Wednesday, November 1, 2017

Another Marijuana-Related Disbarment

The California State Bar Court Hearing Department rejected a number of alleged ethical violations but found enough to recommend disbarment of an attorney

Respondent received $50,000 cash from his client on August 6, 2014, to be held for use in the client purchasing a medical marijuana business in Los Angeles. Rule 4-100(A) requires that all such client funds be deposited into a client trust account. They were not. Instead, Respondent put the cash into a safe in his own office and then used the cash over a period of time for purposes discussed more fully below. This failure by Respondent to comply with the requirements of rule 4-100(A) constituted a willful Violation by him of that rule.

Respondent contends that he was unable to deposit the funds into a client trust account because the banks are unwilling to accept funds derived from marijuana sales and his client failed to respond to his requests for information regarding the source of the cash. This court declines to find that this “explanation” provides any defense to Respondent’s conduct here. First, Respondent made no effort to deposit the cash into any bank. Further, his testimony, that no bank would have accepted the money, was not supported by the testimony of several other witnesses who are engaged in the medical marijuana business. Finally, despite Respondent’s written threat to his client nearly a month later that the cash needed to be returned to the client if information about the source of the money was not promptly received (Ex. 33), Respondent continued to keep the cash in his office and not return it to the client, despite the apparent ongoing lack of information about the source of the funds. 

The dread moral turpitude

Of the $50,000 in cash entrusted to Respondent for safe-keeping, only $27,400 was disbursed by him in a manner authorized by Jaramillo. The balance was retained by him for fees, notwithstanding the absence of a Valid fee agreement with J aramillo and any consent by Jaramillo for Respondent to help himself to those fees. Respondent's mishandling of that remaining $22,600 represented a misappropriation by him of those funds and acts of moral turpitude in willful violation of section 6106.

The court found misconduct in an unrelated representation of a client in the medical marijuana business.


this court’s assessment that a recommendation of ’ disbarment is appropriate and necessary is buttressed by Respondent’s effort to mislead this court by presenting and attesting, under penalty of perjury, to a forged document. Both the Supreme Court and the Review Department of this court have emphasized the importance of a member being honest in dealing with the State Bar’s disciplinary process. Knowingly false statements by a member to the State Bar or this court have been described by the Supreme Court as “particularly egregious” and “may perhaps constitute a greater offense than misappropriation.”

(Mike Frisch)

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