Tuesday, February 19, 2013

Title Officer's Conversion Leads To Disbarment Recommendation

An Illinois Hearing Board has recommended disbarment of an attorney for conversion of funds entrusted to him as the chief operating officer and managing partner of a title company:

Although Respondent's misconduct occurred while he was operating a business rather than conducting a traditional law practice, this does not insulate him from responsibility for his actions. It is well-settled that attorneys are subject to discipline for misconduct that occurs while acting in a private or business capacity, as well as that which occurs in a professional capacity as a lawyer. See In re Abbamonto, 19 Ill. 2d 93, 97, 166 N.E.2d 62 (1960). Thus, the Court has disciplined attorneys in circumstances similar to those present here, where attorneys acting as title agents convert funds they are holding in escrow on behalf of third parties. See In re Gwiazdzinski, 95 CH 726, M.R. 12828 (Sept. 24, 1996) (conversion of escrow funds while acting as principal shareholder and president of title company); In re Wells, 92 CH 576, M.R. 11735 (Dec. 1, 1995) (conversion of funds in escrow account while acting as title insurance agent).

After initially retaining counsel and responding to the investigation, the attorney failed to appear for his deposition and defaulted on the charges. The misconduct involved two checks in a total amount well in excess of half a million dollars.

In Illinois (unlike D.C.), default really means default:

In this case...Respondent's Answer was stricken and the Complaint allegations were deemed admitted. Thus, the Administrator was not required to submit evidence in support of the facts alleged or to otherwise prove those allegations in order to establish the misconduct charged. See In re Golden, 09 CH 88, M.R. 25509 (Nov. 19, 2012) (rejecting argument that Administrator was required to "prove-up" the charges of misconduct where answer was stricken and complaint allegations deemed admitted as discovery sanction pursuant to Supreme Court Rule 219).

I would describe the D.C. default process if I didn't find the subject so depressing. Suffice it to say that the governing rules are so unworkable that Bar Counsel virtually never seeks a default.

If you want see what a "default" rule looks like that requires Bar Counsel to fully prove its case anyhow and allows an attorney to get the result set aside, go to this link and check out Board Rule 7.8.  (Mike Frisch)


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