ATTORNEY GRIEVANCE COM'N OF MARYLAND v. Bereano

RODOWSKY, Judge. Bruce C. Bereano (Bereano), a member of the bar of this Court since 1969, was convicted in the United States District Court for the District of Maryland in November 1994 on seven counts of mail fraud, in violation of 18 U.S.C. §§ 1341 and 1346. In August 1998, the United States Court of Appeals for the Fourth Circuit (the Fourth Circuit) in an unpublished opinion upheld the finding of guilt but remanded for resen-tencing. See United States v. Bereano, 161 F.3d 3 (4th Cir.1998) (table decision).

A few months later, the District of Columbia Court of Appeals disbarred Bereano on the ground that mail fraud is a “crime involving moral turpitude per se.” In re Bereano, 719 A.2d 98, 99 (D.C.1998) (per curiam). The United States Supreme Court then disbarred Bereano on January 25, 1999. In re Bereano, 525 U.S. 1119 , 119 S.Ct. 921 , 142 L.Ed.2d 917 (1999) (mem.). In May 1999, that Court ³²³ also denied Bereano’s petition for a writ of certiorari to review his conviction.

See Bereano v. United States, 525 U.S. 1119 , 119 S.Ct. 1802 , 143 L.Ed.2d 1007 (1999) (mem.). Bereano’s conviction having become final, the Attorney Grievance Commission, through Bar Counsel, petitioned this Court for disciplinary action against Bereano, alleging that he had violated the Maryland Rules of Professional Conduct (RPC), Rule 8.4(a), (b), (c), and (d). 1 The petition was referred for hearing to Judge Eugene M. Lerner of the Circuit Court for Anne Arundel County. In findings and conclusions issued on September 23, 1999, Judge Lerner determined that Bereano had violated subsections (a), (b), (c), and (d) of RPC 8.4, and, in his report to this Court, Judge Lerner added a recommendation for “a sanction less than disbarment.” In this Court Bar Counsel recommends that Bereano be disbarred. Bereano took no exceptions to Judge Lerner’s findings.

In this Court he requests “a suspension of limited duration for a set time period so that [he] can return to the practice of Law.” In our review to determine an appropriate sanction, we accept as facts the allegations of the counts of the federal indictment on which Bereano was convicted, as well as the evidence set forth in the Fourth Circuit’s opinion to demonstrate that there was sufficient evidence to support the convictions. See Maryland Rule 16-710(e)(l) (“[A] final judgment by a judicial tribunal in another proceeding convicting an attorney of a crime shall be conclusive proof of the guilt of the attorney of that crime.”). ³²⁴ I Bereano is a former clerk for a federal district court judge in Virginia and a former counsel to the Maryland Senate. He has taught law as an adjunct faculty member. For more than twenty years he has engaged in legislative lobbying before the Maryland General Assembly and in the private practice of law.

Prior to the instant matter Bereano never has been the subject of professional discipline in any form. The federal indictment alleged that, from May 1990 until June 1991, Bereano “knowingly and willfully devise[d] and intended] to devise a scheme and artifice to defraud” his lobbying clients of money by false pretenses, in violation of 18 U.S.C. § 1341 , and to deprive them of their right to his “loyal, faithful, honest, and unbiased service[s],” in violation of 18 U.S.C. § 1346 . 2 The Government alleged that Bereano devised the mail fraud scheme in order to “conceal the true identities of the actual contributors of campaign funds,” and to “make political contributions in excess of the limitations imposed by Maryland state election law.” 3 Bereano would ³²⁵ request employees of his law firm to make political contributions in their own names to candidates, and then he would reimburse these employees with checks drawn on the law firm’s operating account. In addition Bereano would have his employees cash checks drawn on the law firm’s operating account and made payable to them, and then return the cash to him. Bereano would transfer this cash to members of his family, who would use it to make contributions in their names to Bereano’s political action committee.

The checks drawn on the law firm’s account bore false notations describing the funds as reimbursements for expenses unrelated to political contributions. Bereano caused these checks to be recorded as a disbursement for, among other things, “legislative entertainment.” In addition to Bereano’s fee for services, his lobbying clients had agreed to pay reasonable expenses, including, specifically, “legislative entertainment,” but, as representatives from these clients testified at the federal trial, Bereano was not authorized to make political contributions on their behalf or to bill his lobbying clients for political contributions, made by him. Each count of the indictment concluded that Bereano mailed his lobbying clients bills that “fraudulently includ[ed] ... the amounts of the repayment checks used to reimburse the employees and family members for political contributions, which were falsely billed to clients as ... legislative entertainment.” There were eight counts, each alleging a specific mailing to or from four different clients. 4 The total amount of ³²⁶ fraud alleged was “approximately $16,000.” The Fourth Circuit summarized the scheme as “Bereano’s fraudulent transfer to his clients of his cost of doing business which cost took the form of political contributions.” Before trial, the district court granted the Government’s motion to limit the use of evidence concerning Maryland state election laws to Bereano’s knowledge and intent, as distinct from the substantive issue of whether Bereano violated those laws. The Fourth Circuit agreed that “a violation of Mary-, land state election laws [is] both unnecessary and insufficient to prove mail fraud violations.” Because Bereano’s conviction for mail fraud does not determine, one way or the other, whether he violated Maryland’s election laws, this Court, in determining an appropriate sanction, considers only Bereano’s mail fraud conviction and the misconduct underlying it.

Under the United States Sentencing Guidelines (1995) (USSG), the federal district court was required to determine the “value of the money, property, or services unlawfully taken.” USSG § 2F1.1, cmt. (n.7). That court found that the Government failed to establish losses of $16,000, and, instead, that the losses established were $600. They consisted of four separate $150 amounts respectively billed by Bereano to four lobbying clients for “legislative entertainment,” whereas the amounts billed in fact represented reimbursement for political contributions made indirectly by Bereano and paid for by his clients through the fraud scheme.

The amount of the loss is discussed more fully in Part III, infra. Prior to sentencing, numerous individuals sent letters on behalf of Bereano to the federal district judge, which he characterized as follows: “[T]he 'writers of those letters are a very diverse group of people. They are legislators, they are lawyers, they are law enforcement people, they are CEOs, executives at all levels. There are mayors, county executives, former governors, liberals, conservatives, black, white, men, women. ³²⁷ “...

In a sense, it can be said that [these letters] represent a lobbying effort. Of course, that is not particularly a plus, but they also indicate that a lot of people see and have seen a lot of good in Mr. Bereano.” At sentencing the trial court also distinguished Bereano’s case from more typical mail fraud, saying: “The fraud here was not perpetrated for direct monetary gain to the detriment of the clients involved. The intent was clearly a mutual enhancement of the lobbying position of both the clients and the defendant. But for the defendant’s concerns over the application of the Maryland election laws and their limitations, I am convinced by a preponderance of the evidence that the defendant would have openly solicited the so-called victim clients for contributions to political fundraisers, and if appropriate would have labeled expenses in that category as such on his bills.

There is, I think, clearly an arguable gain to the clients from the fraudulent expenditures as part and parcel of the total efforts that were put forth by Mr. Bereano in their behalf. The beneficiaries of the money were clearly the legislative candidates and not the defendant. And thus, as I have indicated earlier, there is no quantifiable loss to the victims, as is customary in a fraud case.... [T]hat explains, I believe, the testimony of the representatives of the victim entities that they didn’t recognize any fraud or any loss, and I think it explains the letters that have been received.... ” Bereano was sentenced to a five year term of probation, six months of which were to be served in community confinement, 500 hours of community service, and a fine of $20,000. The district court stayed execution of the sentence pending appeal. 5 ³²⁸ On appeal from his conviction, Bereano argued, inter alia, that the Government had failed to prove harm to the alleged victims, and that harm is a necessary element for a conviction under 18 U.S.C. § 1341 .

The Fourth Circuit rejected this argument on factual grounds. It noted that, although the federal circuits are divided on the legal issue, “contemplated harm is present in this case. The contemplated harm is Bereano’s fraudulent transfer to his clients of his cost of doing business which cost took the form of political contributions.... “... The perception of the victim or target of the scheme is ultimately irrelevant to whether Bereano devised a scheme, or acted with the requisite intent to defraud.

See United States v. Brien, 617 F.2d 299, 311 (1st Cir.) (Tf a scheme to defraud has been or is intended to be devised, it makes no difference whether the persons the schemers intended to defraud are gullible or skeptical, dull or bright. These are criminal statutes, not tort concepts. The only issue is whether there is a plan, scheme or artifice intended to defraud.’), cert. denied, 446 U.S., 919 [, 100 S.Ct. 1854 , 64 L.Ed.2d 273 ] (1980).... “Further, while his clients argue that they were satisfied with Bereano’s services, they also testified that they did not authorize and would not have knowingly paid for the political contributions Bereano made. In support of this testimony, the clients’ retainer agreements ... do not authorize Bereano to make political contributions, nor did the clients authorize such expenses by any other means. ³²⁹ “Sending a false bill to a third party through the mails with the necessary criminal intent is a classic violation of the mail fraud statute.” (Citations omitted).

The Fourth Circuit affirmed as to guilt, but remanded for upward revision of the sentence. 6 At the hearing before Judge Lerner, in order to establish a violation of RPC 8.4 Bar Counsel placed in evidence the judgment of conviction, the unpublished opinion of the Fourth Circuit, and the order of the District of Columbia Court of Appeals disbarring Bereano. For his part, Bereano stated, “I very respectfully acknowledge the conviction. I accept the conviction.... [T]here will be no effort ... to relitigate this matter.” Nevertheless, Bereano again elicited testimony from representatives of the defrauded clients that they did not believe that he had billed them fraudulently. At that hearing Bereano called almost forty witnesses who testified to his good character, including a United States Congressman, a former governor, judges, and individual clients.

Judge Lerner summarized this testimony as presenting “the common theme that [Bereano] is trustworthy, honest, ethical, charitable, has done nothing prejudicial to the administration of justice, is an excellent attorney, tenacious, conscientious, hard working, with long hours, has great energy, zeal, and enthusiasm, helps people, has built an excellent reputation as a person and a lawyer.” On the basis of the mail fraud conviction, Judge Lerner found violations of RPC 8.4(a), (b), (c), and (d), and he included a recommendation against disbarment. 7 Judge Lerner’s recommendation is not a finding of fact that would be ³³⁰ entitled to deference unless clearly erroneous. This Court’s jurisdiction over disciplinary proceedings is “original and complete,” Maryland State Bar Ass’n v. Agnew, 271 Md. 543, 553 , 318 A.2d 811, 817 (1974), and the responsibility for determining the appropriate sanction for misconduct falls exclusively upon this Court. II Under standards promulgated by the American Bar Association, absent mitigating circumstances, disbarment is the usual sanction for an attorney convicted of a crime of which a necessary element is fraud. See ABA, Standards for Imposing Lawyer Sanctions § 5.11(b) (1991 ed.).

The crime of mail fraud has two elements: “(1) a scheme to defraud, and (2) the mailing of a letter, etc., for the purposes of executing the scheme.” Pereira v. United States, 347 U.S. 1, 8 , 74 S.Ct. 358, 362 , 98 L.Ed. 435, 444 (1954). The Government is required to prove that the defendant intended to defraud the victim. See, e.g., United States v. Cooper, 132 F.3d 1400, 1405 (11th Cir.1998), cert. denied, — U.S. —, 119 S.Ct. 806 , 142 L.Ed.2d 666 (1999); United States v. Manzer, 69 F.3d 222, 226 (8th Cir.1995); United States v. Peters, 962 F.2d 1410, 1414 (9th Cir.1992). The Fourth Circuit held in United States v. Bereano that these elements had been established on sufficient evidence.

Prior attorney discipline cases in this Court involving lawyers who had been convicted of mail fraud or similar crimes have established the standard for determining the ³³¹ appropriate sanction for those violations of professional ethics. As stated in Attorney Grievance Commission v. Newman, 304 Md. 370 , 499 A.2d 479 (1985), a case where the attorney was convicted of mail fraud, “We have consistently adhered to the view that when a member of the Bar is shown to be willfully dishonest for personal gain by means of fraud, deceit, cheating or like conduct, absent the most compelling extenuating circumstances, ... disbarment follow[s] as a matter of course.” Id. at 378 , 499 A.2d at 483 . Mail fraud was involved in Attorney Grievance Commission v. Pine, 291 Md. 319 , 435 A.2d 419 (1981). It consisted of “procuring a false lost wage letter which was submitted to insurance companies as a part of the claim concocting a false statement of [the client] that he had no prior back problems, when in fact he did, and the exaggeration of the nature and extent of the injuries actually suffered.” Id. at 320-21 , 435 A.2d at 420 (internal quotation marks omitted).

Pine argued that, because he withdrew from the scheme before becoming aware of the official investigation into his activities, he should not be disbarred. We noted that fraud was an essential element of the crime. Id. at 323 , 435 A.2d at 421 . Stating the rule that convictions for such crimes result in disbarment “in the absence of compelling circumstances justifying a lesser sanction,” we held that Pine’s withdrawal from the fraudulent scheme, “although commendable from the standpoint of showing some repentance, did not prevent his conviction of mail fraud.” Id. at 324 , 435 A.2d at 422 .

This Court disbarred Pine. Attorney Grievance Commission v. Mandel, 294 Md. 560 , 451 A.2d 910 (1982), involved the conviction of a Governor of Maryland under the mail fraud statute. We stated that “fraud was the very essence of the charge under which Mandel was convicted.” Id. at 585 , 451 A.2d at 922 . There were no “compelling circumstances” to justify a sanction less than disbarment, despite “the fact that Mandel has already been suspended from the practice of law for almost five years and that [he has suffered] the mental anguish of the prosecution, of the tortuous appellate process and of imprisonment,” be ³³² cause these circumstances did not exist at the time that he engaged in the underlying misconduct.

Id. at 588 , 451 A.2d at 923-24 . This Court disbarred Mandel. 8 The lawyer in Newman, 304 Md. 370 , 499 A.2d 479 , was employed as a senior claims supervisor by an insurance company. He issued drafts to an investigator who either performed no work or inflated the amounts for services that he did perform; the investigator then kicked back a portion of the payments to Newman. Following his conviction for mail fraud, this Court disbarred Newman.

Moreover, although it sometimes is difficult to compare attorney discipline cases from out-of-state courts, 9 other courts ³³³ also routinely disbar attorneys convicted of mail fraud. 10 Fi ³³⁴ nally, outside of the mail fraud context, this Court has indicated that, absent compelling extenuating circumstances, it will disbar attorneys for conduct involving fraud. See Attorney Grievance Comm’n v. Sabghir, 350 Md. 67, 84 , 710 A.2d 926, 934-35 (1998) (misappropriation involving fraud, deceit, and dishonesty). Bereano argues, however, that all of our decisions disbarring attorneys convicted of mail fraud antedate 1987 and no longer have precedential value because “[p]rior to 1987 ... mail fraud was considered an offense involving ‘moral turpitude.’ “However, ‘moral turpitude ceased to be an enumerated factor in disciplinary proceedings upon replacement of the former Maryland Code of Professional Responsibility with the Maryland Rules of Professional Conduct on January 1, 1987’ and is now irrelevant. Attorney Grievance Commission v. Casalino, 335 Md. 446 [, 451, 644 A.2d 43, 45 ] (1994). “There do not appear to be any post 1987 mail fraud disciplinary cases of this Court based on mail fraud convictions.” Respondent’s Memorandum at 21 (citations omitted).

It is correct that the Rules of Professional Conduct no longer use moral turpitude as a standard. It does not follow, however, that cases prior to 1987 shed no light on whether the misconduct underlying mail fraud violates, for example, RPC 8.4(e)’s prohibition against “engaging] in conduct involving dishonesty, fraud, deceit or misrepresentation.” In Casalino, 335 Md. 446 , 644 A.2d 43 (1994), we said: “The fact that ‘crime of moral turpitude’ was removed as a factor in disciplinary proceedings does not mean that there now is no such thing as a crime of moral turpitude.... The only difference under present Rule 8.4 of the Rules of Professional Conduct is that a crime’s status as one of moral ³³⁵ turpitude is irrelevant to whether a lawyer has been guilty of the misconduct proscribed by that rule. Under the current rule, a lawyer’s commission of a crime or conduct enumerated in Rule 8.4 will subject that lawyer to discipline irrespective of whether the crime is also one of moral turpitude.” Id. at 451 , 644 A.2d at 45 (emphasis added).

Bereano also attempts to cast doubt on this Court’s previous cases on mail fraud by arguing that they never involved convictions of a private individual under 18 U.S.C. § 1346 , which provides that “the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” The respondent submits that the United States Supreme Court has never considered whether this section applies to private individuals, as distinct from governmental officials, and that some United States Courts of Appeals have required a violation of a state law or of an independent federal law as a predicate for a conviction under § 1346. From this Bereano seems to draw the conclusion that one of the theories underlying the indictment, ie., 18 U.S.C. § 1346 , is a questionable basis for the imposition of disbarment. As a matter of federal criminal law and procedure, Ber-eano’s argument was rejected by the Fourth Circuit. The argument is similar to one advanced in Attorney Grievance Commission v. Pine, 291 Md. 319 , 435 A.2d 419 .

In that case an attorney who had been convicted of mail fraud argued that he “could [not] have been convicted of false pretenses in a Maryland Court under the facts proven in his federal prosecution” because he had withdrawn from the fraudulent scheme. Id. at 322 , 435 A.2d at 421 (internal quotation marks omitted). We rejected that argument by citing former Rule BV10(e)(l), the identical terms of which are now found in Maryland Rule 16-710(e)(l) (“[A] final judgment by a judicial tribunal in another proceeding convicting an attorney of a crime shall be conclusive proof of the guilt of the attorney of that crime.”). Similarly, the absence of a violation of a state law or of a federal law, other than mail fraud, is irrelevant because Ber- ³³⁶ eano’s conviction is conclusive proof that he engaged in a scheme to defraud and that he possessed the intent to defraud.

In any event, Bereano also was convicted of violating 18 U.S.C. § 1341 . As the Fourth Circuit noted, “the evidence was sufficient to convict Bereano of § 1341 mail fraud violations” because “contemplated harm is present in this case.” Bereano’s assertion that previous Maryland cases on mail fraud do not apply here is unavailing. Accordingly, the only issue in the instant case is whether Bereano has demonstrated compelling extenuating circumstances that would warrant a sanction less than disbarment. Ill Bereano points to a number of factors that, in his view, sufficiently mitigate his misconduct to make disbarment inappropriate.

These factors fall into two general categories, the degree of magnitude of the crime and the respondent’s past history. Under the former category Bereano’s argument presents a number of recurring themes that we now undertake specifically to identify and address. Bereano attempts to minimize his federal mail fraud conviction by analogizing it to a misdemeanor under state law. Focusing on the 18 U.S.C. § 1346 theory of the Government’s case, Bereano submits that he was “in reality” prosecuted and convicted for a violation of state election laws, but that the Government never charged or proved state law violations.

This argument ignores the fact that, in the federal criminal trial, Maryland election laws were used only to demonstrate motive and intent, and the fact that Bereano stands convicted of the federal offense. A theme emphasized in Bereano’s argument is the testimony by his lobbying clients that they did not consider themselves to have been defrauded. In response to a similar argument made to it, the Fourth Circuit said that “while his clients argue that they were satisfied with Bereano’s services, they also testified that they did not authorize and would not ³³⁷ have knowingly paid for the political contributions Bereano made.” This Court has looked to the nature of mail fraud when responding to an argument somewhat similar to that advanced here by Bereano. See Attorney Grievance Comm’n v. Reamer, 281 Md. 323 , 379 A.2d 171 (1977).

Reamer was an interim suspension case involving a lawyer who had been convicted of using the mails to defraud insurers in the settlement of personal injury claims. There, to determine Reamer’s intent, we looked to the instructions under which the federal jury had convicted him. The jurors were told: “[T]he question here is not whether somebody in fact has been defrauded; it is not whether the defendant has profited by