Wednesday, April 27, 2011

Failure To Pay Student Loans Draws Proposed Suspension

An Illinois Hearing Board has recommended a suspension of six months and UFO (until further order) of a 1994 University of Chicago law grad for bad faith failure to repay student loans. The loans were taken out in 2005 for a graduate business degree. The hearing board found that his employment at DLA Piper provided the means to pay off the loans.

The hearing board's conclusions:

We conclude the Administrator proved by clear and convincing evidence that Respondent engaged in most of the misconduct alleged in Count I of the Complaint. Specifically, we conclude Respondent: 1) avoided in bad faith the repayment of an education loan guaranteed by the Illinois Student Assistance Commission or other governmental entity and 2) engaged in conduct involving dishonesty, fraud, deceit or misrepresentation in violation of Rules 8.4(a)(4) and 8.4(a)(8) of the Illinois Rules of Professional Conduct. We did not find the Administrator proved by clear and convincing evidence that Respondent engaged in conduct that is prejudicial to the administration of justice in violation of Rule 8.4(a)(5).

The uncontroverted evidence established that Respondent applied for and received education loans in the amount of $78,483 in 2005 to assist him in payment of the costs of obtaining his graduate business degree. It is also undisputed that Respondent’s loans became due in October 2006, that he failed to make any payments at that time, that in August 2007 he asked for and received an administrative forbearance from December 2006 to December 2007, and that since his forbearance ended Respondent has only made one voluntary payment on the loans. The evidence further established that Respondent was employed at DLA Piper from April 2007 until February 2009 and that he received severance pay until May 2009. Respondent’s starting annual salary at DLA Piper was $190,000 and was increased during the time he worked there. Respondent had the means to repay his loans while he was working at DLA Piper and chose not to fulfill his obligation. Accordingly, we find the evidence clearly establishes that Respondent avoided the repayment of his student loans in bad faith in violation of Rule 8.4(a)(8).

Respondent’s contention that he was unaware of his obligation to repay his student loans is contradicted by his contact with ISAC and IDAPP in 2007 and 2008. The evidence showed that Respondent updated his address with IDAPP personnel and requested an administrative forbearance in August 2007. Respondent also had phone contact with ISAC personnel in October 2007 and updated his address at that time. Respondent acknowledged in his deposition that he had previously received mail at the P.O. Box ISAC sent Respondent letters to from October 2007 to August 2008. Additionally, Respondent had phone contact with ISAC personnel in January 2008 after his administrative forbearance ended and he agreed to begin repaying his student loans at that time.

Accordingly, we do not find Respondent’s claim in the affirmative defense to Count I in his Answer that ISAC and IDAPP did not have his correct contact information at the time his administrative forbearance ended credible. Additionally, Mr. Pierce’s testimony established that Respondent was obligated by the promissory notes that he signed for his student loans to notify ISAC and IDAPP of any address changes. Therefore we conclude that even if it was credible, Respondent’s affirmative defense is not a valid explanation for his failure to repay his student loans.

The attorney also was found to have failed to cooperate with the bar investigation. His explanations were found to be incredible. (Mike Frisch)

Bar Discipline & Process | Permalink

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