Monday, March 2, 2009

Loans From Client Draw Suspension, Probation

The web page of the California Bar Journal reports:

BYRON LEE LANDAU [#177247], 55, of Aliso Viejo was suspended for two years, stayed, placed on three years of probation with an actual 60-day suspension and was ordered to prove his rehabilitation and take the MPRE within one year. The order took effect Sept. 26, 2008.

Landau stipulated that he entered into a business transaction with a client without fully disclosing the terms of the transaction or advising the client to seek independent legal counsel.

In 2002, Landau became friendly with David Bezar, manager and owner of Interactive Communications, LLC. Landau represented Bezar in a contract dispute and Bezar loaned Landau small amounts of money that he repaid. In May 2003, Bezar hired Landau for another contract dispute and a short time later, loaned Landau money to keep his law practice afloat. Landau and his wife were co-debtors in a bankruptcy action at the time.

Over the next five months, Landau accepted eight loans totaling $115,000 from Bezar, who became a consultant to Landau’s law firm. At one point, Landau offered Bezar positions as chief operating officer and chief financial officer. They hired another lawyer to help negotiate the terms under which Bezar would provide management and consulting services to Landau’s firm, but they never reached a formal agreement.

While negotiations were ongoing, Landau disputed Bezar’s accounting of work done for the law firm. A couple of weeks later, Bezar bought a $25,000 Lexus for Landau, who provided a $2,000 down payment and agreed to pay all expenses including insurance, maintenance and gas. Bezar financed the remaining $23,000 in his name.

Three days after Landau borrowed more than $33,000 from Bezar, bringing the total to $115,000, he informed Bezar his services as COO and CFO would not be required. One of Landau’s employees was promoted to do the work.

Two days later, Landau e-mailed Bezar a proposed MOU under which Bezar/Interactive would provide consultation services worth $3,000 a month and would loan Landau more money, up to $150,000. They could not agree and Bezar asked Landau to either finalize an agreement or repay the loans. Landau agreed to try to finalize an agreement and asked the other lawyer to try again.

Bezar next asked Landau for proof of insurance for the Lexus, instructed the other lawyer to stop working on an agreement, and demanded repayment of some expenses rendered to Landau’s law firm as well as a minimum payment on the loans. Although Landau claimed he made the payments, Bezar demanded repayment of the full amount. Landau refused. He also refused to return the Lexus, which Bezar repossessed.

Bezar sued Landau, who agreed to repay $117,000.

In mitigation, Landau cooperated with the bar’s investigation.

(Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2009/03/loans-from-clie.html

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