Wednesday, October 21, 2009
An Illinois hearing board has recommended disbarment based on an attorney's criminal conviction for conspiracy to commit securities fraud. The underlying misconduct:
From September 1998 through October 1999, Respondent was a consultant specializing in mergers and acquisitions of publicly traded companies. In December 1998, Respondent became a shareholder of Global Datatel, Inc. ("Global"). Global, which was a publicly traded company in 1999, purported to have expertise in the areas of Internet/intranet implementation, e-commerce, enterprise resource planning and Y2K testing and compliance. eHola.com Online Service Network ("eHola"), a division of Global, ostensibly offered integrated Internet access service and Spanish content information to individuals in North, Central, and South America.
Beginning in February 1999, Respondent conspired with other Global shareholders, the president of eHola, and the president of an Internet website to disseminate or cause the dissemination of false and misleading information about Global and eHola in order to artificially raise and maintain Global's stock price and trading volume. Among other acts in furtherance of the conspiracy, Respondent and his co-conspirators caused Global to issue a press release falsely stating that Global maintained offices that it did not maintain. They also caused Global to issue a press release falsely stating that eHola had a substantial number of subscribers, which it did not. From January 1999 to April 1999, Respondent and his co-conspirators caused the price of Global stock to rise from $7.25 per share to a high of $16.84 per share, increasing the market capitalization from approximately $163 million to approximately $378.8 million. By November 1999 the price of Global stock dropped to approximately $3 per share.
The hearing board found that the attorney's health claims were not sufficiently documented to warrant a postponement of the hearing:
...Respondent provided a letter from his treating physician that stated Respondent was recovering from a "normally deadly bout with the bacteria MRSA." In addition Respondent was suffering from circulatory, respiratory, and heart problems in addition to Gout. Respondent's physician also stated as a result of his health difficulties, Respondent could not meaningfully participate in these disciplinary proceedings.
The Administrator agreed to a short stay of the proceedings provided that Respondent continue to provide medical documentation of his health issues. Accordingly, the Chair stayed the matter until March 26, 2009. The Chair also directed Respondent to provide additional medical documentation to support any further stay on or before March 23, 2009.
Respondent failed to file any additional medical documentation and failed to participate at a pre-hearing conference held on March 26, 2009. By order that same day, the Chair lifted the stay and set the matter for hearing on June 17, 2009. As Respondent had failed to file a responsive pleading to the Administrator's Complaint, the Chair also granted the Administrator's Motion to Deem the Allegations of the Administrator's Complaint Admitted Pursuant to Commission Rule 236, thereby limiting the evidence presented at the hearing to matters of aggravation and mitigation.