortgage in the amount of $150,000, as mortgagor, in favor of Charter One, as mortgagee, and encumbered the Evanston house with the mortgage which was recorded against the Evanston house as document number 0731308369 on November 9, 2007. The execution of the mortgage was fraudulent, and Respondent knew it was fraudulent, because she knew she did not have Lenore's authority to execute a mortgage encumbering the Evanston house. Respondent converted the $150,000 from the Charter One Mortgage to her own use and paid no portion of those proceeds to Lenore. Records from Charter One indicate that on October 30, 2007 Respondent received a check from Charter One for $42,654, which amount represented a portion of the loan proceeds, and on that same date other checks were written directly to credit card companies to pay off Respondent's credit card debt. (Adm. Exs. 7, 8, 10).
On June 29, 2009, Respondent sent an e-mail to Auerbach in
which she informed Lenore for the first time that she had placed title to the
Evanston Property in her own name and placed a $150,000 mortgage on the Evanston
house. The e-mail noted that "the mortgage consolidated very high interest
credit card debt and my mother was aware of it at the time."
In the e-mail to Auerbach, Respondent offered to "do a quit claim deed now" conveying the Evanston house to Lenore. (Adm. Ex. 10).
Respondent did not take any action to convey the Evanston house to Lenore until after July 15, 2009, the date Lenore filed a complaint to quiet title and for other relief in the Circuit
Court of Cook County, Chancery Division, entitled Lenore S. Lang v. Ellen F. Lang, et. al., 09 CH 23534. (Adm. Exs. 11, 20).
David E. Muschler
David E. Muschler, an Illinois attorney concentrating his practice in the areas of real estate, construction, and general litigation, testified he was contacted in April 2009 by Lenore's stepchildren, who were concerned that Lenore had been defrauded by Respondent. Muschler learned that Respondent had solicited funds from Lenore by falsely representing that she was suffering from cancer, and had taken title to a house purchased by Lenore and then secured a mortgage on the house. Lenore's stepchildren were also concerned about Respondent's mental state and the possibility that she might cause damage to the house, or sell it and keep the proceeds. (Tr. 13-19).
Muschler agreed to represent Lenore for a fee of $250 per hour. On July 15, 2009 he filed a "Complaint to Quiet Title, for Ejectment and Other Relief" on behalf of Lenore and against Respondent in the Circuit Court of Cook County to ensure that Respondent would not sell the house and keep the proceeds. The complaint alleged that Lenore was the legal owner of the property and was entitled to possession, and that she had been defrauded by Respondent. Lenore was seeking to prevent any sale of the property by Respondent, and to recover the monies she had expended on Respondent in connection with Respondent's false claim of cancer. Muschler stated that Lenore was elderly at the time of Respondent's actions and representations, and she died on July 31, 2009. Thereafter Muschler represented Lenore's estate through the executor. (Tr. 15, 20-25, 36; Adm. Exs. 11, 20).
Muschler testified Respondent was served with a copy of the Circuit Court complaint. She did not file an answer, but she did convey the property to the estate by quitclaim deed. The
estate then sold the property for $370,000, and used a portion of the proceeds to pay off the $150,000 mortgage taken out by Respondent. On July 19, 2010 Muschler obtained a default judgment against Respondent to cover the amount of the mortgage. Respondent has not paid any portion of the judgment and Muschler is currently attempting to collect on the judgment. The original purchase price of the home in 2006 was $532,000. (Tr. 26-31; Adm. Ex. 11).
With respect to the funds expended by Lenore for Respondent's false claims of cancer, Muschler stated the executor and stepchildren decided not to pursue that claim. Expending sums to recover those funds would not be worthwhile since Respondent now lives in Denver, Colorado and is not employed. (Tr. 33-34).
Muschler testified to the financial harm caused by Respondent's taking advantage of Lenore. As detailed in the Circuit Court complaint, she improperly received approximately $800,000 from Lenore, which included taking title to the Evanston property, taking out a $150,000 mortgage on the property, and obtaining $275,000 from Lenore for alleged cancer treatments. When the house was sold for $370,000, the estate had to repay the mortgage. Muschler has been paid approximately $25,000 in attorney's fees for representing Lenore and her estate. (Tr. 34-35).
Muschler felt he had an obligation to report Respondent's actions to the ARDC because she took advantage of a client in the purchase of property by placing the property in her own name and then obtaining a mortgage on the property and using the proceeds on herself. (Tr. 37).
On July 17, 2009, the Administrator received a letter from attorney David E. Muschler regarding Respondent's conduct as outlined in Count I. The Administrator docketed an inquiry into Respondent's alleged conduct as Investigation No. 09 CI 3068. On July 27, 2009 and
August 18, 2009, the Administrator sent letters to Respondent at her registered address advising her of the investigation and requesting her response to Muschler's allegations. Respondent received the Administrator's correspondence shortly after the dates on which they were sent. (Adm. Exs. 15, 16).
On August 24, 2009, Respondent sent a letter to the Administrator providing a new address in Denver, Colorado and requesting a 14-day extension to provide a response. At no time after August 24, 2009 did Respondent respond to the Administrator's letters dated July 27, 2009 and August 18, 2009. (Adm. Ex. 17).
On June 9, 2010, the Administrator issued a subpoena duces tecum to Respondent requiring her appearance on June 29, 2010, at 10:00 a.m., at the Chicago offices of the ARDC in relation to Investigation No. 09 CI 3068. On June 14, 2010, Respondent was served with the subpoena duces tecum via certified mail at her address in Denver, Colorado. Respondent did not appear before the Administrator and give sworn testimony as required by the subpoena duces tecum served upon her on June 14, 2010 in relation to Investigation No. 09 CI 3068. As of August 23, 2010, the date the Inquiry Board of the Commission voted this complaint against Respondent, Respondent had not responded in writing or appeared pursuant to the subpoena. Respondent's appearance was never waived or excused. (Adm. Ex. 18).
An affidavit signed by ARDC registrar Thomas W. Peters on February 8, 2011 states that Respondent was admitted to practice law in Illinois on July 17, 1990. On June 7, 2007 she changed her registration status to inactive, on March 8, 2010 her name was removed from the master roll of attorneys for failure to register with the Commission, and on June 10, 2010 she changed her registration status to retired. (Adm. Ex. 19).
In e-mails sent by Respondent to Carl Auerbach in 2006, she informed Auerbach that she had undergone surgery to remove tumors and would be having additional surgery. She also provided him with a breakdown of the costs of the surgery. (Adm. Ex. 12).
The Administrator reported that there are no prior orders or opinions imposing discipline upon Respondent.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In attorney disciplinary proceedings the Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. In re Ingersoll, 186 Ill. 2d 163, 710 N.E.2d 390 (1999). Clear and convincing evidence constitutes a high level of certainty, which is greater than a preponderance of the evidence but less than proof beyond a reasonable doubt. People v. Williams, 143 Ill. 2d 477, 577 N.E.2d 762 (1991).
The allegations of the Complaint were deemed admitted, including the allegation that Respondent first informed Lenore in June 2009 that she had taken title to the Evanston property and had encumbered the property with a $150,000 mortgage. We make one note regarding the evidence we received on this issue. In Respondent's June 2009 e-mail to Auerbach she admitted placing the Evanston property in her own name and mortgaging the property to secure a $150,000 loan, and further stated the mortgage consolidated her high interest credit card debt "and my mother was aware of it at the time." We find the latter quoted statement was specifically disproved by the admitted allegations of the complaint, as well as by the allegations of Lenore's verified Complaint to Quiet Title in which Lenore stated she was not aware until June 2009 that Respondent placed title to the property in her own name or that Respondent
placed a $150,000 mortgage on the property, and she never authorized Respondent to place title to the property in Respondent's name or to encumber the property with a mortgage.
Having considered the Complaint, Respondent's failure to appear or participate in these proceedings in any manner, the order of December 10, 2010 by which the allegations of the Complaint were deemed admitted, and the evidence presented by the Administrator, we find by clear and convincing evidence that Respondent engaged in the acts alleged and committed the following misconduct as charged in the complaint:
breach of fiduciary duty (Count I);
conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (1990) (Count I);
failing to respond to a lawful demand for information from a disciplinary authority, in violation of Rule 8.1(a)(2) of the Illinois Rules of Professional Conduct (2009) (Count II);
knowingly failing to respond to a lawful demand for information from a disciplinary authority, in violation of Rule 8.1(b) of the Illinois Rules of Professional Conduct (2010) (Count II);
conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(a)(5) of the Illinois Rules of Professional Conduct (2009) (Count II);
conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(d) of the Illinois Rules of Professional Conduct (2010) (Count II); 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. (Counts I and II).
Having found that Respondent engaged in wrongdoing, we must determine the appropriate discipline warranted by the misconduct. In determining the proper sanction, we consider the purposes of the disciplinary process. The goal of these proceedings is not to punish but rather to safeguard the public, maintain the integrity of the profession and protect the
administration of justice from reproach. In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300 (1993). Another factor for consideration is the deterrent value of attorney discipline and the need to impress upon others the repercussions of errors such as those committed by Respondent in the present case. In re Discipio, 163 Ill. 2d 515, 645 N.E.2d 906 (1994).
We also take into account those circumstances which may mitigate and/or aggravate the misconduct. In re Witt, 145 Ill. 2d 380, 583 N.E.2d 526 (1991). By failing to appear at the hearing, Respondent forfeited her opportunity to present any evidence of mitigating circumstances. We do note, however, that Respondent has not been previously disciplined.
In aggravation, we consider the fact that Respondent's acts were intentionally deceptive. See In re Rotman, 136 Ill. 2d 401, 556 N.E.2d 243 (1990) ("the presence or absence of a dishonest motive is an appropriate factor to consider in determining the nature of the sanction to be imposed"). In addition, in taking title to the Evanston property and using the proceeds of the mortgage loan, Respondent was acting for her own self benefit. See In re Rinella, 175 Ill. 2d 504, 677 N.E.2d 909 (1997) (in addressing the propriety of the sanction, the Court took note of the attorney's selfish motive).
We also consider the harm or risk of harm caused by Respondent's misconduct. See In re Saladino, 71 Ill. 2d 263, 375 N.E.2d 102 (1978) (discipline should be "closely linked to the harm caused or the unreasonable risk created by the [attorney's] lack of care). In this case we find Respondent's actions relating to the Evanston property caused financial harm to Lenore's estate. Although Respondent returned the Evanston property to her mother's estate by quitclaim deed, the estate was not made whole because the net worth of the property was reduced due to the $150,000 mortgage Respondent placed on the property.
Finally, Respondent's failure to attend and participate in these proceedings is an aggravating factor that deserves significant weight. By her absence Respondent has demonstrated a lack of concern for her own professional fate and, more important, her disrespect for the disciplinary process. See In re Brody, 65 Ill. 2d 152, 357 N.E.2d 498 (1976) (an attorney's failure to cooperate in his or her own disciplinary proceeding demonstrates a want of professional responsibility and is a factor to be considered in aggravation for the purpose of determining an appropriate sanction). In addition, Respondent's failure to participate in these proceedings calls into question her ability to represent clients in a responsible and conscientious manner. See In re Coplien, 07 CH 45, M.R. 22301 (May 19, 2008).
We turn now to a determination of discipline. In suggesting that Respondent's acts warrant disbarment, the Administrator cited to In re Paden, 04 CH 116, M.R. 22089 (May 19, 2008). In that case the attorney, while representing a client in the sale of a building that was part of an estate, forged a power of attorney, informed the client the building had sold for an amount substantially less than the actual selling price, and failed to distribute all of the proceeds of the sale to the estate. We agree that Respondent's acts are comparable to those in Paden. Respondent directed the execution of a false warranty deed, concealed the fact that she held title to the property, and then mortgaged the property and used the loan proceeds for her own benefit. Both Paden and Respondent engaged in fraudulent conduct and breached their fiduciary duties to their clients. Further, Paden, like Respondent, did not participate in her hearing although, unlike Respondent, she did participate in pre-trial matters and proceedings before the Review Board. We conclude that the disbarment in Paden compels a similar sanction in this case.
Although Respondent was not charged with conversion in this case, her unauthorized and intentional actions did result in an eventual reduction of the value of her mother's estate. We
therefore derive additional guidance from cases involving attorneys who converted funds from estates. See Rotman, 136 Ill. 2d at 423 (attorney disbarred for converting $15,000 from estate of incompetent client to pay his own debts); In re Lasica, 07 CH 125, M.R. 23734 (May 18, 2010) (disbarment for converting $78,000 from proceeds of sale of estate property).
Respondent's actions were reprehensible. While purporting to represent her mother's interests, she was actually scheming to benefit herself. She betrayed close family members who trusted her, and caused them to suffer financial harm. When contacted by the Administrator regarding her actions, she failed to explain her conduct or respond to requests for information.
After considering Respondent's acts of misconduct, the serious aggravating factors, relevant case law, and the fact that Respondent has not demonstrated her willingness to conform to the professional rules of conduct, we believe disbarment is warranted and is necessary to protect the public and maintain the integrity of the legal profession. Accordingly, we recommend that Respondent Ellen Frances Lang be disbarred.
Date Entered: May 27, 2011
|Henry T. Kelly, Chair, with William M. Dickson and Albert C. Baldermann, Hearing Panel Members.|