BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

FREDERICK JOSEPH OTTO,

Attorney-Respondent,

No. 2126753.

Commission No. 2017PR00001

JOINT STIPULATION OF FACTS
AND RECOMMENDATION FOR REPRIMAND AGAINST RESPONDENT

Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission, by his attorney, Christopher Heredia, and Respondent, Frederick Joseph Otto, by his attorney, Samuel J. Manella, stipulate that the following facts are true and that a reprimand by the Hearing Board is warranted:

I.    JOINT STIPULATION OF FACTS

A.    Conflict of Interest in relation to Helen Stipanovic Estate

1. At the time of Respondent's misconduct, Respondent was the grandfather of R.O. ("R.O."), a minor.

2. At all times described below, Respondent was the father of Jonathan Otto ("Jonathan").

3. Beginning in 1986, Respondent had advised on, drafted, and executed personal estate planning instruments, including multiple wills, powers of attorney, and a family trust, for Helen and Bozidar Stipanovic ("Helen," "Bozidar," or, collectively, "the Stipanovics"), who had only one daughter, Simonida Stipanovic ("Simonida").

4. From approximately 1989 through approximately 1997, Respondent and Bozidar

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were officers of Accurate Polymers Ltd. ("APL"), a research and development company in which Respondent was an initial shareholder and as well as general counsel. During that time, Respondent's professional relationship with Bozidar developed into a friendship that existed until Bozidar's death.

5. On September 29, 2011, Bozidar died.

6. In or around April 2012, Respondent and Helen agreed that Respondent would devise and prepare estate documents, including the creation of a final will and trust for Helen's estate. Respondent and Helen also agreed that Respondent would devise and draft for Helen powers of attorney for both health and property. Respondent and Helen did not enter into any fee agreement for Respondent's preparation of these documents.

7. At the time Respondent and Helen agreed that Respondent would prepare her estate documents, as a result of his representation of and relationship with Helen, Respondent was aware that Helen's estate had a value of approximately $900,000.

8. Between November 2012 and August 2013, Respondent prepared multiple drafts of Helen's will and trust. At Helen's repeated direction, these drafts included R.O. as one of the beneficiaries to Helen's estate.

9. On or around August 20, 2013, Respondent prepared final drafts of the will ("Stipanovic Will"), and trust, entitled the Helen J. Stipanovic Trust u/t/a August 28, 2013 ("Stipanovic Trust"), and sent copies of the drafts to Helen for her review, approval, and execution. Respondent also prepared a Power of Attorney for Health and a Power of Attorney for Property.

10. Under the Power of Attorney for Property, Respondent was the first named agent, and as a result was granted full power and authority over Helen's financial affairs, real estate,

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financial institutions, tax matters, stocks and bonds, and retirement plans.

11. Under the Stipanovic Will and Trust, Helen was the trustee and beneficiary of the trust during her life, and, upon her death, and following her executor's sale or disposal of her personal property, the residue of Helen's estate would pour over into the Stipanovic Trust.

12. Under the Stipanovic Will, Respondent was named the successor executor, following the first named executor, Dean Ivkovich ("Ivkovich").

13. Under the Stipanovic Trust at Helen's direction, Respondent was named successor trustee upon Helen's resignation, death or inability to manage affairs. As successor trustee, Respondent had sole discretion to distribute the trust income for the benefit of three beneficiaries: Simonida, Ivkovich, and R.O.

14. The Stipanovic Trust at Helen's direction further provided that upon the death of both Helen and Simonida, the Stipanovic Trust was to be distributed as follows: 70 percent to Ivkovich, if Ivkovich survived both Helen and Simonida, with Ivkovich's share to go to his son, Nikola Ivkovich ("Nikola"), if Ivkovich did not survive both Helen and Simonida; and 30 percent to R.O., if R.O. survived both Helen and Simonida. Additionally, R.O.'s 30 percent share was to be distributed to Jonathan if R.O. did not survive both Helen and Simonida.

15. Respondent informed Helen that including either R.O. or Jonathan as beneficiaries might create problems for Respondent. However at no time did Respondent advise Helen that he was prohibited from preparing a trust for Helen which included either R.O. or Jonathan as beneficiaries.

16. On August 28, 2013, Helen executed the Stipanovic Will and Trust, in addition to the Power of Attorney for Health and Power of Attorney for Property at a Northern Trust Bank branch in Lake Forest, Illinois. At Respondent's direction, attorney Marc Blumenthal

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("Blumenthal"), who had also reviewed and explained the documents to Helen, was also present at the execution of these documents on Helen's behalf. Respondent was not present for the execution of these documents.

17. On March 22, 2014, Respondent delivered the originals of the executed estate instruments, described in paragraph 18, above, to Helen.

18. On November 1, 2014, Helen died.

19. On November 10, 2014, Ivkovich as executor, through attorney Frederic Lesser ("Lesser"), filed a petition with the Circuit Court of Lake County seeking to admit the Stipanovic Will to probate under case number 14P00001049.

II. MISCONDUCT

20. By reason of the conduct described above, Respondent has engaged in the following misconduct:
  1. preparing on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift, by conduct including drafting a will and trust benefitting Respondent's son and Respondent's granddaughter, in violation of Rule 1.8(c) of the Illinois Rules of Professional Conduct (2010).

III.    FACTORS IN MITIGATION

21. Respondent has not been previously disciplined, has acknowledged and expressed remorse for his conduct, and has also been cooperative throughout the disciplinary proceedings. Mr. Otto has been involved in charitable organizations, such as Rotary International, where he has been named as a local District Governor. During his tenure as District Governor, he assisted with Rotary's efforts to provide medical procedures for children around the world, partnered with local organizations to donate dental equipment to Mexico and Ghana, spearheaded Rotary efforts in building a school in Angola, and arranged for hundreds of children to participate in

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short term foreign exchange visits to American homes.

IV.    RECOMMENDATION FOR DISCIPLINE

22. The parties hereby waive the twenty-one day period for filing exceptions and request that the Hearing Board administer a reprimand to Respondent at the conclusion of the hearing in this matter pursuant to Commission Rule 282.

23. This recommendation is consistent with sanctions in In re Oklepek, 98 CH 133 (April 14, 1999), and In re Narmont, M.R. 9785, 94 SH 41 (March 30, 1994).

24. In In re Oklepek, 98 CH 133 (April 14, 1999), the attorney was reprimanded by the Hearing Board for preparing estate instruments for a client in which the attorney and his wife were beneficiaries. The attorney prepared several drafts of a client's last will and testament. Similar to Respondent in the present case, at the client's direction, these instruments in Oklepek included the attorney and his wife as beneficiaries to half of the client's personal effects, as well as fifty percent of the residue of the client's estate, which were later executed. The attorney advised his client that he was prohibited from preparing a will on her behalf, however due to their social relationship through their church, the client insisted that the attorney continue to draft the instruments. In mitigation, the attorney had not been previously disciplined, cooperated throughout the proceedings, had expressed remorse for his conduct, and acknowledged that he would refrain from similar conduct in the future, similar to Respondent here.

25. Additionally, in In re  Narmont, M.R. 9785, 94 SH 4122 (March 30, 1994), the Court censured an attorney for preparing wills for his client in which bequests to the attorney were made. Similar to Respondent in the present case, the attorney in Narmont had been friends and business partners with his client for several years, and asserted that the bequests were made at the direction of his client. However the attorney did not explain that the existence of any

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conflict or a potential conflict could create potential challenges to the will. Although Respondent in the present case did not adequately explain to Helen the likelihood of potential challenges to her estate documents, he did inform Helen that drafting the documents in which R.O. and Jonathan were beneficiaries could create problems, a fact the attorney in Narmont did not disclose to his client. In mitigation, the Court found that the client's bequests to the attorney in Narmont were not unnatural given their close relationship, similar to Respondent's relationship with the Stipanovics.

WHEREFORE, the Administrator and Respondent jointly request that the Hearing Board enter an order reprimanding Respondent as a result of his misconduct.

Respectfully submitted,

Frederick Joseph Otto, Respondent

By: Samuel J. Manella

Samuel J. Manella

Counsel for Respondent

Samuel J. Manella, PC

77 West Washington Street, Suite 705

Chicago, IL 60602

Telephone: (708) 687-6300

Email: manellalawoffice@aol.com

 
  Jerome Larkin, Administrator
Attorney Registration and
Disciplinary Commission

By: Christopher Heredia

Christopher Heredia

Counsel for the Administrator

130 East Randolph Drive, Suite 1500

Chicago, Illinois  60601

Telephone: (312) 565-2600

Email: cheredia@iardc.org
 

BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

FREDERICK JOSEPH OTTO,

Attorney-Respondent,

No. 2126753.

Commission No. 2017PR00001

REPRIMAND

Based upon the agreement and stipulations of the parties, the panel of the Hearing Board hereby makes findings, and reprimands and admonishes you, Frederick Joseph Otto, as follows:

1. In 2013, you prepared final drafts of a will and trust for your client, Helen J. Stipanovic, which named your granddaughter, R.O. a 30 percent beneficiary to Stipanovic's trust, and your son, Jonathan Otto, a contingent beneficiary to R.O.'s 30 percent, in violation of Rule 1.8(c) of the Illinois Rules of Professional Conduct (2010).

2. In determining that a reprimand is an appropriate sanction, the Hearing Board has considered that you have not been previously disciplined, and you have cooperated throughout these proceedings.

3. The Hearing Board has the authority, pursuant to Supreme Court Rule 753(c)(3), to administer a reprimand to a Respondent in lieu of recommending disciplinary action by the Court. The Board has determined that this course of action is appropriate in this case. You are therefore reprimanded for engaging in conduct which did not comport with the level of professionalism required of an attorney.

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4. You are further advised that while this reprimand is not formally presented to the Illinois Supreme Court, it is not to be taken lightly. This reprimand is a matter of public record and is on file with the Attorney Registration and Disciplinary Commission and may be admitted into evidence in subsequent disciplinary proceedings against you.

Respectfully submitted,

Mark L. Karasik, Chair
Mark W. Bina
Donald D. Torisky

CERTIFICATION

I, Kenneth G. Jablonski, Clerk of the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois and keeper of the records, hereby certifies that the foregoing is a true copy of the Reprimand, approved by the Hearing Panel, entered in the above entitled cause of record filed in my office on August 29, 2017.

Kenneth G. Jablonski, Clerk of the
Attorney Registration and Disciplinary
Commission of the Supreme Court of Illinois