Friday, February 17, 2017

First Time's A Likely Disbarment

The Illinois Review Board has recommended the disbarment of an attorney admitted in 1974 who has never been previously disciplined.

The misconduct involved misuse of a portion of $100,000 in entrusted funds.

The complaint alleges that, in 2011 and 2012, Respondent was associated with a law firm called Coyle, Stengel, Bailey and Robertson (Stengel firm) in Rock Island, Illinois. The firm maintained a client trust account, on which Respondent was a signatory. In 2011, Respondent represented PVY Development, LLC and its manager, David Requet, as the seller of commercial property (a Walgreens store) in Davenport, Iowa. The buyer was Bhupen Patel and his company, WAG Davenport. The real estate contract required Patel to make two $50,000 earnest money payments to PVY, which he did on August 30, 2011 and September 19, 2011 by wire transfer into the Stengel firm's client trust account. But a dispute arose between PVY and Patel, and the sale was never completed.

From September 19, 2011 through October 17, 2012, Respondent or someone acting at his direction drew nine checks from the Stengel firm's client trust account: five to Respondent himself in the aggregate amount of $32,000; three to PVY in the aggregate amount of $53,000; and one to David Requet in the amount of $15,000. These nine checks totaled $100,000 - the amount of earnest money that Respondent was supposed to be holding in escrow under the terms of the real estate contract. The disciplinary complaint alleged that Respondent had no authority to use any portion of the earnest money for his own purposes or to distribute it to PVY or David Requet.

In October and December 2011, Respondent sent letters to the buyer's attorney in which he implied that all $100,000 of the escrow money was being held on deposit. The disciplinary complaint alleged that Respondent knew these statements were false because he was not holding the entire $100,000 of earnest money, but instead had taken and used a portion of it for his own purposes.

He sought to avoid the consequences of default to no avail

On appeal, Respondent argues that, although the facts of the complaint were deemed admitted and that he acknowledged those facts, he did not admit the legal conclusions stated in the complaint.  He contends, therefore, that the Hearing Board erred in finding misconduct based upon the allegations in the complaint.

As a matter of law, Respondent is incorrect. Rule 236's language is clear and mandatory, In re Maros, 94 CH 430 (Review Bd., March 20, 1996), approved and confirmed, M.R. 12639 (Sept. 24, 1996), and provides that all factual allegations and disciplinary charges are deemed admitted when a respondent fails to answer the complaint. The rule limits the resulting hearing to matters in aggravation and mitigation.

Consequently, once an order is entered deeming a complaint's allegations admitted, the issues of whether, and how, misconduct occurred are closed.


In arguing for a lesser sanction than disbarment, Respondent primarily disputes facts that were found in the hearing. He also raises the issue of the medical report that indicated that he was possibly suffering from dementia. He claims to have sent the report to the Hearing Board as well as to the Administrator's counsel, but it was omitted from the record. He contends that he cooperated to the fullest extent he could, and argues that it was not proper for the Hearing Board to conclude that he failed to cooperate as an aggravating factor. Ultimately, he claims that he tried to articulate at his first hearing that he is suffering from early-onset dementia, and that the transcript from that hearing shows that he was confused and unable to understand that he must vigorously defend himself. He asks that he be censured and ordered to enroll in an appropriate program with the Lawyers Assistance Program...

In light of the substantial amount of money that Respondent converted, his failure to make full restitution, and his lack of participation in his hearing, combined with the lack of mitigation, we believe his disbarment is necessary to protect the public, maintain the integrity of the legal profession, and protect the administration of justice from reproach.

One of the most prominent failings of the D.C. Bar disciplinary system is its institutional aversion to defaults as enforced here under the Illinois rules.

Things would improve immeasurably if an approach akin to that applied here is adopted. (Mike Frisch)

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