Wednesday, May 5, 2021

Misplaced Trust

Disbarment has been ordered by the Minnesota Supreme Court

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against respondent Barry L. Blomquist, Jr. The petition alleged Blomquist misappropriated trust assets by investing in five start-up companies he owned, in breach of his fiduciary duty as trustee; refused to comply with court orders from three different judges; and failed to cooperate with the Director’s investigation into his misconduct. After an evidentiary hearing, a referee found the Director had proven Blomquist committed the alleged misconduct and recommended Blomquist be disbarred. Based on Blomquist’s misconduct, we agree with the referee and, therefore, we disbar Blomquist from the practice of law.

The attorney was trustee of a trust created by a client who then died. 

The beneficiary encountered problems in securing information from Respondent and initiated a court proceeding

Blomquist appeared in court as directed, but failed to bring all the court-ordered documents and information. The probate court subsequently removed Blomquist as trustee, finding Blomquist failed to act as a prudent investor and violated Minnesota’s prohibition against trustee self-dealing. The court found “especially troubling” Blomquist’s “cavalier attitude . . . about the obvious self-dealing he engaged in by using trust assets to fund his own businesses.” The court observed that “[Blomquist] believes that since he sees his business ventures as promising significant returns upon (what he believes is) their inevitable success, he has satisfied his fiduciary duties to the Trust and to [D.H.]. Unfortunately, nothing could be further from the truth in the eyes of the law.”

And secured a judgment

D.H. docketed the judgment. She sought information about the trust’s assets from Blomquist through post-judgment discovery. Blomquist still did not produce the necessary documentation. This forced D.H. to pursue additional judicial enforcement actions. In November 2012, the probate court ordered Blomquist to appear at a hearing later that month to answer questions concerning his personal property and transactions related to the trust property. Blomquist, however, engaged in a series of delay tactics including a claimed illness, which resulted in repeated continuation motions and a general lack of responsiveness. In June 2013, after over 6 months of delays, D.H. filed a motion for an order to show cause why Blomquist should not be held in contempt.

Eventually

By the time the trust dissolved, the balance was only $20,000. Blomquist only paid approximately $100,000 of the $400,000 judgment that D.H. obtained against him. But that payment was not voluntary and D.H. only received this money because her attorney located various properties Blomquist owned and sold them off at auction.

The court notes that misappropriation and disobeying court orders usually draws disbarment

Blomquist’s misconduct, however, does not end there. After misappropriating D.H.’s trust assets and willfully ignoring court orders, Blomquist failed to cooperate with the Director in her investigation. He provided non-responsive answers to questions, did not provide requested documentation, failed to appear for a required meeting, insisted the Director could only submit written questions to him, and failed to respond to the charges of unprofessional conduct.

The court further noted several aggravating factors. (Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2021/05/disbarment-has-been-ordered-by-the-minnesota-supreme-court-the-director-of-the-office-of-lawyers-professional-responsibility.html

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