Lawyer is Reprimanded For False Statement In Motion for Extension of Time.

The case is In re Ryan Kenneth Melcher, 2018 PR 88. Melcher was employed as an assistant federal publid defender in the office of the Colorado federal defender. Melcher’s error was a mistatement of fact in a routine motion for extension of time. The Panel describes the error in this way;

2. In November 2016, Respondent was appointed to represent Rocky Allen (“Allen”) before the Tenth Circuit Court of Appeals (“Tenth Circuit”) in relation to Allen’s appeal of his 2016 federal criminal conviction for tampering with a consumer product and obtaining a controlled substance by deceit or subterfuge. The matter was captioned United States v. Rocky Allen under case number 16-1450.


3. On April 26, 2017, while representing Allen, Respondent filed a motion in Allen’s matter before the Tenth Circuit entitled “Appellant’s Unopposed Motion for 14-Day Extension of Time to File Reply Brief.” In his motion, Respondent informed both the court and his opposing counsel at the U.S. Attorney’s Office for the District of Colorado that he had multiple matters scheduled for oral arguments, and needed additional time to prepare, and included the following information in his motion:

“I also have been working on the following cases with upcoming deadlines in this Court: United States v. Archuleta, No. 16-1297 (oral argument set for May 9, 2017); United States v. Ivory, No. 15-3238 (oral argument set for May 10, 2017); United States v. Olea-Monarez, No. 16-1330 (opening brief due May 15, 2017); United States v. Allen, No. 17-1083 (opening brief due June 5, 2017).”

4. In writing that another client’s matter in United States v. Ivory was set for oral argument on May 10, 2017, Respondent knowingly made a false statement to both the court and his opposing counsel as United States v. Ivory was not set for oral argument, which Respondent knew at the time he filed his motion.

When the mistake was recognized, it was quickly corrected. Despite the correction, the ARDC made a finding that the lawyer engaged in fraudulent conduct in violation of Rule 8.4(d).

5. By reason of the conduct described above, Respondent has engaged in the following misconduct:

a. knowingly making a false statement of fact or law to a tribunal, by filing a motion for extension of time and including language that he needed additional time to prepare for oral argument in United States v. Ivory when Respondent knew there was no oral argument pending in the Ivory matter, in violation of Rule 3.3(a)(1) of the Illinois Rules of Professional Conduct (2010);

b. knowingly making a false statement of material fact or law to a third person, by serving government counsel with a motion for extension of time in which Respondent wrote that he was preparing for oral argument in United States v. Ivory when the Ivory matter was not set for oral argument, in violation of Rule 4.1(a) of the Illinois Rules of Professional Conduct (2010); andc. engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation, by purposely including false language that United States v. Ivory was set for oral argument when Respondent knew there was no oral argument pending, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct (2010

The Panel acknowledges that the lawyer made only one false statement in the motion and that he recevied no personal benefit from that false statement. In addition, the respondent lost his job and has now been publicly embarrassed.

Comment: in my opinion this small error should have been dealt with by a private reprimand, not a public finding that the lawyer violated Rule 8.4(c). This is disciplinary overkill.

ARDC Hearing Board Recommends Suspension of One Year For Lawyer Who Altered Firm’s Billing System

The ARDC Hearing Board recommended a one-year suspension for a lawyer who was found to have altered his firm’s billing system to improve his billings. The Hearing Board found as follows:

Sometime prior to May 2014, Respondent inadvertently discovered that his Juris profile allowed him to make changes to origination credits from his office computer. He testified he told his colleague Ryan Shpritz of his discovery and showed Shpritz how to make a change, but he did not tell Shpritz he intended to make changes. (Ans. at par. 8; Tr. 221, 268-70).
Respondent acknowledged that between May 2014 and April 2018 he made changes to origination credits. In addition to deleting an attorney with whom he was sharing origination credit, he also completely changed some origination credits from another attorney’s name to his own name. In making the changes, he considered how the client came to KSN. For example, when an inactive client came back to KSN through his efforts, he felt he should receive origination credit. In some instances he changed the origination credit in his favor, and then changed it back because he knew his actions were wrong. Respondent did not recall how many times he made changes, but acknowledged the KSN records reflect it was more than 200 times over a four-year period. (Ans. at par. 9; Tr. 220-23, 239, 252, 270-73).
Respondent testified he began making changes, even though he knew he had no authority to do so, because he was frustrated that his concerns were not addressed and it was a way to correct an improper allocation of credit on a handful of clients. He also felt, to some extent, that other people were riding on his coattails. He denied acting from ambition, and described himself as being conflicted over his conduct. He denied knowing he was among the highest paid non-equity principals. (Ans. at pars. 11, 12; Tr. 221-23, 229, 249-57, 267, 270, 274-78).
Discovery of Respondent’s Actions
Lieke Daley, controller at KSN and overseer of the firm’s database system, testified he received an email from a KSN attorney in April 2018 asking why certain client matters were not reflecting a split origination. After speaking to a Juris consultant, Daley began a time-consuming process of reviewing change logs, running reports, analyzing data, and confirming his findings with Juris. (Tr. 35-37, 41-43, 60).
Daley discovered that Respondent was the individual logged into the system when certain changes were made to origination credits. He identified two spreadsheets that reflect over 200 changes at the matter level and 20 changes at the client level. The changes resulted in an increase of $202,881.47 to Respondent’s book of business during the four year period and an increase of at least $30,000 to his origination compensation, to the detriment of other attorneys. The spreadsheets indicate numerous KSN attorneys were affected, including Robert Kogen and Ryan Shpritz. Once Daley was confident of his findings, he took the information to the executive committee. (Ans. at par. 10; Tr. 42, 46-55, 65, 72-73, 104; Adm. Exs. 3, 4).
Kogen testified he learned on April 18, 2018 that Respondent had changed origination credit for a number of accounts. On April 23, 2018 he and Matthew Moodhe, a member of KSN’s Executive Committee, met with Respondent for about two hours to question him about the changes. Kogen recalled Respondent vehemently denied doing so, and stated the changes must be a mistake. When they went to Respondent’s office to log in to Juris from Respondent’s computer, a screen appeared that was different than the screen on Kogen’s own computer and Kogen saw that changes could be made. After Respondent continued to deny changing any credits, Kogen suggested that he go home. (Ans. at par. 14; Tr. 93-96, 100-102, 120).
Kogen testified Respondent returned a short time later, broke down and admitted to what he had done. When Kogen asked for an explanation, Respondent stated he wanted to advance to equity partner quickly and once he started making changes, he could not stop. Kogen then spoke to his other partners and they agreed to terminate Respondent’s position with the firm. Kogen advised Respondent of their decision that evening. (Ans. at par. 14; Tr. 102-104).
Respondent attributed his initial denials of wrongdoing to being overwhelmed with fear and not thinking rationally. He knows he did not handle himself appropriately and testified if he were given the opportunity again, he would immediately admit his mistake. He agrees he was fired for conduct that was dishonest and which harmed his former law firm and colleagues. The day he was fired, he concluded his actions were wrong. (Tr. 224-25, 268).
Ryan Shpritz, an equity partner at KSN, testified Respondent was one of his best friends at the firm, but they have not spoken since shortly after Respondent’s termination. Shpritz recalled at that time Respondent was emotional and embarrassed; attributed his acts to pressure he place on himself to make equity principal; compared his behavior to an addiction; and stated he did not think he would be caught. Respondent testified he did not recall what he said at the time, but he would not characterize his actions as an addiction. (Tr. 126-29, 227-28).
Restitution to KSN
Kogen and Respondent both testified that Respondent offered to make restitution to KSN at their April 23, 2018 meeting, and again in subsequent email correspondence. No amount was discussed at those times. Kogen told Respondent he would get back to him, but did not do so. (Tr. 108-10, 229-31; Resp. Ex. 1).
On or about May 30, 2018 Respondent sent a letter to Kogen with a check for $30,432.22, which was the amount KSN had identified as being at issue in a communication to the ARDC. Respondent’s check included the words “Full Restitution” on the memo line. On June 11, 2018, a litigation attorney at KSN advised Respondent that the firm would not accept his check with the “Full Restitution” notation. Respondent sent a second check for $30,432.22 to KSN without any notation, and that check was accepted. (Tr. 111-13, 232-36; Resp. Exs. 2-5).

The Hearing Board found that the lawyer violated Rule 8.4(c) and recommended a suspension of one year. If you have questions about legal ethics, please review our legal ethics webpage.

ARDC Hearing Board Rejects Claim that Lawyer Wrongfully Obtained Health Insurance

In a recent decision, filed March 12, 2019. the ARDC Hearing Board rejected a claim that a lawyer wrongfully held herself out as an employee of a company to obtain health insurance. Since the lawyer won her case and the panel recommended that the charges be dismissed, I’m not going to list the lawyer’s name in this blog post. 

The Hearing Board found the following facts to be relevant:

During the time Respondent worked at law firms and General Growth Properties, she received health insurance as an employee through her employers’ policies. When she started her own firm in 2009, she obtained health insurance pursuant to the Consolidated Omnibus Reconciliation Act (Cobra). At that time Respondent and her husband, who was a partner with a large company, were living with Respondent’s parents in Highland Park. (Tr. 19-20, 27-28).
Between 2009 and October 2010, Respondent decided she wanted to have a second child. Her Cobra coverage had a waiting period of twelve months for maternity benefits, and other private insurance options had a similar requirement. Her husband did not have insurance coverage through his business. Respondent testified when she mentioned the situation to her father, he told her she could be added to Horizon’s policy. She understood from his statement that she was allowed to be on the policy. (Ans. at pars. 4, 6; Tr. 29-31, 76).
Daniel Michael recalled telling Respondent he would add her to the company insurance policy. He acknowledged Respondent never worked at Horizon, but he believed she qualified for coverage because she was part owner of the company. He was not aware that only employees were covered by the policy. When he told the office accountant, Robert Berman, to make sure Respondent was added to the policy, Berman did not ask any questions or express any concerns. Daniel testified that whenever his kids needed something, they got it. (Tr. 133-35, 138-39, 145).
In or about January 15, 2011, Respondent completed parts of a Blue Cross Blue Shield “Employee Application.” She acknowledged writing “Horizon Realty Group” in the space provided for the employer’s name, and writing her own name in the space for employee. She also provided her email address, social security number, and her husband’s and daughter’s names where requested. In a section designated “Employment Status,” the following options were provided:
__ Active Employee    __COBRA Continuation    __IL Continuation    __ If Retiree, retirement date ____
Respondent did not know who placed an “x” next to “Active Employee,” or who placed other marks on the page indicating “PPO” coverage and “family” health plan. She denied filling in the date of employment and the effective date of the policy, and did not know who completed that portion of the application. (Tr. 35-43, 50-51, 75; Adm. Ex. 1).
Respondent testified she did not want life insurance coverage and therefore did not provide information pertaining to that option, such as job title, salary amount and number of hours worked in a normal week. On a separate “Waiver of Coverage” form, Respondent wrote “Horizon Realty Group” as her employer and her own name as the employee, filled in her address and social security number, and indicated she was declining life insurance coverage. She denied writing in the date of hire on that form, and does not know who filled in that information. On a page entitled “Medical Questionnaire,” Respondent wrote her name and date of birth, and supplied information for her husband and daughter. (Tr. 38, 43-47, 50-52, 74-75; Adm. Ex. 2).
Respondent acknowledged signing the application, waiver, and medical questionnaire in the spaces provided for “Signature of Employee,” and dating them January 15, 2011. By signing the application, she acknowledged the following:
I apply for coverage as indicated above, for which I am or may be eligible under the agreement with Blue Cross and Blue Shield of Illinois, a Division of Health Care Service Corporation . . . and/or Fort Dearborn Life Insurance Company . . . which are herein exclusively called the Company. I have read the above statements and represent that they are true and complete to the best of my knowledge.
(Tr. 42, 49-51, 233; Adm. Ex. 1).
Respondent did not believe she was breaking any rule by signing the forms as an employee. She testified she never thought twice about the situation after her father told her she could be on the company policy. She acknowledged she never worked for Horizon, nor was she employed by her father or any of his businesses for any purpose. She testified her brother was an employee of Horizon, and she assumed he was on the Horizon policy. (Tr. 57-59, 233-34).
Jeffrey Michael testified he did not instruct anyone to give the Employee Application to Respondent, did not give it to her himself, did not fill in any information on Respondent’s initial application or on a subsequent form to enroll an additional child, and did not provide that information to anyone. He first became aware that Respondent was on the Horizon group insurance policy when he received a request for information from the ARDC or from a bankruptcy trustee. He was not aware the company was paying both the employer and employee contribution for Respondent. (Tr. 218-26).
Jeffrey and his family were on the Horizon policy during the 2011 to 2015 time period. He testified he works for the company full time, but denied he is an employee or receives payroll wages; rather, he is paid as the sole owner of an LLC. He confirmed that Respondent was not employed by the company, and no other non-employees were on the policy. (Tr. 219-21, 225).
Robert Berman, a certified public accountant, testified he worked for Horizon Realty in or about 2010 and 2011 as an in-house accountant. His only responsibility with respect to health insurance benefits was to supply blank forms and, at Daniel or Jeffrey Michael’s request, he faxed a blank application to Respondent. He knew at the time that no payroll was being processed for Respondent. He also knew that Jeffrey, who was an owner and worked at the company, was covered by the policy. Berman denied having any discussions with Respondent regarding the completion of the application and did not recall whether the form was completed and signed when she returned it. After receiving the application, he filled in the policy number, effective date of the policy and the date of employment, which information he might have received from Jeffrey, and sent the application in for processing. He denied having any further involvement with Respondent’s health insurance, any claims she filed, or the addition of dependents to the policy. (Tr. 193-99; Adm. Ex. 1).

The Findings:

In the case before us, Respondent acknowledged she completed portions of insurance applications that identified her as an employee of Horizon when, in fact, she never worked for Horizon. Further, while covered by the Horizon policy, she submitted claims for medical services and received payments from Blue Cross. Those facts, while seemingly incriminating, must be viewed in light of other evidence and Respondent’s explanations for her conduct.
Respondent denied that her actions stemmed from any calculated plan to deceive anyone; rather, she explained that in light of her father’s statement that she could be added to the Horizon policy, she failed to give any real thought to her eligibility. We found Respondent to be a very credible witness and her explanation to be reasonable. In our opinion, her deference to her father’s judgment was realistic in light of his position of authority in the company and the fact he would be expected to have knowledge of company benefits. Respondent’s legal expertise, while extensive in the area of commercial real estate, did not encompass the interpretation of insurance benefit plans.
Even if Respondent had given greater thought to the language of the application form, the wording of the acknowledgement paragraph was vague in that it stated she was applying for coverage for which she was eligible or “may become” eligible. The Blue Cross representative was not asked to interpret that language, nor was it referenced in the terminology definitions we reviewed. With respect to an “x” next to “Active Employee,” Respondent did not recall if she made that mark. Since at least one other person entered information on the application form, we draw no conclusions with respect to that mark. We also note there were no other options provided, such as “owner” or “other.”
Aside from the issue of Respondent’s motivations, which we conclude were innocent, we find there was a complete failure of proof as to whether she was, in fact, eligible for coverage. It was incumbent upon the Administrator to provide proof of the policy terms, requirements, benefits and definitions in place at the time of the alleged wrongdoing, but that proof was lacking. The two-page undated excerpt of definitions, which was represented to be part of a “group document,” was of little assistance without the entire document, which may have contained additional definitions or addressed the issue of coverage for company owners. The fact Respondent’s brother identified himself as an owner of the company who was covered by the policy, only adds to the confusion and the possibility that further definitions may exist. The Blue Cross representative did not know if the two-page excerpt was the document referenced in the policy booklet and notably, had no opinion as to whether Respondent qualified for coverage. Additionally, the benefit applications for Horizon that were presented to us were not in effect at the time Respondent first applied for coverage and we saw no evidence that Respondent was given a copy of the actual benefits policy or any other document that defined who was entitled to coverage. As such, she had no basis to make an independent judgment that would contradict her father’s assessment.
We also find it significant that no one involved with the application process raised any objections or concerns regarding Respondent’s coverage under the Horizon policy. We saw no evidence that anything was said to Respondent – by her father, her brother, the company accountant or the insurance broker who transmitted the policy to Blue Cross – that would cause Respondent to pause and consider her actions. Likewise, we saw no indication that Jeffrey Michael’s eligibility for coverage was ever questioned when he, like Respondent, was an owner of the company and not an employee.
We have reviewed cases in which attorneys engaged in dishonest conduct by seeking insurance coverage or other benefits for themselves of family members. In See e.g. those cases the attorneys were clearly aware that eligibility requirements could not be met. In re Lewis, 2016PR00007 (Review Bd. 2018) (exceptions pending before the Supreme Court) (attorney admitted that his eligibility for benefits was dependent on his status as a domestic partner, but continued claiming benefits for eight years after the domestic partnership ended); In re Bless, 2013PR00122, M.R. 28275 (Nov. 21, 2016) (attorney who was collecting disability benefits failed to obtain approval for secondary employment, although he knew such approval was required by workplace rules, in order to continue receiving full benefits); In re Worrell, 07 CH 60, M.R. 24407 (Mar. 21, 2011) (attorney acknowledged concealing information that would prevent her step-father from receiving public aid benefits); In re Volpe, 97 CH 33, M.R. 15040 (Nov. 24, 1998) (in order to obtain health benefits, attorney listed himself and family members as employees of a family business which had ceased to exist years earlier).
The present case is more in line with In re Cooney, 2010PR00123 (Nov. 30, 2011) where an attorney relied on his employer’s assurances that he could be included in a union health benefits plan, and that the arrangement had been approved by a union officer. The attorney signed a union membership application, which had been completed for him, which inaccurately identified him as a “carpenter.” He was not familiar with the law involved and did not research what was necessary to include nontrade employees in a union benefit plan. The attorney was reprimanded for undermining the justice system and bringing the legal profession into disrepute in violation of Supreme Court Rule 770 (which rule is no longer a basis for imposing discipline), but no finding of dishonest conduct was made.
We found Respondent to be a credible witness and accept her explanation that she gave no real thought to the insurance process and instead, simply acceded to her father’s decision. While her failure to give proper consideration to her actions and investigate her eligibility for coverage was not prudent behavior, especially for an attorney, we find no evidence of dishonest intent or purpose on her part.
During closing argument, counsel for the Administrator asserted that Respondent’s conduct constituted “constructive fraud,” which requires neither actual dishonesty nor intent to deceive. Cases have held that constructive fraud occurs where a special relationship gives rise to a legal or equitable duty that, when breached, results in a detrimental effect on public or private interests. See In re Gerard, 132 Ill. 2d 507, 528-29, 548 N.E.2d 1051 (1989); Cessna v. City of Danville, 296 Ill. App. 3d 156, 168-69, 693 N.E.2d 1264 (4th Dist. 1997). We find no such relationship here. We further note that neither a constructive fraud theory, nor the facts necessary to support it, were referenced or charged in the Complaint.1For the foregoing reasons, we conclude the Administrator failed to prove a violation of Rule 8.4(c) by clear and convincing evidence.
2.    Rule 8.4(b) – engaging in a criminal act that reflects adversely on Respondent’s honesty, trustworthiness or fitness as a lawyer
The Administrator charged Respondent with violating Rule 8.4(b) by “committing insurance fraud by submitting false claims when she was not entitled to insurance coverage as an employee of HRG (Horizon Realty Group).” The criminal statute cited in the Complaint states that a person commits insurance fraud by:
Knowingly obtain[ing], attempt[ing] to obtain, or caus[ing] to be obtained, by deception, control over the property of an insurance company or self-insured entity by the making of a false claim or by causing a false claim to be made on any policy of insurance issued by an insurance company or by the making of a false claim or by causing a false claim to be made to a self-insured entity, intending to deprive an insurance company or self-insured entity permanently of the use and benefit of that property.
720 ILCS 5/17-10.5(a)(1). A “false claim” is defined as any statement made to an insurer, insurance broker or insurance agent in support of a claim for payment or as part of, or in support of, an application for insurance when the statement 1) contains false or misleading information concerning any fact material to the claim; or 2) conceals the occurrence of any event material to a person’s entitlement to insurance benefits or payment, or the amount of any benefit to which the person is entitled. 720 ILCS 5/17-0.5.
We understand this charge to be based on Respondent’s application for insurance In January 2011 and her submission of claims between February 2011 and January 2016. As a preliminary matter, we note that the statute cited in the Complaint, although admitted by Respondent to be the controlling law at the time, actually took effect in July 2011 and therefore would not govern the application submitted by Respondent in January 2011. While the predecessor statute (720 ILCS 46-1(a) and 46-1(d)(5) (2010)) is nearly identical to the statute cited in the Complaint, a charge as serious as criminal conduct requires exactitude and we will not find a violation of a statute that was not in effect at the time the conduct in question occurred. The statute cited by the Administrator does apply to Respondent’s completion of the 2014 form adding a dependent to the policy, which she signed as an employee of Horizon, as well as to the insurance claims she submitted between July 1, 2011 and January 2016.
We find that a violation of Rule 8.4(b) was not proved by clear and convincing evidence. The criminal statute requires that a person “knowingly” engage in a “deceptive act” to gain control of the property of an insurance company. In our discussion of Rule 8.4(c), we concluded that Respondent’s conduct stemmed from her lack of attention and her assumptions based on statements made by her father, rather than from any knowing behavior or conscious deceptive act meant to deprive the insurance company of its property. Moreover, there was no evidence she had the proper materials in front of her that would establish the criteria for her insurance coverage, or that she knew those criteria. For those same reasons, we find Respondent did not knowingly engage in any deceptive act in violation of the insurance fraud statute.

Comment: the alleged misconduct was uncovered when the company went bankrupt. Still, it strikes me as remarkably petty for someone to report this attorney to the ARDC for what was at best a paperwork mistake. Further, none of the charged conduct had anything to do with the practice of law. The final issue that should be considered is – why do people have to go through such suffering to get health insurance in this country.
Edward X. Clinton, Jr.

ARDC Review Board Reduces Punishment For Attorney Who Received Domestic Partner Benefits

The case, in re Barry Michael Lewis, 2016 PR 00007, concerns allegations that an attorney allegedly continued to receive domestic partner insurance benefits for 8 years after he was ineligible to receive said benefits.

The Hearing Board found liability and recommended a six-month suspension. The ARDC Review Board reduced the punishment to censure because no clients were harmed. The Review Board explains its ruling:

The Hearing Board’s sanction analysis in this case is well-reasoned and guides our recommendation. However, we believe that, in recommending a six-month suspension, the Hearing Board gave insufficient consideration to the fact that Respondent’s conduct did not involve or impact any clients. While any conduct involving personal or professional dishonesty is inexcusable and warrants discipline, in this matter, Respondent’s record of representing clients and conducting himself ethically in his profession remains unblemished after over 40 years of practice. Imposing discipline that would trigger the requirements of Supreme Court Rule 764, including the requirement that Respondent notify clients, courts, and others of his discipline, seems unduly harsh and akin to punishment. We thus have strived to reach a sanction recommendation that recognizes the seriousness of Respondent’s misconduct and achieves the objectives of discipline but does not seek to punish Respondent.
Accordingly, taking into account Respondent’s misconduct as well as the aggravating and mitigating factors present here, and giving particular consideration to the fact that Respondent’s misconduct did not involve or affect any clients, we recommend that Respondent be suspended for five months. We believe that this sanction is commensurate with Respondent’s misconduct, consistent with discipline that has been imposed for comparable misconduct, and sufficient to serve the goals of attorney discipline and deter others from committing similar misconduct.

If you questions about a legal ethics situation, do not hesitate to contact me. Our legal ethics webpage is located here.

ARDC Alleges False Statements On Law School Application and Bar Application

Normally I do not write about complaints filed by the ARDC because the allegations have not been proven. In this case, I have decided to report on the amended complaint in the matter of In Re Vincenzo Field, 2018 PR 00015 because it illustrates that a lie on a law school application never goes away. The two relevant counts are provided below. (There were other counts in which Mr. Field was accused of lying in various cases he handled.).

The first two counts contain these allegations:

Count I

1. Respondent received a bachelor of arts degree in history and political science from McGill University in May, 1998.
2. In October, 2005, Respondent registered to take the Law School Admission Test (“LSAT”) but cancelled taking the test. In December, 2005, Respondent took the LSAT and scored 158. In September, 2006, Respondent retook the LSAT and scored 173.1
3. In late 2005, Respondent applied for admission to the University of Chicago Law School, but was denied admission to the 2006 entering class.
1 LSAT scores are based on the number of questions answered correctly and range from 120 to 180.
4. On or about December 4, 2006, Respondent submitted a second application for admission to the Juris Doctor program at the University of Chicago Law School. The application requested that Respondent submit, among other things, a resume and candidate statement as part of the application process. Respondent submitted his personal statement and an addendum which purportedly addressed gaps in Respondent’s academic record.
5. In his personal statement addendum, Respondent stated that in 1999 he had been diagnosed with a leiomyosarcoma (a form of stomach cancer) that he had undergone four separate surgeries to have tumors removed from his stomach, as well as radiation therapy and what he referred to as “countless” minor procedures to stop gastric bleeding. Respondent stated that the disease delayed completion of his MA degree, stalled work in the McGill University Ph.D program, and forced his withdrawal from the University of Michigan, where he had taken courses as a visiting scholar toward completion of a doctoral degree.
6. In his personal statement addendum, Respondent further stated that although he had just undergone surgery in September, 2005 and was still receiving radiation therapy, he had sat for the October and December 2005 LSAT exams. Respondent explained that he was not healthy enough to have sat for the exams, but that in January, 2006, for the first time in six years, Respondent had been given a clean bill of health by his oncologist. As a result, he scored well on the LSAT, with a score of 173, and was finishing course work at the University of Michigan.
7. Respondent’s statements that he had been diagnosed with and received treatment for leiomyosarcoma were false.
8. Respondent knew the statements that he had been diagnosed with and received treatment for leiomyosarcoma were false because at no time prior to submission of his application to the law school had Respondent been diagnosed with or received treatment for leiomyosarcoma or any other cancer, nor did Respondent have an illness that affected his LSAT performance, and did not take the LSAT exam in October, 2005.
9. At the time Respondent submitted the false information in his application for admission to the University of Chicago Law School, Respondent knew the information was false and intended to mislead the law school in order to advance his chances for admission to the Law School.
10. Based upon Respondent’s false application to the University of Chicago Law School, Respondent was admitted to the school. At no time prior to the time he commenced his studies or since completion of his studies at the Law School did Respondent amend his application to provide truthful information to the Law School.
11. By reason of the conduct above, Respondent has engaged in the following misconduct:
  1. conduct involving dishonesty, fraud, deceit, or misrepresentation, including, but not limited to Respondent’s false statement that he was diagnosed with and received treatment for leiomyosarcoma, had an illness that affected his LSAT performance and had taken the LSAT exam in October, 2005, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (1990).

Count II

13. On or about May 31, 2011, Respondent filed with the Illinois Board of Admissions to the Bar, an agency of the Supreme Court of Illinois, both a character and fitness registration application (“application to the bar”) and a separate application to take the bar examination. Respondent’s applications to the Board of Admissions were made pursuant to Supreme Court Rule 703, which requires proof of an applicant’s course of law studies and fulfillment of the requirements for and receipt of a first degree in law from a law school approved by the American Bar Association, and Supreme Court Rule 704, which requires each applicant to file with the Board of Admissions to the Bar both a character and fitness registration application and separate application to take the bar exam.
14. Respondent’s application to the bar (“questionnaire”) requested answers to 55 questions relating to his character and his potential fitness to practice law. Respondent completed the application, but did not disclose his false statement in his application to the University of Chicago Law School that he was diagnosed with and received treatment for leiomyosarcoma.
15. Question 55 of the questionnaire asked the following: “Do you understand that after your Character and Fitness Registration Application is filed, you will have a continuous reporting obligation and must notify the Board of Admissions of any changes or additions to the information provided in your application? This includes, but is not limited to, address changes, employment changes, criminal charges, disciplinary actions (educational, employment or other), and traffic violations, including any parking tickets that are not paid upon receipt.”
16. Respondent answered “Yes” to Question 55 of the questionnaire.
17. Question 53 of the questionnaire asked the following: “Is there any additional information with respect to possible misconduct or lack of moral qualification or general fitness on your part that is not otherwise disclosed by your answers to questions in this application?”
18. Respondent answered “No” to question 53 of the questionnaire. At no time prior to the February 21, 2018 voting of a complaint by the members of Panel C of the Inquiry Board, did Respondent advise the Committee on Character and Fitness that he had submitted a false information in his application for admission to the University of Chicago Law School. At no time prior to his admission to the Bar in the State of Illinois did Respondent amend or change his answer to question 53 of the questionnaire to provide the Committee on Character and Fitness information about the false information he included in his application for admission to the University of Chicago Law School.
19. Respondent’s preparation of his application to the bar, his answer to question 53 of the questionnaire, and his failure to advise the Committee on Character and Fitness of his conduct in submitting the false information in his application for admission for University of Chicago Law School were false and Respondent knew that his conduct was false because his application for admission to the Illinois Bar contained material omissions which were intended to deceive the Committee on Character and Fitness in order to advance Respondent’s chances for admission to the Illinois Bar.
20. On or about May 31, 2011, Respondent submitted the questionnaire to the Committee on Character and Fitness together with the remainder of his application to the Illinois Bar. On or about November 10, 2011, Respondent was admitted in reliance on the entire application, which was not accurate.
21. As a result of the conduct set forth above, Respondent has engaged in the following misconduct:
  1. knowingly making a statement of fact known by the applicant to be false in his application to the Bar, and failing to update that information, including but not limited to Respondent’s failure to reveal his false statement that he was diagnosed with and received treatment for leiomyosarcoma in his law school application, in violation of Rule 8.1(a) of the Illinois Rules of Professional Conduct;
  2. failing to disclose a fact necessary to correct a material misapprehension in his application to the Bar, and failing to update that information, including but not limited to Respondent’s false statement that he was diagnosed with and received treatment for leiomyosarcoma in his law school application, in violation of Rule 8.1(b) of the Illinois Rules of Professional Conduct; and
  3. conduct involving dishonesty, fraud, deceit, or misrepresentation, including but not limited to Respondent’s failure to disclose his false statement that he was diagnosed with and received treatment for leiomyosarcoma in his law school application in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct.

Comment: Any reader should withhold judgment until the ARDC Hearing Board makes a factual finding.

ARDC Hearing Board Recommends One-year Suspension For Lawyer Who Converted Settlement Funds

The case is In re Adebayo Olusgun Adesina, 17 PR 0097.

This is a simple case where the lawyer obtained a settlement for the client, but converted some of the settlement funds.

The ARDC Hearing Board found some of the charges unproven but did find the respondent failed to safeguard client funds and engaged in dishonest conduct with the client.  The Hearing Board recommended a one-year suspension.

The Key finding is this one:

2. Rule 1.15(a) Safeguarding Funds
Rule 1.15(a) requires lawyers to hold property of clients or third persons that is in the lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds must be held in a client trust account that meets the requirements set forth in Rule 1.15. Ill. Rs. Prof’l Conduct, R. 1.15(a) (2010). Respondent’s admissions and the evidence presented at hearing establish by clear and convincing evidence that Respondent violated this Rule.
Prior to disbursing funds owed to Blossom and third parties, the balance of Respondent’s client trust account fell below the amount Respondent should have been holding on numerous occasions. Respondent admitted he transferred funds from his client trust account to his checking account from which he paid personal and business expenses. This conduct was a clear violation of Rule 1.15(a).
3. Rule 8.4(c) Dishonest Conduct
Rule 8.4(c) prohibits attorneys from engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. Ill. Rs. Prof’l Conduct, R. 8.4(c) (2010). Respondent’s admissions and the evidence presented at hearing established that over several months Respondent intentionally took funds he knew belonged to Blossom and third parties. Respondent treated his client trust account as a personal account, going so far as to empty the client trust account on December 13, 2016. In addition, Respondent falsely stated to Blossom in October 2016 that all of her settlement funds were available in his client trust account when he knew that was not true. Accordingly, we find the Administrator proved by clear and convincing evidence that Respondent acted dishonestly.

ARDC Review Board Recommends 90 day Suspension for Shared Law Office Fiasco

The ARDC review board has recommended a 90-day suspension for Scott Thomas Kamin, 2016 PR 97. Kamin was the main tenant in a shared law office. He fell behind on the rent. When he was served with the eviction lawsuit he took service for the subtenants but failed to notify them of the existence of the eviction lawsuit.

The facts are described as follows:

The Administrator brought a one-count complaint against Respondent, charging him with engaging in dishonest conduct in connection with an eviction matter, in violation of 2010 Illinois Rule of Professional Conduct 8.4(c). Following a hearing at which Respondent was represented by counsel, the Hearing Board found that Respondent had committed the charged misconduct and recommended that he be suspended for 90 days.
Respondent filed exceptions to the Hearing Board’s dishonesty finding as well as its sanction recommendation. He asks this Board to reverse the Hearing Board’s misconduct finding and to dismiss the complaint against him. In the alternative, he argues that, if this Board affirms the misconduct finding, he should be reprimanded or censured instead of suspended.
For the reasons that follow, we affirm the Hearing Board’s dishonesty finding and agree with its recommendation that Respondent be suspended for 90 days for his misconduct.

Respondent was admitted to practice in Illinois in 1995, and has been a solo practitioner since 1997, focusing his practice on criminal and civil rights matters. He has no prior misconduct.
In 2015 and early 2016, Respondent leased office space at 55 East Jackson Boulevard in Chicago. He, in turn, sublet office space to other attorneys, including Carla Buterman, Eric Rakoczy, Phillip Brigham, Jason Epstein, and a few others. In March 2015, Respondent fell behind in his rent payments, and in September 2015, he stopped paying rent entirely. During that time, however, he continued accepting rent payments from his subtenants, who did not know that he had fallen behind in his own rent payments, and was struggling to pay his other bills.
On November 5, 2015, attorney Allen B. Glass filed an eviction lawsuit on behalf of the landlord against Respondent personally, his law office, and the law offices of Brigham, Epstein, Rakoczy, and “unknown occupants.” Glass testified at Respondent’s hearing that the subtenants had to be named in the lawsuit for possession purposes.
On November 6, Cook County Sheriff’s Deputy Tony R. Lampkin went to Respondent’s office and served the summons on him. He asked Respondent if he was authorized to accept service for the others on the service list, and Respondent said that he was. Lampkin thus indicated on the affidavit of service that he had left copies of the summonses and complaint with authorized persons. The subtenants were not in the office at the time Respondent accepted service. Respondent thinks he put the complaint and summonses in his desk drawer.
Buterman (who was not named in the complaint), Epstein, Brigham, and Rakoczy all testified that they did not authorize Respondent to accept service of process for them, and that Respondent did not tell them about the lawsuit or that they were named as defendants.

Respondent acknowledged that he accepted service on behalf of his subtenants; that he did not seek their authority to accept service on their behalf; and that he did not tell any of them that he had accepted service on their behalf.
On at least three occasions, Glass and Respondent appeared in court on the eviction lawsuit. Respondent did not tell the judge that the subtenants were not properly served. Glass testified that Respondent represented to the court that he was appearing on behalf of himself and the other named defendants. Respondent denied making any such representation and testified that the issue of who represented the subtenants never came up. The Hearing Board credited Glass’s testimony, not Respondent’s.
Respondent told Glass that he would be able to pay his back rent when he received a settlement from the City of Chicago. Glass agreed to continue the matter a few times to give Respondent a chance to present a payment plan. But the settlement that Respondent expected did not come through, and Respondent did not present a payment plan or pay any of his back rent.
Respondent told Glass that he would be able to pay his back rent when he received a settlement from the City of Chicago. Glass agreed to continue the matter a few times to give Respondent a chance to present a payment plan. The settlement that Respondent expected did not materialize and Respondent never presented a payment plan or paid any of his back rent.
Consequently, on January 21, 2016, the court entered an order of eviction and a judgment of $43,468.48 against Respondent and his law office subtenants. Respondent’s subtenants learned of the order of eviction around the time it was entered, or shortly thereafter.
Buterman testified that she learned about the impending eviction around January 19, when another subtenant, who was not named in the complaint, told her he thought they were being evicted. Respondent told Buterman about the eviction about a day later. He showed her a copy of the eviction complaint, after she asked to see it, but did not give her a copy. According to Buterman, Respondent said he had accepted service of the complaint on behalf of everyone in the office and then put the complaint in his drawer because he did not want anyone to know he had been served with the complaint. He told her that he did not notify her about the eviction because he feared the subtenants would leave before he had a chance to work things out with the landlord.
Rakoczy testified that Respondent told him about the eviction at the end of January. Respondent did not tell him that an order of possession had been entered or show him the complaint or summons. Rakoczy did not learn about the lawsuit or that he had been named as a defendant until after he had moved out in February. He learned about the lawsuit from either Brigham or Buterman.
Brigham testified that he learned of the eviction from Rakoczy, and that Respondent came to talk with him later that day or the next day. Respondent told Brigham he made a business decision not to notify anyone and that he thought he would be able to resolve the eviction lawsuit because he had expected some cases to settle. Respondent did not show or give Brigham a copy of the complaint, or tell Brigham that he was named as a defendant.
Epstein testified that he learned of the eviction when Respondent and another male subtenant came into his office and told him they had to move in ten to fourteen days. He did not recall Respondent saying that a lawsuit had been filed and that he had been named as a defendant. Respondent did not give Epstein a copy of the complaint or summons, or tell Epstein that he had accepted service on Epstein’s behalf. Epstein learned about the judgment after his conversation with Respondent.
After all of the tenants had moved out of 55 East Jackson, Rakoczy, Brigham, and Epstein filed motions to vacate the judgment against them, on the ground that service was improper because Respondent was not authorized to accept service for them. Glass agreed to vacate the judgment against the subtenants, and the court issued an order vacating the judgment against them.

Misconduct Findings 

The Hearing Board found that Respondent had committed the misconduct with which he was charged – engaging in dishonest conduct in violation of Rule 8.4(c) by stating to Deputy Lampkin that he was authorized to accept service on behalf of the subtenants when he was not; failing to inform the court he did not have authority to accept service or appear on behalf of the subtenants; and concealing the eviction lawsuit from the subtenants.
Regarding the misrepresentation to Lampkin, the Hearing Board inferred dishonesty from the circumstances. It found that, contrary to Respondent’s assertion to Lampkin, he did not have authority to accept service on behalf of the subtenants nor did he have reason to believe that he had such authority. It reasoned that, given his experience as an attorney, his financial troubles, and his subsequent concealment of the lawsuit from his subtenants, it did not believe that his representation to Lampkin was an innocent mistake.
The Hearing Board also found that Respondent had concealed the lawsuit from his subtenants, noting that he kept the complaint and summonses in his desk drawer and decided not to tell the subtenants about the lawsuit or that they were named defendants in it. It found not credible Respondent’s explanation that not telling the subtenants about the lawsuit was a business decision, finding it more likely that he did not want the subtenants to learn that he had not been remitting their payments to the landlord and wanted to continue receiving their payments in order to pay his expenses. It found credible the subtenants’ testimony that Respondent did not provide them with a copy of the complaint after informing them of the impending eviction, which it found to be further evidence of his intent to conceal their status as defendants. It found it apparent that Respondent did not want the subtenants to know they were parties to the lawsuit or that he had taken action on their behalf without their knowledge and consent.
And last, the Hearing Board found that Respondent’s failure to inform the court that he had accepted service on behalf of the subtenant defendants without their authority was dishonest. It found that he knew he had accepted service without authority and that the subtenants had no knowledge of the lawsuit and were not properly before the court, and yet he made no effort to advise the court of the improper service, even after the subtenants were named in the order of possession. It found that, as an officer of the court and the only party who knew of the improper service, he had an obligation to inform the court of the facts of the case. It thus concluded that Respondent intentionally concealed information about service from the court, and from opposing counsel, because he did not want anyone involved in the lawsuit to know he was acting without the subtenants’ authority.

The Review Board upheld the finding of a violation of Rule 8.4(c).

ARDC Hearing Board Orders Suspension For Failure To Pay Income Taxes And Related Misconduct

The case is captioned Robert Kent Gray, 2016 PR 00045. This case is an example of carelessness magnified into an ARDC proceeding because an attorney did not file his income tax returns for several years and then was put in a terrible jam when his wife sought a divorce from him.

The Hearing Board found that Gray did not file income tax returns from 2010-14 and then lied about it when the issue arose in his divorce proceeding. The respondent took the Fifth Amendment in response to each question asked in his deposition.  The Hearing Board voted a one-year suspension. The Review Board also voted for a one-year suspension. The dissenting member of the panel would have given Gray a six-month suspension.

The facts are described as follows:

Respondent’s Conduct During His Divorce Proceedings
Per the allegations and charges in Count I of the amended complaint, during his divorce proceedings, Respondent repeatedly ignored the court’s order to produce his tax returns for 2010, 2011, and 2012, and to obtain transcripts of his tax returns for those years from the IRS. Moreover, he did not file federal or state tax returns or pay taxes for the years 2010 through 2014. He thus knowingly made three false statements – one in a pleading, one in a letter to opposing counsel, and one during a hearing – regarding his efforts to obtain transcripts of his tax returns, because he knew that no transcripts of his returns existed.

Respondent’s Unauthorized Practice of Law
Andrew Oliva, Registrar for the ARDC, testified by evidence deposition that Respondent did not timely register by January 1, 2015, and that, on March 10, 2015, he was removed from the Master Roll. Mr. Oliva testified that Respondent was sent multiple registration notices, by both mail and e-mail, and none of them was returned as undeliverable. Respondent became registered again on April 17, 2015. Between March 10 and April 17, while he was removed from the Master Roll, Respondent performed legal work for the Villages of Southern View and Illiopolis.

The Review Board rejected the challenge that Gray made to the Hearing Board’s finding. It held that (a) the Administrator was not required to obtain a judicial determination when Gray asserted the Fifth Amendment privilege; (b) the admission of an evidence deposition of the ARDC clerk was not an error, and (c) the Hearing Board was correct in finding that there ware aggravating factors.

The most interesting issue raised in the appeal is whether or not the Hearing Board was correct to sanction Gray for failing to sign an IRS form to release his tax returns. The Panel Discussion:

Respondent argues that the sanction that the Hearing Panel Chair imposed on him for not signing IRS Form 8821 – deeming the allegations and charges in Count I admitted – is not permitted by the ARDC Rules. He contends that the language of the sanction was “pulled” from Rule 236, regarding a failure to answer. He has not fully articulated his reasoning, but seems to argue that the sanction relieved the Administrator of the burden of proving his case and deprived Respondent of presenting exculpatory evidence, including his own testimony and the IRS transcripts, which would have defeated the Administrator’s burden of proof. Supreme Court Rule 219(c) and Commission Rule 260(e) provide that the Hearing Board may sanction a party’s unreasonable refusal to comply with requests for discovery or with orders entered by the Hearing Board. In re Spiezer, 00 SH 49 (Review Board, March 28, 2002), at 5, petition for leave to file exceptions allowed, M.R. 18161 (Sept. 19, 2002). This Board reviews the Hearing Board’s sanction decisions for abuse of discretion. Id.
A hearing panel chair can deem allegations admitted as a discovery sanction for an attorney’s willful failure to comply with a discovery order. See Id. (hearing panel chair struck respondent’s answer, deemed allegations of the complaint admitted, and barred respondent from testifying at hearing after respondent failed to comply with discovery orders); In re Duval, 2012PR00018 (Hearing Bd., June 12, 2014), approved and confirmed, M.R. 26849 (Sept. 12, 2014) (hearing panel chair entered order deeming allegations of complaint admitted after respondent refused to provide signed medical releases and other information to the Administrator).
Because Respondent did not comply with the order to sign the IRS form, and did not respond to the Administrator’s motion for sanctions, the Hearing Panel Chair did not abuse his discretion in granting the motion for sanctions and sanctioning Respondent for his willful failure to comply with the discovery order.
Respondent links the Hearing Panel Chair’s sanction order with the Administrator’s purported failure to follow the Zisook procedure, contending that the Administrator ignored the Zisook procedure but then filed a motion for sanctions against Respondent because he had not signed and produced IRS Form 8821, as to which he also asserted his Fifth-Amendment privilege. Respondent claims that, by deviating from the Zisook procedure but then “sidestepping” the required burden of proof by having the allegations deemed admitted, the Administrator avoided having to actually prove his case. For this reason, Respondent argues, the charges in Count I should be dismissed.
As noted above, the Administrator was not required to follow the procedure set forth in Zisook. Moreover, Respondent was not sanctioned for his invocation of the Fifth Amendment, but for his failure to comply with a discovery order. While he contends that he had a right under the Fifth Amendment not to sign IRS Form 8821, signing an authorization form that would allow a third party to produce documents is not the type of testimonial communication that the Fifth Amendment is intended to protect. See Fisher v. United States, 425 U.S. 391, 408, 96 S. Ct. 1569 (1976) (holding that defendants could not assert Fifth Amendment privilege to stop production of tax records in possession of attorneys and accountants because production of documents by a third party is not a testimonial communication). Consequently, Respondent could not avoid complying with the order to sign and produce Form 8821 by invoking the Fifth Amendment to [sic].

Opinion at 9-10.

This is a case where the lawyer was careless and then, due to the aggressive and contentious nature of his divorce, was placed in a terrible position.

I understand why he took the Fifth Amendment, but there may have been a better way to resolve this mess. There is no question that Gray was a competent attorney and was able to do his work. His carelessness and lack of attention to detail (in my opinion) was the reason for the harsh punishment.

Edward X. Clinton, Jr.

ARDC Hearing Board Recommends Five Month Suspension For Lawyer Who Created Fake Loan Documents

Some of the allegations in ARDC matters are hard for me to believe. This is one such case. A lawyer was accused of dishonesty and fraud in violation of Rule 8.4(c). Essentially, the lawyer prepared fake subordination agreements so that he could secure additional financing for a family real estate business. A subordination agreement takes a lender with priority and moves that lender behind another lender. Lenders are reluctant to subordinate their loans because they lose their first claim to the collateral and give another lender an advantage. The Hearing Board voted a five-month suspension.

The facts, as found by the Hearing Board, were as follows:

Before becoming a lawyer, Respondent worked as a realtor and loan originator. He saw a business opportunity in the need of some real estate purchasers for short term loans until they could obtain long term financing. Consequently, Respondent formed LOP Capital, LLC (LOP). LOP made short term loans at a relatively high interest rate, until the borrower could get a conventional loan at a lower rate. The arrangement presupposed that the buyer would quickly obtain other financing and repay the loan from LOP. (Tr. 17-20, 89-93).
Respondent’s father and grandfather co-owed LOP with Respondent. They provided the funds with which to begin LOP’s operations, by taking out loans from American Community
Bank and Trust (American Community). The loans exceeded $1.5 million. Respondent’s father and grandfather each owned real estate, which they pledged to secure these loans. Respondent was to make the payments due to American Community, which included monthly payments of approximately $10,000. (Ans. at par. 1; Tr. 18-23).
LOP enjoyed some initial success. However, beginning in 2008, widespread economic recession caused sharp declines in the real estate market and property values. This created significant problems for LOP, in bringing in revenue and in maintaining its loans from American Community. (Ans. at par. 1; Tr. 20-25, 42-43, 92-93).
As time went on, American Community began to require that its loans be renewed at increasingly shorter intervals. In the renewal process, American Community would assess the adequacy of existing collateral and sometimes required additional collateral to renew a loan. In that context, in 2009 or 2010, LOP executed a deed in trust to American Community, pledging property LOP owned in Stephens County, Georgia as additional collateral for LOP’s obligations to American Community. (Ans. at par. 1; Tr. 24-25, 43-44).
LOP’s financial problems continued over time. It became increasingly difficult for Respondent to make the payments due to American Community. Respondent described his concern with avoiding foreclosure, particularly on property owned by his father or grandfather. Respondent also described his reluctance to inform his father of the situation. (Ans. at par. 1; Tr. 23-26, 32-34, 42-45; Adm. Exs. 3-6).
In an effort to obtain funds to pay American Community, Respondent tried to sell property and borrow additional funds. Respondent received some loans from individuals, but found only one commercial lender willing to lend funds to him. That lender, Prime Equity of Atlanta, Georgia, agreed to lend LOP $25,000, at eighteen percent interest, provided it received a first security interest in LOP’s property in Georgia. That was the same property LOP had pledged to American Community. (Ans. at par. 2; Tr. 25-28, 79-80, 112, 114).
Respondent assumed American Community would not agree to subordinate its interest to Prime Equity, and he did not ask anyone at American Community about this issue. Instead, on or about January 10, 2011, Respondent created a document entitled “Subordination Agreement.” According to this document, American Community agreed to subordinate its rights in the Georgia property to the interests of Prime Equity. Respondent signed the document, using the names of American Community’s vice president, Rick Francois, and its chief financial officer, Robert W. Getty. Respondent then signed Mark Tarinelli’s name and used Tarinelli’s notary stamp to purportedly notarize the other signatures. (Ans. at pars. 3, 4; Tr. 26-30; Adm. Ex. 1).
Respondent attempted to mimic the signatures of each of these individuals. He did not have authority from any of them to sign their names to this document and did not have authority to use Tarinelli’s notary stamp. Tarinelli was an attorney with whom Respondent was working, and Respondent had access to Tarinelli’s office. Respondent likewise did not have any authority from American Community to take action on its behalf in relation to the Georgia property. Respondent knew the purported Subordination Agreement was false and that his conduct was wrong. (Ans. at pars. 4, 5; Tr. 26-30, 59, 64-65, 77-78).
Respondent tendered the Subordination Agreement to Prime Equity and caused the document to be filed with the local court clerk. Respondent obtained the loan and used the proceeds to pay amounts past due to American Community. (Ans. at par. 6; Tr. 30-31, 36-37).
Respondent also created a document entitled “Cancellation of Subordination Agreement” (Cancellation), which purported to show that American Community cancelled the Subordination Agreement. On this document, and without authority, Respondent signed Francois’s name and purported to notarize that signature using Tarinelli’s name and notary stamp. Respondent knew the Cancellation was false. Respondent recorded the Cancellation, on or about June 1, 2012, by filing it with the local court clerk. (Ans. at pars. 7, 8, 9; Tr. 31, 53, 64-65, 77-78; Adm. Ex. 2)1.
At that time, Respondent had not fully paid the loans from Prime Equity or American Community. According to Respondent’s testimony, he intended to record the Cancellation as soon as the loan from Prime Equity was ready to go and the purpose of the Cancellation was to put things back in order, with American Community in a first position. Respondent did not notify anyone at American Community of the Subordination Agreement or Cancellation. Respondent knew if he did so the documents would be discovered as forgeries. (Tr. 53, 57, 113).
The Subordination Agreement and Cancellation came to light when American Community later foreclosed on the Georgia property. Francois first learned of those documents when they were sent to him in 2015. (Tr. 63-68). Francois sent the documents to Tarinelli, who likewise first saw them at that time, in August 2015. (Tr. 77, 85, 87).

The Hearing Board was unimpressed with the “remorse” shown by the lawyer:

Respondent engaged in serious misconduct, which entailed clear dishonesty. Respondent prepared and signed two documents, which he knew he had no authority to execute. Each document purportedly affected the right of a lender in collateral pledged to secure its loan. Respondent also falsely notarized the two documents, which ratcheted up the level of dishonesty present in this case.
Respondent’s misconduct was not a momentary lapse of judgment. Preparing, executing and purportedly notarizing these two documents involved a number of steps. Respondent also filed each document, filing the Cancellation a year and a half after the Subordination Agreement.
There was little mitigation. Respondent described some limited pro bono work. He did not present any character testimony.
Respondent suggested the Cancellation was mitigating, because it undid the Subordination Agreement. We disagree. Respondent’s theory suggests he does not understand the impact of his conduct. The Cancellation, if genuine, would have affected Prime Equity, whose loan had not been repaid when Respondent recorded the Cancellation. More fundamentally, the Cancellation constituted a second fraudulent document, which Respondent prepared knowing it was false and which provided a way to conceal the Subordination Agreement.
Respondent acknowledged his conduct was wrong and expressed remorse. However, to us, Respondent’s remorse appeared less related to his misconduct than to the overall situation involving the failure of LOP.

ARDC Review Board Recommends 60 day suspension for Lawyer Who Created Fake Corporations To Contest a Mechanic’s Lien

A lawyer was hired to defend a mechanic’s lien action. Typically, a mechanic’s lien is filed by a contractor who did work on a construction project. The lien is designed to force the owner of the property to pay the outstanding invoice. Lien law is tricky and complex.

Here the respondent was retained by two homeowners to defend a mechanic’s lien lawsuit. Instead of defending the lien, the respondent created two spurious entities to apparently convince the court that the lien was invalid. The Hearing Board found that this conduct involved dishonesty and false statements to a tribunal and recommended a 30-day suspension. The Review Board increased the suspension to 60 days.

The Review Board recites the facts in this manner:

In July 2011, Respondent began representing David and Jody Bilstrom in a mechanic’s-lien action that was filed against them in 2006 by Artisan Design Build, LLC, a Wisconsin limited liability company. Respondent took over the case after the Bilstroms’ prior counsel withdrew. Respondent believed that he would not have difficulty resolving the matter, because it was his opinion that the mechanic’s lien was invalid.
In the initial complaint, as well as in an amended complaint filed in 2008, the plaintiff was incorrectly named “Artisan Design Build, Inc.” Soon after filing his appearance in the matter, Respondent prepared articles of incorporation for an Illinois entity named “Artisan Design Build, Inc.” – the exact name of the plaintiff as captioned in the complaint and amended complaint. Respondent designated his employee, Steven Schwartz, as the registered agent for Artisan Design Build, Inc. He listed the company’s registered business address as 2101 St. John’s Avenue in Highland Park, Illinois, which was Mr. Schwartz’s home address at the time.
At Respondent’s direction, Mr. Schwartz signed the Articles of Incorporation and filed them with the Illinois Secretary of State. Respondent paid the filing fee. Respondent admitted in his answer to the disciplinary complaint against him that Artisan Design Build, Inc. never undertook any work or transacted any business in Illinois or anywhere else.
On or about July 26, 2011, Respondent drafted a letter to himself purportedly from Mr. Schwartz as the sole shareholder of Artisan Design Build, Inc. Respondent directed his secretary to type the letter and Mr. Schwartz to sign it. The letter stated, among other things, that Mr. Schwartz knew nothing about the lawsuit involving a corporation with the name Artisan Design Build, Inc.; was concerned that the pending lawsuit could have a negative impact on his corporation; and wanted the lawsuit terminated. Respondent admitted at his disciplinary hearing that these statements purportedly by Mr. Schwartz were false, in that Mr. Schwartz knew all about the lawsuit because he was working for Respondent, and was not concerned about the effect of the lawsuit on his corporation.
About nine days after drafting the letter, Respondent drafted and filed a motion to dismiss the complaint against the Bilstroms. In the motion, he argued that the only corporation with the name “Artisan Design Build, Inc.” that has ever been qualified to do business in Illinois was the corporation for which articles of incorporation were filed in July 2011. He attached the July 26 letter signed by Mr. Schwartz and claimed that it was from the individual who filed those articles of incorporation and who is its sole shareholder. He further argued that the plaintiff in the lawsuit had not obtained authority to conduct business in Illinois, never existed in Illinois, and had not paid a franchise tax or license fee, and that its authority to conduct business in Illinois had been revoked, so that it could not maintain a civil action in an Illinois court.
At his disciplinary hearing, Respondent admitted that he did not inform the court that Mr. Schwartz was his employee and had formed the corporation at Respondent’s direction.
He testified that he believed Artisan Design Build, LLC’s original lien was invalid, and that the company was being sneaky in creating a lien under a different name and foreclosing on that lien, and he wanted the court to understand that that was something that should not be done. He acknowledged that he should have made his points in a straightforward manner rather than by drafting and attaching the letter. He testified that his intent in preparing and attaching the letter was to make sure that Artisan Design Build, LLC could not proceed under the name Artisan Design Build, Inc., and that his goal was to have the plaintiff proceed as Artisan Design Build, LLC. He denied that he was trying to deceive anyone with the letter.
On November 29, 2011, the court granted Artisan Design Build, LLC leave to file a second amended complaint to correct its captioned name, and denied as moot Respondent’s motion to dismiss.
In August 2012, while the mechanic’s-lien lawsuit was still pending, the Bilstroms sought to get a mortgage from a bank. The bank was concerned about the litigation and wanted to make sure that the mechanic’s lien did not exist. Respondent provided a title report that did not show the lien and offered to provide his professional opinion that the lien was invalid, but that was not sufficient to assuage the bank’s concern about the litigation. According to Respondent, the bank wanted “external documentation.”
Respondent thus drafted a “Release of Mechanic’s Lien” using the same lien number as the one that Artisan Design Build, LLC had recorded in 2006. The purported release listed the lienholder’s name as “Artisan Design Build, Inc.” and stated that Artisan Design Build, Inc. released the claim for lien against the Bilstroms and authorized the DuPage County Recorder of Deeds to enter satisfaction and release of the lien.

Respondent directed his employee Mr. Schwartz, as registered agent for Artisan Design Build, Inc., to sign the release, and directed his secretary to notarize it. Respondent or
someone acting at his direction presented the purported release to the DuPage County Recorder of Deeds and caused it to be recorded. Respondent paid the filing fee.
At his hearing, Respondent admitted he knew that Artisan Design Build, Inc. did not file a lien; that, at no time on or after the date the lien was filed, had the mechanic’s lien been satisfied or released; that, at no time did he have the authority of Artisan Design Build, LLC to release the mechanic’s lien; and that Mr. Schwartz did not have authority to release the lien.
A few weeks after filing the purported release, Respondent realized the release referred to “Artisan Design Build, Inc.” instead of “Artisan Design Build, LLC,” so he drafted a second release for the same lien number, but under the name of “Artisan Design Build, LLC.” Respondent directed Mr. Schwartz to sign, and his secretary to notarize, the second release. He presented the second release to the DuPage County Recorder of Deeds and caused the release to be recorded. He paid the filing fee.
Respondent admitted that Artisan Design Build, LLC did not satisfy or release the mechanic’s lien; that he knew that Mr. Schwartz was not authorized to release the lien; that Artisan Design Build, LLC did not authorize him to release the lien; and that he had no rights in the Artisan Design Build, LLC name.
In September 2012, Respondent or someone acting at his direction filed an application to cancel the assumed corporate name of Artisan Design Build, Inc. At Respondent’s direction, Mr. Schwartz signed the application as the company’s president. On the same day, to comport with the information in the second purported release, Respondent drafted and caused to be filed with the Illinois Secretary of State articles of incorporation for an entity named “Artisan Design Build, LLC,” with the same registered business address as Artisan Design Build, Inc. – Mr. Schwartz’s home address. Respondent directed Mr. Schwartz to sign the articles of incorporation for Artisan Design Build, LLC as its manager. Respondent paid the filing fee.
Respondent admitted that Artisan Design Build, LLC, the Illinois company that he organized, never transacted business in Illinois, and that neither he nor Mr. Schwartz transacted business on behalf of Artisan Design Build, LLC in Illinois.
At his hearing, Respondent testified that he created the purported releases because the bank wanted outside documentation. He testified that he knew the liens “were gone” and “invalid to begin with.” He testified that he did not think he was doing anything wrong because he “was filing a release of something that didn’t exist,” so “wasn’t releasing anything.” He testified that he had planned to use the releases, but did not use them outside of recording them.

My opinion: given the amount of deceptive conduct involved here and the creation of fake documents purporting to release mechanic’s liens and the failure to express remorse, I’m surprised the suspension was for only 60 days. For anyone who is facing a harsh penalty, this case can be used as an example of why your client should not be suspended for more than 60 days.

Edward X. Clinton, Jr. 

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