Tuesday, March 24, 2009

The Benefits Of Reporting Yourself

The South Carolina Supreme Court reprimanded an attorney who had self-reported to the Office of Disciplinary Counsel his participation in a series of what uurned out to be shady real estate transactions on behalf of clients. The key facts:

Respondent self-reported to ODC that he, along with several other lawyers, numerous non-lawyers, and several business entities had been named as defendants in civil litigation initiated by a lender.  Respondent’s errors and omissions carrier settled the litigation by paying damages in an agreed amount of $35,000 to the lender. 

It is now known that, as a result of a federal investigation, James Byrd, Eric Byrd, and their related business associates and/or entities entered into schemes to acquire and then sell real estate at inflated values to the detriment of the purchasers and to a lender who made loans to those purchasers.  Due to those schemes, the lender made loans to persons it would not have otherwise approved.  Further, the lender made loans contrary to its policies and procedures and in amounts in excess of its lending policies and procedures which it had in place to promote timely repayment and to prevent default upon its loans secured by real estate mortgages.  Subsequently, both the Byrds and others were indicted and sentenced to terms in federal prison for wire, mail, and/or bank fraud. 

Respondent represents that he was unaware of any criminal activity in connection with any of the real estate transactions he handled that were arranged by the Byrds.  ODC does not dispute this representation.  Further, respondent represents that he does not believe that his activities constituted criminal acts and ODC does not dispute this representation.

However, twenty-eight (28) real estate closings which were handled by respondent as arranged by one or both of the Byrds revealed irregularities that ODC contends constitute lawyer misconduct on the part of respondent.  With the advantage of information revealed by hindsight and the investigation by the federal authorities and ODC, respondent agrees with ODC’s contention. 

In one transaction, respondent wrote a check on his trust account payable to Vision Enterprises, an entity known by respondent to be owned and/or controlled by one or more of the Byrds.  The check was for the exact amount due to the seller Eric Byrd on a related HUD-1 Settlement Statement prepared by respondent.  As a result, the information furnished to the borrower and lender on the HUD-1 contained incorrect information. 

The attorney ceased closing transactions for the clients when he began to have concerns about thier behavior. In the bar proceeding, he cooperated fully and agreed with the OBC that he had violated ethical standards that included lack of competence, conflicts of interest and  false statements of material fact. The court noted that, if the misconduct had not been self-reported, a suspension would have been imposed. (Mike Frisch)


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"Peculiar." Could there have been a bag man who accompanied the "self report"?

Posted by: Evil | Mar 24, 2009 10:38:00 AM

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