Wednesday, November 14, 2007

Prohibited Transaction Charged

The Illinois ARDC recently filed and served charges alleging that a lawyer had engaged in a prohibited business transaction. The lawyer is charged with establishing a trust for the benefit of the client's developmental disabled child. He was named as co-trustee. After the client died, he arranged with the other co-trustee to loan him $80,000 from trust funds, secured with real property as collateral. He resigned as co-trustee but continued to provide legal services to the trust. He caused the real property to be refinanced four times, declared bankruptcy, and had the debt discharged. The trust is out over $79,000.

If these charges are proven, the conduct is as bad as intentional misappropriation (see today's earlier post) and merits the same sanction. (Mike Frisch)

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