Monday, September 17, 2012

Hearing Board Proposes Reprimand; Review Board Favors Two-Year Suspension

The Illinois Review Board has proposed a suspension of two years of an attorney who concealed assets in a bankruptcy by transferring the assets to his friend and law partner.

The Review Board summarized its findings and conclusions:

This matter arises out of a one count complaint charging Respondent with bankruptcy fraud by attempting to transfer certain assets to his law partner and friend, Barbara Stackler; by intentionally omitting the disclosure of certain assets on his personal bankruptcy schedules filed with the court; and by falsely stating to the court that his schedules included all of his assets and liabilities. Respondent did not deny many of the factual allegations of the complaint, but denied that he intended to defraud the court or his creditors.

Following a hearing, two members of the Hearing Board concluded that Respondent violated Rule 8.4(a)(5), prior to filing his bankruptcy petition, by transferring his assets in violation of the Illinois Uniform Fraudulent Transfer Act. That violation caused American National Bank, one of Respondent's creditors, to initiate judicial proceedings to overturn the transfers, thereby resulting in conduct that was prejudicial to the administration of justice. The Board concluded that the Administrator failed to prove by clear and convincing evidence that Respondent acted with the intent to defraud his creditors, engaged in intentionally dishonest conduct, or made false statements to the court in violation of Rules 3.3 or 8.4 (a)(4). The Board recommended that Respondent be reprimanded. One member of the Hearing Board dissented, finding that Respondent did not engage in any misconduct and recommending that the charges be dismissed.

Upon review, the Administrator requested that the Review Board reverse the Hearing Board findings that Respondent did not engage in intentional misconduct and recommend to the Court that Respondent be suspended for three years. The Respondent asked the Review Board to affirm the Hearing Board Report in its entirety and reprimand Respondent.

The Review Board concluded that the Hearing Board erred in failing to find that Respondent engaged in the misconduct as alleged in the Administrator's Complaint. The Review Board found that the Hearing Board's findings were against the manifest weight of the evidence. The Review Board found that the evidence at hearing clearly and convincingly demonstrated that Respondent made knowingly false statements to the bankruptcy court in violation of Rules 3.3(a)(1), 3.3(a)(2), and engaged in conduct involving dishonesty and prejudicial to the administration of justice in violation of Rules 8.4(a)(4) and 8.4(a)(5) of the Illinois Rules of Professional Conduct. The Review Board recommended that Respondent be suspended for a period of two years.

(Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2012/09/the-illinois-review-board-has-proposed-a-suspension-of-two-years-of-an-attorney-who-concealed-assets-in-a-bankruptcy-by-trans.html

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