Monday, December 1, 2008
The Michigan Attorney Discipline Board rejected claims of mental disability related mitigation and upheld a panel order of revocation in a matter involving theft and conversion:
Respondent was a partner at Varnum Rittering Schmidt & Howlett LLP ("Varnum"). He joined the firm in 1983 and left in July, 2006 to go to the Grand Rapids office of another firm. He was a corporate lawyer with a substantial income and book of business. He was described in testimony at the hearing as a "superstar." His clients included the Gainey Corporation and its principal, Harvey K. Gainey, Sr. Respondent was active in the management of Varnum, serving as the Corporate Practice Chair and managing and developing the firm's consulting group. He was active in community organizations and on boards and, according to a 2003 evaluation, he managed many key relationships profitably and effectively. It was also represented to the panel that the personal fees billed and collected by respondent were the highest in the firm. The firm recognized this with a $60,000 bonus which, with similar bonuses in other years, brought his annual compensation from the late 1990's forward to a range scaling from $400,000 to in excess of $500,000. Records from 2005 also show that respondent was a successful rainmaker for his firm and had significant personal production and managed a very significant amount of legal work.In 1986, respondent incorporated Covesco, Inc., which he characterized as a "shell company" and which functioned as respondent's alter ego, according to Varnum. Respondent admitted that prior to July 2006 he transferred to Covesco credits and trust account balances belonging to Gainey Corporation and Varnum. The amount of client credits and trust account .proceeds transferred to Covesco were estimated to be in the range of $40,000 to $45,000 by Terrance Bacon, Varnum's general counsel.
Respondent also took money from his firm through fraudulent or improper expense reimbursement requests. He entered into an agreement, after a review of records with Mr. Bacon, in which he admitted that he was paid by Varnum for unjustified expense items based on Oosterhouse having falsely described the expenses as incurred for the benefit of clients or Varnum, and in which he admitted that the unjustified expenses requested by and paid to or for Oosterhouse over a ten year period likely fell within the range of $50,000 to $80,000.
The panel found that respondent engaged in "sophisticated manipulations of client invoices, credits on client fees that were diverted to Covesco, and other devices which hid [his] activities," citing, as one example, that respondent "carefully orchestrated the transfer of excess legal fees from flat fee assignments to the Covesco account, and then applied those credits to other lawyers' time so that they appeared to perform statistically at a better level."
As for the mitigation, the board found that the panel had applied the proper legal standard to the mitigation claims and that probation (as the attorney had sought), rather than revocation, would be contrary to the public interest. The board agreed with the panel's conclusion that the misconduct reflected a character flaw rather than an inability to assimilate into the law firm's culture of integrity:
A disposition toward honesty does not depend on acceptance into a law firm culture in a person's mid-twenties or, if it does, that might be referred to as a character flaw.
The Grand Rapids Press reported earlier this month that the lawyer was recently appointed as the chief operating officer of the now bankrupt Gainey Corporation. (Mike Frisch)