Month: August 2016

ARDC Alleges That A Retired New York Lawyer Wrongfully Engaged In Unauthorized Practice of Law

The ARDC has filed a complaint against a retired New York lawyer, Richard Peter Caro, who moved to Illinois and, allegedly, engaged in the unauthorized practice of law. The pertinent allegations are as follows:

1. At no time has Respondent applied for admission to practice law in Illinois or been admitted to the Illinois bar.

2. On April 24, 1974, Respondent was admitted to practice law in New York. At no time was he admitted to practice law in any other states. On August 12, 2010, he registered for retirement status with New York, and he remained on retirement status until August 19, 2011, when he resumed active status. While on retirement status, Respondent was not permitted to practice law in any jurisdiction.

3. On July 1, 2005, Respondent leased an apartment from Dennis Martinek (“Martinek”) at 111 Groveland Avenue in Riverside, Illinois (“the Groveland apartment”). Shortly thereafter, Respondent informed Martinek that he was a New York attorney.

4. From February 5, 2008, to August 12, 2011, Martinek was an investor in a business, Politico, LLC d/b/a Vini’s of Lincoln Park, which operated a pizza restaurant, Vini’s Pizza, at 2429 N. Lincoln Avenue in Chicago (hereinafter, collectively “Vini’s”).

5. In August 2010, Martinek informed Respondent about a number of legal problems that Martinek had encountered in connection with Vini’s, including alleged fraud and mismanagement by the then-General Manager of the company, Rosendo Diaz (“Diaz”).

6. Between August 2010 and September 2010, Respondent and Martinek agreed that Respondent would represent Martinek and Vini’s in at least eight different legal matters. Those matters included:

a. a tax claim by the State of Illinois because Diaz had allegedly failed to pay sales tax on pizza sales at Vini’s;
b. a claim against Diaz related to his purported mismanagement of Vini’s;
c. the defense of four creditors’ claims against Vini’s for accounts receivable, including claims by:

i. DePaul University;
ii. S&S Heating and Cooling, Inc.;
iii. Ice Town Leasing;
iv. Sysco Chicago, Inc.

d. An eviction matter related to a 5-day notice that had been served on Vini’s on September 10, 2010 to vacate its business premises on Lincoln Avenue in Chicago;
e. An alleged banking error by Vini’s credit card processing company, First Merit Bank, wherein Vini’s had purportedly not been credited with $5,000 in pizza sales proceeds.

7. Between August 2010 and September 2010, Respondent and Martinek began negotiating as to the fees that Respondent would be paid for the legal work referenced in paragraph six, above, but they did not enter into a specific agreement as to the amount of those fees at that time.

8. Between September 2010 and August 2011, Respondent provided legal advice and services to Martinek and Vini’s on the matters referenced in paragraph six, above. During that period, Respondent corresponded with Vini’s creditors and their counsel, reviewed and analyzed documents related to the respective claims, performed legal research on those claims, drafted letters to creditors for Martinek’s signature, and advised Martinek as to how to proceed in each matter.

9. In or about July 2011, Respondent and Martinek agreed that Martinek would barter monthly rent payments from Respondent’s rental of the Groveland apartment by applying those amounts as payments toward Respondent’s legal fees for the matters referenced in paragraph six, above. The monthly rental amounts were $1,000 from July 1, 2011 through July 1, 2012. For legal services that Respondent provided on Martinek’s behalf in 2011 and 2012, Martinek waived a total amount of $12,000 in rental payments.

10. In addition to the waiver of rental payments as referenced in paragraph nine, above, between September 2010 and August 2011, Respondent also received $20,605.46 in payments for fees by or on behalf of Martinek and Vini’s in connection with the matters referenced in paragraph six, above.

11. On February 14, 2003, Martinek filed a complaint against Respondent in the Circuit Court of Cook County, seeking to evict Respondent from the Groveland apartment and to recover $7,530 in allegedly unpaid rent. That case was docketed as Martinek v. Caro, case number 2013 M1 703844. Respondent was served with the complaint and summons in the matter shortly thereafter.

12. On October 3, 2013, Respondent and his wife, Svetlana Caro, jointly filed a Chapter 13 bankruptcy petition in the United States District Court for the Northern District of Illinois, and that case was docketed as In re Caro and Caro, case number 13 BK 38958. The matter was assigned to the Honorable Janet Baer. Respondent’s filing of the bankruptcy petition caused Martinek’s claim in case number 2013 M1 703844 to be stayed.

13. On November 25, 2013, in connection with case number 13 BK 38958, Respondent filed an adversary complaint against Martinek. The adversary complaint was docketed as Caro v. Martinek, United States District Court for the Northern District of Illinois case number 13-1334. In the adversary claim, Respondent sought an order denying Martinek’s claim for unpaid rent and granting Respondent compensation for legal services provided to Martinek “[b]eginning in September 2010 and until Richard Caro ceased representing Martinek at the end of June 2012.”

14. Respondent attached to his adversary complaint in case number 13-1334, a copy of a Statement for Services dated October 26, 2012 (Attached hereto as Exhibit 1). The Statement of Services listed the time expended by Respondent handling legal matters on behalf of Martinek, and it included a total of 170.6 hours for the matters referenced in paragraph six, above. On in his Statement of Services, Respondent listed 105.3 hours that he had expended between August 12, 2010, and August 19, 2011.

Conclusion: there appears to be no doubt as to the unauthorized practice of law. The decision to file the adversary complaint in bankruptcy appears to have caused the bankruptcy court and the ARDC to look into the matter.

Edward X. Clinton, Jr.

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ARDC Accuses Lawyer of Creating False Documents in Loan Transaction

BEFORE THE HEARING BOARD:

The ARDC has accused a lawyer of creating false documents in a loan transaction. The pertinent allegations are these:

“2. In late 2010 or early 2011, Respondent was engaged in discussions with another lender, Prime Equity of Atlanta, Georgia, about borrowing $25,000 from Prime Equity. Respondent intended to use the proceeds of that loan to reduce the amount of LOP’s obligation to American Community. Prime Equity told Respondent that it would not lend the money to LOP unless Prime Equity received a first security interest in the Stephens County property, which would require American Community to agree to subordinate its own security interest in that property.

3. On or about January 10, 2011, Respondent created a document entitled “Subordination Agreement” that purported to show that American Community had “waive[d] and subordinate[d] all right, title or interest under its outstanding security deed in or to the [Stephens County] property as against the loan to be made by [Prime Equity] to [LOP] so that the security deed to be executed by [LOP] to [Prime Equity] shall convey title to the property superior to the outstanding security deed of [American Community] and superior to the indebtedness secured thereby.” Respondent added the purported signatures of American Community’s executive vice president (Rick Francois) and chief financial officer (Robert W. Getty) to the document, and then added the purported signature and notary stamp of Mark Taranelli, a notary and attorney with whom Respondent was acquainted.

4. At no time did Respondent request or receive authority from anyone at American Community to take any action concerning the Stephens County property on the bank’s behalf, nor did he have the authority of Mr. Francois, Mr. Getty or Mr. Tarinelli to add their purported signatures (and, in Mr. Tarinelli’s case, to use his notary stamp) on the purported agreement.

5. Respondent knew that the purported subordination agreement was false, because he knew that American Community had not agreed to waive or subordinate its interest in the Stephens County property, and because he knew that he had created the document and affixed purported signatures and a notary stamp to it without authority.

6. After he prepared the purported subordination agreement, Respondent delivered the document to representatives of Prime Equity in order to induce that entity to lend $25,000 to LOP based on the false representation that American Community had agreed to subordinate its interest in the Stephens County property. Respondent then caused the purported subordination agreement to be filed with the office of the Clerk of the Superior Court for Stephens County, Georgia.

7. On or about June 1, 2012, Respondent created a second document, entitled “Cancellation of Subordination Agreement,” that purported to show that American Community had cancelled the agreement described in paragraphs three through six, above. Respondent then added the purported signature of Mr. Francois and the purported signature and notary stamp of Mr. Taranelli to the document, which Respondent later caused to be filed with the office of the Clerk of the Superior Court for Stephens County, Georgia.

8. At no time did Respondent request or receive authority from anyone at American Community to take any action concerning the bank’s interest in the Stephens County property, nor did he have the authority of Mr. Francois or Mr. Tarinelli to add their purported signatures (and, in Mr. Tarinelli’s case, to use his notary stamp) on the purported cancellation document.

9. Respondent knew that the purported cancellation of the subordination agreement was false, because he knew that he had created the document, that he did not have authority from anyone at American Community to take any action on the bank’s behalf, and because he had affixed purported signatures and a notary stamp to the document without authority.

10. By reason of the conduct described above, Respondent has engaged in the following misconduct: conduct involving dishonesty, fraud, deceit or misrepresentation, by knowingly creating and signing documents without authority that contained false signatures and notary stamps, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010).

In sum, these are allegations and have not been proven. The ARDC tends to be very concerned about cases where lawyers created false documents.

Edward X. Clinton, Jr.

Indiana Suspends Lawyer for 180 Days For Failing to Prosecute Client’s Malpractice claim

IN THE MATTER OF FAIRCHILD, Ind: Supreme Court 2016 – Google Scholar:

This is an opinion from the Indiana Supreme Court suspending a lawyer for failing to prosecute the client’s medical malpractice claim. The lawyer also failed to keep the client informed of the statute of the matter – specifically that the case had been dismissed.

The findings were as follows:

Violations: The parties agree that Respondent violated these Indiana Professional Conduct Rules prohibiting the following misconduct:

1.3: Failure to act with reasonable diligence and promptness.

1.4(a)(3): Failure to keep a client reasonably informed about the status of a matter.

1.4(a)(4): Failure to comply promptly with a client’s reasonable requests for information.

Discipline: The parties propose the appropriate discipline is a suspension of 180 days without automatic reinstatement. The Court, having considered the submissions of the parties, now approves the agreed discipline.

Edward X. Clinton, Jr.

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The ABA Has Hurried To Amend The Proposed Model Rule of Professional Conduct 8.4

Model Rule of Professional Conduct 8.4:

The ABA in response to criticism has proposed amendments to its new rule against harassment and discrimination. The language of the rule is too broad and will create pointless discipline cases. It also will, inevitably, restrict free speech.

The State of Illinois will, inevitably, adopt some version of this dreadful rule, which can make any office argument into a professional discipline matter.

Ed Clinton, Jr.

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Legal Ethics Forum: Backlash to MR. 8.4(g)

Legal Ethics Forum: Backlash to MR. 8.4(g):

There is a new proposal in the ABA to modify Rule 8.4(g) as follows:

It shall be professional misconduct for a lawyer to engage in conduct that the lawyer knows or reasonably should know is harassment or discrimination on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socioeconomic status in conduct related to the practice of law. This paragraph does not limit the ability of a lawyer to accept, decline or withdraw from a representation in accordance with Rule 1.16. This paragraph does not preclude legitimate advice or advocacy consistent with these Rules.

As one might imagine, the Rule has unleashed a firestorm of criticism on the ground that it mandates political correctness and that it represses free speech.

I’m not a fan of this Rule and would encourage everyone to read the excellent criticisms on the Volokh Conspiracy Blog.

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