Monday, April 1, 2013

Ignorance Not Bliss

From the April 2013 California Bar Journal:

[An attorney] was disbarred Feb. 14, 2013, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

The State Bar Court found that [the attorney] committed eight acts of misconduct in two matters, both stemming from the actions of a non-attorney who worked virtually unsupervised for [him].

[The attorney] was a criminal defense attorney who, in an effort to increase his client base, hired Nancy De Duling, who had operated a translation and interpreting business in the San Fernando Valley for a number of years. She also conducted short sales, foreclosure avoidance and loan modification work and although [he] had little interest in such work, he saw it as a potential source of future criminal defense work.

He opened a law office in Van Nuys which essentially was run by De Duling. She interviewed and accepted clients, entered into fee agreements and had authority to handle matters on behalf of the clients. When clients began to complain about how their matters were being handled and demanded refunds of their fees, [the attorney] either ignored them or forwarded the inquires to De Duling, who continued to use [his] name and letterhead even after disciplinary charges were filed against him.

In the first of the two matters for which he was disbarred, a couple hired [the attorney] to modify their home loan. De Duling advised them to try to have their mortgage reduced from $3,119 per month to $2,400 and to make payments to her instead of the bank. They did so, giving her a total of $38,400 that she never gave to the bank or deposited in a client trust account. The clients had never met [him] and when they sent him a lengthy letter detailing their complaints because their house was about to be foreclosed, he made no effort to contact them. When they fired him and demanded a refund of their money, he “flipped his lid,” but waited to discuss the matter with De Duling, who assured [him] everything “was good.”

The couple lost their home and their equity and believe they will never be able to buy another home. They live in a trailer inherited from the woman’s mother. Although [the attorney] told the State Bar all their money had been turned over to the bank, two checks he provided as proof were forged. At the time of his trial, he had not reported De Duling to the police.

Judge Donald Miles found that [he]failed to deposit client funds in a trust account, pay out client funds promptly or perform legal services competently, and he misappropriated funds through gross negligence of his employee.

In the second matter, a client whose car was about to be repossessed hired Sanz and gave De Duling $3,000 that he thought would be given to the car financing company. The client received papers from [his] office that bore a court stamp that was in fact falsified. [He] eventually returned $3,000 to the client.

Miles found that [he] failed to perform legal services competently, deposit client funds in a trust account or returned unearned fees, and he misappropriated funds through gross negligence of his employee.

In mitigation, [the attorney] had no prior discipline record, presented evidence of his good character and he cooperated with the bar’s investigation. Nonetheless, Miles recommended his disbarment, citing his “unacceptable indifference” to his professional obligations, allowing an employee to hold a position in which she could steal money from clients, and continuing to defend De Duling despite the complaints about her. Further, Miles said, [his] “claim of ignorance is not‘bliss’ in this case; it is intolerable. The future protection of the public and the profession require that he be disbarred from the practice of law.”

(Mike Frisch)

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