Attorney Grievance Commission v. Mahone

Attorney Grievance Commission of Maryland v. Willie James Mahone, Miscellaneous Docket AG No. 82, September Term, 2015 ATTORNEY DISCIPLINE — SANCTIONS — INDEFINITE SUSPENSION — Respondent Willie James Mahone violated the Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”), Maryland Rules regarding attorney trust accounts, and Maryland Code (1957, 2010 Repl. Vol.), § 10-306 of the Business Occupations and Professions Article (“BP”) when he failed to maintain records accurately reflecting the status of his attorney trust account. Furthermore, Respondent commingled personal funds and client funds within the account, withdrew cash from his trust account, and created negative balances in multiple client accounts. On February 12, 2014, Sandy Spring Bank notified the Attorney Grievance Commission of Maryland (“AGC”) that Respondent’s attorney trust account was overdrawn by $86.48.

When the AGC investigated the matter, it found that Respondent could not produce records of his trust account activity. In addition, Respondent failed to timely and completely respond to Bar Counsel’s requests for information. Respondent violated (1) MLRPC 1.1 (Competence); (2) MLRPC 8.1(b) (Bar Admission and Disciplinary Matters); (3) MLRPC 8.4(a) and (d) (Misconduct); (4) Maryland Rule 16.606.1 (Attorney Trust Account Record-Keeping); (5) Maryland Rule 16-607 (Commingling of Funds); (6) Maryland Rule 16-609 (Prohibited Transactions); and (7) BP § 10-306 (Misuse of Trust Money) when he mismanaged his attorney trust account and failed to fully comply with the AGC’s disciplinary investigation. Taken together, these violations warrant indefinite suspension.

Circuit Court for Montgomery County Case No.: 32111 Argued: November 3, 2016 IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 82 September Term, 2015 ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. WILLIE JAMES MAHONE Barbera, C.J. Greene Adkins McDonald Watts Hotten Getty, JJ. Opinion by Adkins, J. McDonald and Watts, JJ., concur and dissent. Filed: December 19, 2016 On February 29, 2016, the Attorney Grievance Commission of Maryland (“AGC”), acting through Bar Counsel, filed a Petition for Disciplinary or Remedial Action against Respondent Willie James Mahone.

Bar Counsel charged Mahone with violating the Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”), Maryland Rules governing attorney trust accounts, and a statutory provision regarding misuse of trust money.1 Specifically, Bar Counsel alleged that Mahone violated the following provisions: (1) MLRPC 1.1 (Competence);2 (2) MLRPC 1.4 (Communication); 3 (3) 1 Effective July 1, 2016, the Maryland Rules were revised. The MLRPC were renamed the Maryland Attorneys’ Rules of Professional Conduct (“MARPC”) and renumbered. Rules Order (June 6, 2016). The revised rules are now numbered as follows: MARPC 19-301.1 (Competence); MARPC 19-301.4 (Communication); MARPC 19-301.15 (Safekeeping Property); MARPC 19-308.1 (Bar Admission and Disciplinary Matters); and MARPC 19-308.4 (Misconduct).

The Maryland Rules regarding attorney trust accounts were also renumbered. The revised rules are now numbered as follows: Rule 19-407 (Attorney Trust Account Record-Keeping); Rule 19- 408 (Commingling of Funds); and Rule 19-410 (Prohibited Transactions). We will refer to the MLRPC and the previous numbering of the Maryland Rules regarding attorney trust accounts because the misconduct at issue occurred before these changes. 2 Rule 1.1. Competence.

A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. 3 Rule 1.4. Communication. (a) A lawyer shall: (1) promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(f), is required by these Rules; (2) keep the client reasonably informed about the status of the matter; (continued . . .) MLRPC 1.15(a), (c), and (d) (Safekeeping Property);4 (4) MLRPC 8.1(b) (Bar Admission and Disciplinary Matters);5 (3) MLRPC 8.4(a), (c), and (d) (Misconduct);6 (4) (3) promptly comply with reasonable requests for information; and (4) consult with the client about any relevant limitation on the attorney’s conduct when the attorney knows that the client expects assistance not permitted by the Maryland Lawyers’ Rules of Professional Conduct or other law.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. 4 Rule 1.15. Safekeeping Property. (a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules, and records shall be created and maintained in accordance with the Rules in that Chapter.

Other property shall be identified specifically as such and appropriately safeguarded, and records of its receipt and distribution shall be created and maintained. Complete records of the account funds and of other property shall be kept by the lawyer and shall be preserved for a period of at least five years after the date the record was created. *** (c) Unless the client gives informed consent, confirmed in writing, to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred. (d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall deliver promptly to the client or third person any funds or other property that the client or third person is entitled (continued . . .) 2 Maryland Rule 16.606.1 (Attorney Trust Account Record-Keeping);7 (5) Maryland Rule 16-607 (Commingling of Funds);8 (6) Maryland Rule 16-609 (Prohibited Transactions);9 to receive and, upon request by the client or third person, shall render promptly a full accounting regarding such property. 5 Rule 8.1.

Bar Admission and Disciplinary Matters. An applicant for admission or reinstatement to the bar, or a lawyer in connection with a bar admission application or in connection with a disciplinary matter, shall not: *** (b) fail to disclose a fact necessary to correct a misapprehension known by the person to have arisen in the matter, or knowingly fail to respond to a lawful demand for information from an admissions or disciplinary authority, except that this rule does not require disclosure of information otherwise protected by Rule 1.6. 6 Rule 8.4. Misconduct. It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Maryland Lawyers’ Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; *** (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice[.] 7 Rule 16-606.1.

Attorney trust account record-keeping. (a) Creation of records. The following records shall be created and maintained for the receipt and disbursement of funds of clients or of third persons: (1) Attorney trust account identification. An identification of all attorney trust accounts maintained, including the name of the financial institution, account number, account name, date the account was opened, date the account was closed, and an agreement with the financial (continued . . .) 3 institution establishing each account and its interest-bearing nature.

(2) Deposits and disbursements. A record for each account that chronologically shows all deposits and disbursements, as follows: (A) for each deposit, a record made at or near the time of the deposit that shows (i) the date of the deposit, (ii) the amount, (iii) the identity of the client or third person for whom the funds were deposited, and (iv) the purpose of the deposit; (B) for each disbursement, including a disbursement made by electronic transfer, a record made at or near the time of disbursement that shows (i) the date of the disbursement, (ii) the amount, (iii) the payee, (iv) the identity of the client or third person for whom the disbursement was made (if not the payee), and (v) the purpose of the disbursement; (C) for each disbursement made by electronic transfer, a written memorandum authorizing the transaction and identifying the attorney responsible for the transaction. (3) Client matter records. A record for each client matter in which the attorney receives funds in trust, as follows: (A) for each attorney trust account transaction, a record that shows (i) the date of the deposit or disbursement; (ii) the amount of the deposit or disbursement; (iii) the purpose for which the funds are intended; (iv) for a disbursement, the payee and the check number or other payment identification; and (v) the balance of funds remaining in the account in connection with the matter; and (B) an identification of the person to whom the unused portion of a fee or expense deposit is to be returned whenever it is to be returned to a person other than the client.

(continued . . .) 4 (4) Record of funds of the attorney. A record that identifies the funds of the attorney held in each attorney trust account as permitted by Rule 16- 607 b. (b) Monthly reconciliation. An attorney shall cause to be created a monthly reconciliation of all attorney trust account records, client matter records, records of funds of the attorney held in an attorney trust account as permitted by Rule 16- 607 b, and the adjusted month-end financial institution statement balance.

The adjusted month-end financial institution statement balance is computed by adding subsequent deposits to and subtracting subsequent disbursements from the financial institution’s month-end statement balance. (c) Electronic records. Whenever the records required by this Rule are created or maintained using electronic means, there must be an ability to print a paper copy of the records upon a reasonable request to do so. (d) Records to be maintained.

Financial institution month-end statements, any canceled checks or copies of canceled checks provided with a financial institution month-end statement, duplicate deposit slips or deposit receipts generated by the financial institution, and records created in accordance with section (a) of this Rule shall be maintained for a period of at least five years after the date the record was created. 8 Rule 16-607. Commingling of funds. a. General prohibition. An attorney or law firm may deposit in an attorney trust account only those funds required to be deposited in that account by Rule 16-604 or permitted to be so deposited by section b. of this Rule. b.

Exceptions. 1. An attorney or law firm shall either (A) deposit into an attorney trust account funds to pay any fees, service charges, or minimum balance required by the financial institution to open or maintain the account, including those fees that cannot be charged against interest due to the Maryland Legal Services Corporation Fund pursuant to Rule 16-610 b 1 (D), or (B) enter into an agreement with the financial institution to have any fees or charges deducted from an operating account maintained by the attorney or law firm. The attorney or law firm may deposit into an attorney trust account any funds (continued . . .) 5 and (7) Maryland Code (1957, 2010 Repl. Vol.), § 10-306 of the Business Occupations and Professions Article (“BP”) (Misuse of Trust Money).10 expected to be advanced on behalf of a client and expected to be reimbursed to the attorney by the client. 2.

An attorney or law firm may deposit into an attorney trust account funds belonging in part to a client and in part presently or potentially to the attorney or law firm. The portion belonging to the attorney or law firm shall be withdrawn promptly when the attorney or law firm becomes entitled to the funds, but any portion disputed by the client shall remain in the account until the dispute is resolved. 3. Funds of a client or beneficial owner may be pooled and commingled in an attorney trust account with the funds held for other clients or beneficial owners. 9 Rule 16-609. Prohibited transactions. a.

Generally. An attorney or law firm may not borrow or pledge any funds required by the Rules in this Chapter to be deposited in an attorney trust account, obtain any remuneration from the financial institution for depositing any funds in the account, or use any funds for any unauthorized purpose. b. No cash disbursements. An instrument drawn on an attorney trust account may not be drawn payable to cash or to bearer, and no cash withdrawal may be made from an automated teller machine or by any other method.

All disbursements from an attorney trust account shall be made by check or electronic transfer. c. Negative balance prohibited. No funds from an attorney trust account shall be disbursed if the disbursement would create a negative balance with regard to an individual client matter or all client matters in the aggregate. 10 Business Occupations and Professions Article § 10-306. Misuse of trust money.

A lawyer may not use trust money for any purpose other than the purpose for which the trust money is entrusted to the lawyer. 6 We transmitted the matter to the Circuit Court for Montgomery County and designated the Honorable Cynthia Callahan (“the hearing judge”) to conduct an evidentiary hearing. Following a one-day hearing, the hearing judge issued Findings of Fact and Conclusions of Law, in which she found by clear and convincing evidence that Mahone violated MLRPC 1.1, MLRPC 8.1(b), MLRPC 8.4(a), (c), and (d); Maryland Rules 16.606.1, 16-607, 16-609; and BP § 10-306. THE HEARING JUDGE’S FINDINGS OF FACT Mahone was admitted to the Maryland Bar in May 1980. The AGC’s investigation of Mahone was triggered when Sandy Spring Bank notified the AGC that an overdraft of his attorney trust account had occurred.

The hearing judge made the following findings of fact by clear and convincing evidence: In February 2014, an overdraft in the amount of $86.48 occurred in Mahone’s attorney trust account. On March 10, 2014, Bar Counsel sent Mahone a letter requesting an explanation of the overdraft and client ledgers, monthly bank statements, deposit slips, and canceled checks from November 2013 to March 2014. The letter requested a response within 10 days. Mahone responded on March 31, 2014, but did not provide the requested client ledgers or deposit slips.

His response was also 10 days late. Bar Counsel sent Mahone follow-up letters requesting the client ledgers and deposit slips on April 10, 2014, November 18, 2014, and December 10, 2014. Despite these repeated requests, Mahone never responded. 7 Due to Mahone’s failure to provide the requested information, Bar Counsel subpoenaed Sandy Spring Bank for Mahone’s attorney trust account records for November 2013 to December 2014. A forensic investigator for the AGC, Charles E. Miller, IV, analyzed Mahone’s attorney trust account records.

Miller created a transaction summary and client ledger summary from these records, which indicated: (1) negative balances in nine client trust accounts; (2) earned attorney’s fees deposited into nine client trust accounts; (3) remaining balances in five client trust accounts; (4) 11 electronic transfers, including several checks Mahone made out to himself; and (5) a $1,500 cash withdrawal. On April 9, 2015, Bar Counsel provided Mahone with Miller’s summaries and requested additional information related to the transactions in the summaries by April 24, 2015. Although Mahone was granted a 14-day extension, Bar Counsel did not receive a response. Bar Counsel then requested a response by May 18, 2015.

Mahone responded by letter on May 20, 2015, stating that he would provide the requested information by June 1, 2015. Mahone finally responded to Bar Counsel’s request on August 16, 2015, but failed to provide a satisfactory explanation or any of the requested supporting documentation. Mahone later sent Bar Counsel a supplemental response, but none of the information he provided addressed Bar Counsel’s requests. On June 23, 2016, Bar Counsel deposed Mahone.

During his deposition, Mahone admitted that he failed to create and maintain proper records, failed to create records associated with electronic transactions, and commingled funds. Mahone also answered questions related to four transactions in Miller’s summaries. Miller updated 8 his summaries to reflect this new information, and the summaries were received into evidence. The summaries demonstrated the following by clear and convincing evidence: 1.

Mahone caused negative balances in the following client matters: 06/25/2014 Acoota -$800.00 12/01/2014 Harrison -$525.00 10/08/2014 Juarez -$1,472.00 10/16/2014 Leppo -$1,365.00 06/16/2014 Mahmood -$516.00 08/29/2014 Mahmood -$2,035.20 12/17/2014 Patty -$2,000.00 09/25/2014 Rice -$1,575.11 02/12/2014 Unknown -$86.48 2. Mahone deposited earned attorney’s fees into his attorney trust account in the following matters: 11/16/2014 Anzures $238.75 11/04/2014 Branson $125.00 11/04/2014 Fletcher $125.00 11/16/2013 Goldberg $300.00 09/10/2014 Knill $125.00 09/10/2014 Lopez $350.00 11/04/2014 Marks $125.00 12/04/2014 Marks $625.00 11/08/2013 Smith-Jasper $260.00 3. Mahone improperly maintained funds in his attorney trust account belonging to clients, third parties, and sometimes himself in the following matters: 04/02/2014 Duckett $27.31 08/06/2014 Hickman $600.00 01/27/2014 Hopkins $200.00 08/11/2014 Salahudding $537.00 08/19/2014 Yamada $1,628.00 9 4. Mahone failed to maintain records associated with the following electronic funds transfers from his attorney trust account: 01/29/2014 Unknown -$1,000.00 10/02/2014 Unknown -$2,000.00 5.

Mahone failed to maintain any records associated with the following transactions and cannot identify whose money was withdrawn from the attorney trust account: 09/09/2014 Hopehill United -$100.00 Methodist Church 10/02/2014 Check to -$2,000.00 Mahone 11/29/2013 Check to -$800.00 Mahone 12/30/2013 Check to -$900.00 Mahone 02/12/2014 Cash Deposit $125.00 02/18/2014 Cash Deposit $100.00 04/25/2014 Cash Deposit $1,500.00 11/19/2014 Check to -$500.00 Mahone 11/25/2014 Check to -$865.00 Mahone 6. On September 9, 2014, Mahone made a $100 personal donation to his church from his attorney trust account. 10 THE HEARING JUDGE’S CONCLUSIONS OF LAW From these facts, the hearing judge concluded that Mahone violated MLRPC 1.1, 8.1(b), and 8.4(a), (c), and (d). The hearing judge also found that Mahone violated Maryland Rules 16-606.1, 16-607, and 16-609, and BP § 10-306.11 MLRPC 1.1: Competence MLRPC 1.1 requires attorneys to represent their clients with the necessary legal knowledge, skill, thoroughness, and preparation. The hearing judge found that Mahone violated MLRPC 1.1 when “he failed to competently handle client and third party funds deposited into his trust account.” In addition, the hearing judge found that Mahone violated MLRPC 1.1 when “he failed to create and maintain records of the deposits and withdrawals of client and third party funds.” MLRPC 8.1: Bar Admission and Disciplinary Matters MLRPC 8.1 imposes an obligation on Maryland attorneys to fully cooperate with disciplinary investigations.

The hearing judge found that Mahone violated MLRPC 8.1(b) by failing to timely and completely respond to Bar Counsel’s letters requesting additional information on March 10, 2014, April 10, 2014, and November 18, 2014. MLRPC 8.4: Misconduct MLRPC 8.4 defines professional misconduct for attorneys. The hearing judge found that Mahone violated MLRPC 8.4(a), (c), and (d). He violated MLRPC 8.4(a) by breaching other rules of professional conduct.

Mahone violated 8.4(c) “when he created 11 The hearing judge did not find a violation of MLRPC 1.4 or 1.15. The Findings of Fact and Conclusions of Law do not contain any mention of these charges. 11 negative balances in his trust account for individual client matters and when he over- drafted his account.” Lastly, the hearing judge concluded that Mahone’s conduct, taken as a whole, harms the reputation of the legal profession in violation of MLRPC 8.4(d). Rule 16-606.1: Attorney Trust Account Record-Keeping Maryland Rule 16-606.1 requires attorneys to create and maintain records reflecting the status and activity of attorney trust accounts. The hearing judge found that although Mahone did not act with “malice or for personal gain,” he violated this Rule: [Mahone] did not create and maintain records for the receipt [or] disbursement of funds [for] clients or [ ] third persons.

He was unable to identify which client matters were associated with numerous transactions. [Mahone] admits that he failed to perform monthly reconciliations of his trust account. He was unable to reconcile many of the individual client ledgers or account for the balance of the funds maintained in his account at any given time. [Mahone] failed to create or maintain any records associated with the electronic transfers from his account. Rule 16-607: Commingling of Funds Maryland Rule 16-607 prohibits attorneys from depositing personal funds into an attorney trust account. The hearing judge found that Mahone violated Rule 16-607 by “routinely [leaving] his own funds in his trust account as a ‘buffer’” and depositing earned attorney’s fees into the trust account.

Additionally, the hearing judge found that none of the exceptions in Rule 16-607 b—which provides situations in which an attorney may commingle personal funds with the clients’—applied. 12 Rule 16-609: Prohibited Transactions Under Maryland Rule 16-609, attorneys are prohibited from using funds within a trust account for any unauthorized purpose, withdrawing cash from a trust account, and creating a negative balance within a trust account. The hearing judge found that Mahone violated Rule 16-609 by using trust funds for unauthorized purposes, withdrawing $1,500 in cash from his trust account, and creating negative balances in accounts belonging to Juarez, Leppo, Mahmood, Rice, and “Unknown.” BP § 10-306: Misuse of Trust Money BP § 10-306 prohibits attorneys from using trust money for any unauthorized purpose. The hearing judge found that Mahone violated BP § 10-306 for the same reasons he violated MLRPC 8.4(c) and Rule 16-609. DISCUSSION “In attorney discipline proceedings, this Court has original and complete jurisdiction and conducts an independent review of the record.” Att’y Grievance Comm’n v. Page, 430 Md. 602, 626 (2013) (citation omitted).

Within this independent review, however, we accept the hearing judge’s findings of fact unless they are determined to be clearly erroneous. Id. (citation omitted). If the hearing judge’s factual findings are founded on clear and convincing evidence, this Court will not disturb them.

Att’y Grievance Comm’n v. Ugwuonye, 405 Md. 351, 368 (2008) (citation omitted). By contrast, this Court reviews the hearing judge’s conclusions of law without deference. Id. (citation omitted). 13 Exceptions Both parties are permitted to file “(1) exceptions to the findings and conclusions of the hearing judge [and] (2) recommendations concerning the appropriate disposition . . . .” Md. Rule 16-758(b).

If neither party