Attorney Grievance Commission v. Smith

CATHELL, J. Bar Counsel, on behalf of the Attorney Grievance Commission, petitioner, and at the direction of the Review Board, filed a petition with this Court seeking disciplinary action against Scott G. Smith, respondent, 1 pursuant to ²⁰⁷ Md. Rule 16-751. 2 The petition, which is based on the four complaints of Mr. Mark R. Bryers, Mr. William L. Kent, Mr. William R. Campbell and Mr. William S. Campbell and Mr. Thomas S. Carswell, alleges that respondent violated several provisions of the Maryland Rules of Professional Conduct (MRPC), 3 two provisions of the Business Occupations and ²⁰⁸ Professions Article of the Maryland Code, 4 and Maryland Rule 16-609. 5 On April 8, 2002, pursuant to Maryland Rule 16-752 and 16-757, 6 this Court assigned the matter to Judge Nancy L. Davis- ²⁰⁹ Loomis in the Circuit Court for Anne Arundel County to conduct an evidentiary hearing and to make findings of fact and conclusions of law with respect to respondent’s case. Respondent was duly served and he later filed a timely answer to the petition. The evidentiary hearing took place on November 26 and 27, 2002. After the hearing, Judge Davis-Loomis found, by clear and convincing evidence, that respondent willfully misappropriated funds and was in violation of Maryland Rule 16-609, Md.Code §§ 10-303 and 10-606 of the Business Occupations and Professions Article, as well as MRPC 1.15(a) and (b), 8.1(b) and 8.4(a), (b) and (c).

Respondent filed in this Court numerous exceptions to Judge Davis-Loomis’ findings of fact and conclusions of law. We overrule all of respondent’s exceptions to the findings in respect to the complaints filed against him and accept the hearing judge’s findings of fact and conclusions of law in respect to those matters. 7 Considering respondent’s egregious conduct, the appropriate sanction is disbarment. ²¹⁰ I. Facts The facts of the complaints in this case are deceptively complex. They are, however, similar in that they involve the same violations in each complaint actually filed against respondent. 8 Respondent, at the request of one of his clients, Stateline Capital Corporation (hereafter “Stateline”), a company engaged in funding high-risk loans, opened an escrow account entitled “Scott Smith PC Escrow Account” and agreed to act as escrow agent for Stateline in reference to this account. Stateline principals were James D. Payne and Stephen Ryan.

Respondent and Payne, on behalf of Stateline, signed a Client-Counsel Agreement that called for respondent “to receive funds for and on behalf of Client [Stateline]; and ... to disburse according to Client’s direction.” (alteration added). Stateline, in turn, had various clients, including the five complainants in this case: Mr. Bryers, Mr. Kent, the Campbells and Mr. Carswell, who deposited money into respondent’s escrow account. Respondent was to be paid $30,000 for his services. However, most important to these proceedings, there were several escrow agreements effectuated that should have governed respondent’s actions differently than his agreement with Stateline and it is his violation of ²¹¹ these agreements as an escrow agent that is the basis of his attorney misconduct.

Stateline offered to obtain large monetary sums of venture capital to fund various real estate and business projects. As a result, individuals or groups who were interested in real estate development and other business interests were told to place a commitment fee in escrow with an escrow agent, respondent. The witnesses testified in depositions that they were told that the commitment fees would be held in escrow by respondent until Stateline secured the money needed for the various projects or, if the loans and funding did not go through, the commitment fees would be returned to the complainants. The commitment fees were to be held in escrow until the loan was funded and if the loan was not funded, the money was to be returned.

The escrow terms were set out in multiple Escrow and Disbursing Agreements and, in one instance, an Escrow Agreement signed by respondent, Payne and/or Ryan and various individuals seeking high-risk loans. 9 ²¹² In part, Judge Davis-Loomis made the following factual findings: “On January 8, 1999, Respondent opened an account at Nations Bank/Bank of America____ Respondent and his wife, Katherine N. Smith, were listed as persons with signatory authority on the account. The first deposit into the escrow account was made on January 8, 1999 in the amount of $100. The escrow account remained open until June 5, 2000, when Respondent withdrew the balance of $245.97. “While the escrow account was open, Respondent received deposits of commitment fees totaling more than $1.9 million. Each commitment fee was held for only a short time and then was disbursed.

After listening to testimony and reviewing extensive exhibits, this Court finds that these funds were regularly disbursed to entities having no connection to the entities depositing the commitment fees. Beneficiaries of these disbursements included Stateline principals, Respondent and his corporation, Legal Eagle, and Desmond Kramer, a personal friend of Respondent who had no involvement with Stateline. “Stateline failed to fund any loans. At the present time, some customers have not received refunds of their commitment fees. Respondent testified that the Stateline transactions were the subject of the United States Attorney’s Office in Nevada.

Respondent testified that he presently believes that Ryan and Payne are ‘swindlers.’ “The evidence clearly and convincingly establishes that Respondent played an active role in the Stateline scheme. ²¹³ Various depositors relied upon his reputation as a lawyer in good standing when agreeing to deposit money in the escrow account. Although Respondent may not have known what was expected of him when he agreed to act as escrow agent in November 1998, it was apparent to him by February 1999 that Stateline’s customers were being misled as to the escrow agreements. Respondent’s letter of February 12, 1999 makes it clear that Respondent made a conscious decision to assist Ryan and Payne in deceiving Stateline’s customers into thinking that the commitment fees were being held in escrow. “Respondent also used personal funds to pay obligations owed by Stateline not related to deposits to his escrow account. On June 28, 1999, he deposited $25,000 from his personal corporation, Legal Eagle, and then disbursed those funds to a Stateline client known as 1228 Collins Avenue.

Respondent testified at trial that on July 15, 1999, he deposited $20,000 into the escrow account to pay Mayfair Trust. In reality, the $25,000 sent to Mayfair Trust on August 31, 1999 came from a commitment fee that an unrelated party had deposited into the escrow account on August 30, 1999. Respondent sent the $20,000 he had deposited into the escrow account from his personal funds to Ryan on July 19,1999. “The following are summaries of findings related to each of the deposits to the escrow account for which testimony or documentary evidence was presented. 10 “Mark R. Bryers “On November 15, 1999, Petitioner received a complaint from Mark R. Bryers (hereafter ‘Bryers’). Bryers alleged in his complaint that $100,000 had been transferred to Respondent’s escrow account on February 19, 1999 as a ²¹⁴ commitment fee for a project known as Heaphy House, that Bryers was entitled to a refund, and that the funds had not been returned. “Bryers provided Petitioner with a copy of a Financing Agreement and an Escrow and Disbursing Agreement.

These agreements called for Stateline to provide a loan of over $7 million and for Bryers to deposit a $100,000 commitment fee in Respondent’s escrow account. The Escrow and Disbursing Agreement called for the $100,000 to be held in escrow until the closing of the loan. The agreements further stated that Respondent was authorized to accept the commitment fee and agreed to do so. Respondent signed the last page of the Escrow and Disbursing Agreement and, according to the facsimile line, sent it to Bryers on February 12,1999. “The bank records indicate that Bryers transferred $100,000 to Respondent’s escrow account on February 19, 1999.

On February 25, 1999, these funds were disbursed and the balance in the escrow account was $72.12. In discovery, Respondent produced a copy of a letter dated July 14,1999, from Respondent to Bryers stating that ‘[t]his will confirm that in the event the vendor of the Heaphy House project should pull out of this transaction, Stateline will cause the escrow funds to be returned pursuant to the Escrow Agreement.’ Stateline did not provide financing within the time designated in the Financing Agreement, and Bryers requested a refund of the $100,000 commitment fee. “On December 6, 1999, Petitioner’s counsel sent Respondent a letter notifying him of the Bryers complaint. On or about December 21, 1999, Respondent provided a written response in which he represented that on or about December 17, 1999, he refunded Bryers’ commitment fee plus interest. Respondent failed to disclose that the commitment fee he received from Bryers had long since been disbursed.

In the December 6 letter, Petitioner also requested that Respondent provide copies of bank statements, cancelled checks and other records of the escrow account within 15 days. Respondent did not include these records ²¹⁵ with his December 21 letter nor did he provide those records with a subsequent letter dated January 21, 2000 and received by Petitioner on January 27, 2000. Respondent did not disclose that he had refunded the Bryers commitment fee with his personal funds from another NationsBank account. “On June 12, 2000, Respondent’s counsel provided Petitioner with a copy of a letter dated March 17, 2000 that he received via facsimile. The letter is addressed from [Bryers’s] counsel and is signed by Peter Rama, Bryers’s solicitor.

In the course of discovery, Petitioner received a similar document from Respondent that appears to be an unsigned draft of this same letter. The two letters differ in the wording of the second paragraph. The letter containing Peter Rama’s signature states that ‘[flurther, we understood that Stateline’s efforts in connection with a loan syndication did necessitate the transfer of funds provided by me from my account with National Bank of New Zealand (furnished to support Mr. Bryer’s application) to another attorney’s escrow account in order to secure funding for the project.’ The unsigned draft provided by Respondent stated that ‘[flurther, we understood that Stateline’s efforts in connection with a loan syndication might necessitate the transfer of Mr. Bryer’s funds from NationsBank to another attorney’s escrow account in order to secure funding for the project.’ This Court declines to draw any conclusions as to the reason these two drafts exist but notes that the language of the unsigned draft is in direct contradiction to the parties’ Escrow and Disbursing Agreement. “In discovery, Respondent also produced a copy of a letter dated December 16, 1999 addressed to Respondent from Payne. This letter authorized Respondent to return the $100,000 commitment fee to Bryers and apologized to Respondent for not being available to give this authorization earlier.

Petitioner’s witness John DeBone testified that the Respondent produced this letter in discovery with a piece of white tape across the document. DeBone made a copy of the document and then removed the tape. The tape cov ²¹⁶ ered a facsimile transmission date of -January 17, 2000, indicating that Respondent did not receive the letter until a month after he had used personal funds to repay Bryers. “William L. Kent “On November 25, 1999, Petitioner received a complaint from William L. Kent (hereafter ‘Kent’), alleging that on or about March 18, 1999, Kent entered into an agreement with Stateline whereby Stateline would arrange financing in excess of $8,000,000 for a project to purchase a marina. The agreement called for Kent to pay a refundable commitment fee of $100,000, but this fee was later reduced to $50,000.

Respondent was to hold the commitment fee in escrow until the closing on the loan. “Stateline provided Kent with an Escrow Agreement identifying the Respondent as escrow agent and instructing Kent to wire the funds to the Respondent’s escrow account. Bank records reflect that on March 29, 1999, Respondent received a wire transfer from Kent in the amount of $50,000. Prior to the deposit, the balance of the escrow account was $51.94. On March 30, 1999, another investor in Kent’s project deposited $25,000 into the escrow account.

Later on that same day, the Respondent disbursed $50,000 to Abdel Hafid Lofty in Germany, presumably upon Ryan’s instructions. On April 1, 1999, Respondent disbursed $7,000 to Payne, and, on April 2, 1999, Respondent disbursed $15,000 to Ryan. By April 2, 1999, the account balance was $36.00. Respondent presented no evidence showing that these disbursements were related to the financing of the Kent project. “In June or July 1999, Kent contacted Respondent by telephone to inquire about the financing.

The Respondent assured Kent that the funds were still in the escrow account. On or about September 27, 1999, Kent wrote to the Respondent and demanded the return of the $50,000 commitment fee. On or about October 8, 1999, Kent’s counsel sent a letter to Ryan, which was copied to Respondent, demanding the return of the $50,000. Between October 8 ²¹⁷ and 20, 1999, Kent continued to contact Respondent requesting return of the commitment fee.

The Respondent did not disclose to Kent that he no longer had the money in the escrow account. “On or about November 16, 1999, Kent wrote to Petitioner concerning the Respondent’s failure to return the escrow funds. On or about December 6, 1999, Petitioner notified Respondent of the Kent complaint and asked him to provide a written response and records for the escrow account. On or about December 21, 1999, the Respondent provided a written response to the Kent complaint to the Petitioner. He enclosed evidence that on or about December 9, 1999, the Respondent sent Kent a cashier’s check in the amount of $50,000.

Respondent did not provide the escrow records nor did he disclose in his response that the $50,000 commitment fee had not been maintained in the escrow account prior to December 9, 1999. Respondent’s subsequent response that Petitioner received on January 27, 2000 and dated January 21, 2000 did not include the requested records. “William B. and William S. Campbell “Petitioner received a third complaint against Respondent on January 16, 2001 from William B. and William S. Campbell alleging that they had wired $200,000 to Respondent’s escrow account, that there had been a demand for the return of this money and that the funds had not been returned. Bank records indicate that $200,000 was deposited into the escrow account on May 6, 1999 on behalf of the Campbells. Prior to the deposit, the escrow account balance was $5,555.33.

On May 6, 1999, Respondent disbursed $150,000 to an entity named Blanco Thackaberry and disbursed $50,000 to McGuire Woods, a law firm. On May 11, 1999, $5,000 was disbursed to an individual named Hal Goldberg. The balance on May 26, 1999 was less than $500. Respondent presented no evidence that these disbursements were related to the [Campbells’] loan financing. ²¹⁸ “William B. Campbell stated at his deposition that he contacted Stateline on behalf of Asian Energy Ltd. regarding a $25 million loan for a stock purchase.

William B. Campbell spoke with Respondent by telephone and obtained the routing numbers for the escrow account. On May 6, 1999, William B. Campbell faxed a copy of the Escrow Funds Provider Agreement between Asian Energy and The Bedford Group to Respondent. William B. Campbell stated at his deposition that he knew Respondent only as the escrow agent and not Stateline’s guarantor. He indicated he would not have sent the funds if he had known the funds would not remain in Respondent’s account, and, as of the date of his complaint to Petitioner, he believed the funds were still in Respondent’s escrow account.

William B. Campbell indicated that his son, William S. Campbell, handled the majority of communication concerning the escrow funds. ‘William S. Campbell (hereafter ‘Steve Campbell’) wanted his own attorney to act as the escrow agent in the Stateline agreement. Since Stateline refused, it was agreed that the Campbell’s attorney would draft a rider to the agreement. This convinced Steve Campbell that the Campbells’ money would be safe. After the Campbells checked Respondent’s background and were provided with a copy of his resume, driver license and passport by Ryan, they agreed to wire the money to Respondent.

Steve Campbell testified that the fact that Respondent was a Maryland attorney reassured the Campbells that he had acted as an escrow agent in the past and was familiar with escrow agreements. “Steve Campbell signed a document, drafted by his attorney, entitled ‘Rider to Escrow Agreement Between State-line Capital Corp. and Asian Energy, Ltd.’ The Rider, dated April 30, 1999, was signed by Ryan, on behalf of Stateline, and Respondent, as escrow agent. When Steve Campbell signed the agreement, Respondent had not yet signed it. Later, Steve Campbell received a copy with Respondent’s signature. The Rider has a facsimile line on the top indicat ²¹⁹ ing that it was sent by Respondent.

The Rider to Escrow Agreement at paragraphs two an three provides: 2. Stateline shall cause the funds necessary to pay the Escrow Funds Provider to be paid at the closing and netted out of the gross loan proceeds, in a manner to be agreed upon by counsel for Stateline and the Escrow Funds Provider. 3. In the event that the loan cannot be funded, Stateline shall provide immediate notice to the Escrow Funds Provider and the Escrow Agent shall refund the Escrow deposit directly to the Escrow Funds Provider. “Ryan also sent Steve Campbell an Escrow and Disbursing Agreement dated March 17, 1999, which was not signed by Respondent. The agreement has handwritten language that states: ‘In addition escrow funds will not be transferred out of the State of Maryland for any reason until completion of transaction and reimbursement to borrowers.’ Steve Campbell was aware this statement was inserted and was further assured of the safety of his funds and believed that he had a stronger agreement as the result of the modification of the agreement. 11 “The original time limit for funding was to be 60 banking days or 90 days total.

In October 1999, Steve Campbell requested return of the money. In November, Ryan met with Steven Campbell and other Asian Energy investors. During the meeting, Ryan said that the funding was available, that they were going to get their money and not to ‘rock the boat.’ No loan was ever received. “On February 29, 2000, Steve Campbell’s attorney sent a letter to Respondent and Ryan in which he demanded return of the Campbells’ funds. There was no response to ²²⁰ this letter.

After multiple requests for return of the commitment fee, Steve Campbell received a copy of a letter that Payne sent to Asian Energy, Ltd., promising the return of the commitment fee on May 26, 2000. Steve Campbell also phoned Respondent on numerous occasions. Although Steve Campbell spoke to a woman who identified herself as Respondent’s wife and left messages, Respondent never returned the calls. “Prior to sending their complaint to Petitioner, the Camp-bells sent a copy to Respondent. In response, he received a letter signed by both Respondent and Ryan dated January 8, 2001.

In the letter, Respondent and Ryan indicated that they were continuing their efforts to get the deposit refunded. The letter also stated that the ‘lodging of any complaint shall adversely affect not only [Respondent] but Mr. Ryan as well, and shall assuredly destroy any possibility of [Ryan’s] performing at this critical stage.’ Respondent promised that he and Ryan would keep the Campbells updated concerning ‘our’ efforts to secure the return of the deposit and the funding of Asian Energy. “In response to the Campbells’ complaint, Respondent sent Petitioner a letter dated February 13, 2000. Respondent indicated that Asian Energy Ltd. had received a funding commitment for its project from Grindstone International and that ‘we’ expected the complaint to be retracted as having been filed in error once the Campbells learned of the funding. Enclosed with Respondent’s letter was a letter dated December 15, 2000 from Ryan to James Sylvester of Asian Energy Ltd. offering a loan commitment to Asian Energy in the amount of $4.5 million.

Sylvester provided Steve Campbell with a similar letter he had actually received from Ryan dated December 15, 2000. This letter, however, called for a $5.5 million loan and the wording of page three differed from the letter provided by Respondent. The letter that Sylvester actually received called for no commitment fee. The letter Respondent provided to Petitioner called for a commitment fee of $200,000 payable by Asian Energy to Grindstone upon acceptance of ²²¹ the loan terms.

The commitment fee previously paid to Stateline ‘shall be credited in full satisfaction of this requirement.’ It is clear to this Court that the document that Respondent provided to Petitioner was not the letter that was actually sent to Sylvester. “Steve Campbell testified that he did not authorize Respondent or anyone else to disburse the $200,000 commitment fee he sent to Respondent and was unaware of the disbursements made by Respondent following receipt of his funds. “On cross-examination, Steve Campbell indicated that he believed the funds were ‘sitting in [an] escrow account pledged so that they could acquire the funding.’ After further questioning by Respondent’s counsel, Steve Campbell indicated that ‘pledged’ was the wrong use of the term and that he understood the money was put in an escrow account to help secure the loan.” “Beaver Dam Project/Thomas E. Carswell/G. Marcus Hodge “In 1999, Thomas Carswell (hereafter ‘Carswell’) and Luis Moreno (hereafter ‘Moreno’) became involved in a land development project called Beaver Dam Investments (hereafter ‘Beaver Dam’). In October 1999, Moreno entered into an agreement with Stateline whereby Stateline would obtain a loan of over $25 million to finance the Beaver Dam project. Moreno was to receive an unconditional commitment from Stateline for the loan upon deposit of $100,000 to Respondent’s escrow account on or before November 19, 1999. On or about November 3, 1999, two deposits totaling $100,000 were deposited into Respondent’s escrow account as a commitment fee on behalf of Beaver Dam.

On November 4, 1999, Respondent disbursed these funds to unrelated parties. “Moreno’s attorney, G. Marcus Hodge (hereafter ‘Hodge’), testified at his deposition that, in the fall of 1999, ²²² he spoke with Ryan and Payne of Stateline. During this conversation, Hodge was told that Respondent was an attorney who would hold certain escrow deposits for a loan transaction that Moreno was attempting to acquire from Stateline. On November 24, 1999, Hodge wrote to the Respondent and requested a copy of the escrow agreement. On November 30, 1999, Hodge sent a letter to Stateline in which he stated that if the promised loan transaction did not close by the end of the week, Moreno would lose his opportunity to purchase the Beaver Dam property. “Between November 24 and December 7,1999, Hodge left several telephone messages with the Respondent’s office that were never returned.

On December 7, 1999, Hodge again wrote to respondent requesting a copy of the escrow agreement. On that same day, Respondent faxed a letter to Hodge in which he promised to fax a copy of the escrow agreement to Hodge that week and send a signature by mail. “Although the Beaver Dam commitment fee left the escrow account on November 4, 1999, Respondent faxed a letter to Hodge on December 16, 1999, stating: '... please be assured that we shall hold your client’s refundable loan commitment fee or 100k in escrow pending the outcome of this undertaking.’ On December 17, 1999, Hodge wrote to Payne following his review of the Escrow and Disbursing Agreement and suggested revisions to the agreement. A copy of this letter as well as a copy of the Escrow and Disbursing Agreement was sent to Respondent. “On January 12, 2000, Hodge sent Respondent a copy of a letter to Stateline in which he advised that, if he did not receive the loan proceeds by January 28, 2000, the deposit should be returned. On February 28 and March 3, 2000, Hodge wrote to the Respondent and demanded an immediate refund of the deposit.

The Respondent did not respond to either of these two letters. On March 7, 2000, Hodge wrote to Respondent and threatened to complain to the Maryland, Florida, Virginia and District of Columbia bars. Respondent faxed a reply to Hodge in which he stated, ²²³ among other things, that he ‘got no pay’ for serving as Statelines’ agent. Hodge claims that in a March 8, 2000 telephone call, Respondent told Hodge that his client’s funds were in a Bank of America account, that Respondent would open a separate escrow account solely to hold the $100,000 Beaver Dam commitment fee, and that Respondent would be the only one authorized to withdraw those funds as per the escrow agreement.

Respondent also told Hodge that he would provide the names and addresses of the loan officer who was familiar with the terms of the account. Respondent never provided this information. “On March 10, 2000, Hodge wrote to Respondent to confirm that the separate escrow account had been opened. In his letter, Hodge stated: ‘... our client is holding you, as the agreed upon Escrow Agent, personally responsible for the safe keeping of this $100,000 refundable commitment fee.’ On March 13, 2000, Respondent replied, falsely representing that he was holding ‘one hundred thousand dollars intact in [my] escrow account.’ Respondent enclosed a bank statement/profile that showed the account balance to be $101,474.84. “This Court finds the following transactions to be particularly egregious. At the hearing before this Court the Petitioner’s witness testified that on March 13, 2000, Respondent caused $100,000 to be wired into the escrow account from his personal friend, Desmond Kramer.

After this deposit was made, Respondent had an account statement printed, which he provided to Hodge, showing the balance to be $101,474.84. On March 17, 2000, the $100,000 was transferred from the account to an unknown destination. At this Court’s hearing, Respondent corroborated this story and testified that Desmond Kramer was his personal friend who had no relationship with Stateline and that Desmond Kramer loaned him the $100,000 so it would look like Hodge’s client’s money was in the escrow account. On or about March 29, 2000, Payne transferred $100,000 to Hodge’s trust account. ²²⁴ “This Court notes that Desmond Kramer received an earlier $100,000 disbursement from Respondent’s escrow account on January 13, 2000.

When questioned about this disbursement, Respondent was first unable to explain why he transferred these funds from the escrow account. He then indicated that Stateline owed these funds to Kramer, even though Kramer had not deposited any funds into the account prior to January 13, 2000. “Conclusions of Law “This Court finds that Respondent violated Maryland Rules of Professional Conduct 1.15(a) and (b), 8.1(b) and 8.4(a), (b) and (c). This Court also finds that Respondent violated Business Occupations and Professions Article Sections 10-306 and 10-606(b) and Maryland Rule 16-609. “MRPC 1.15 “MRPC 1.15(a) requires that a lawyer hold property of clients or third persons separate from the lawyer’s own property. It is clear to this Court that Respondent made several escrow account transactions involving his personal funds, his corporate entity and loans from personal friends.

Respondent never disputed that these transactions occurred. There is clear and convincing evidence that Respondent violated MRPC 1.15(a). “Respondent cannot escape responsibility for his conduct by arguing that he merely followed the instructions of his client, Stateline. Pursuant to MRPC 1.15(b), Respondent owed a fiduciary duty to third parties as well as his client. Respondent had an obligation to hold the entrusted funds, promptly return them to the depositors upon request and promptly render a full accounting upon request.

It is clear to this Court that Respondent did not hold the funds in escrow for any significant length of time and that Respondent only refunded commitment fees to several depositors after they filed complaints with the Attorney Grievance ²²⁵ Commission. This Court also notes that Respondent even provided G. Marcus Hodge a false accounting in connection with the Carswell complaint. There is clear and convincing evidence that Respondent violated MRPC 1.15(b). “MRPC 8.1(b) “Respondent violated MRPC 8.1(b) when he knowingly failed to respond to a lawful request for information by Petitioner. The evidence established that Petitioner requested that respondent provide bank records relating to his escrow account in connection with the Bryers and Kent complaints.

Respondent never provided these records, and it is clear that these records are not confidential communications protected by MRPC 1.6. “There is clear and convincing evidence that Respondent did not act to avoid, and in fact wanted to give, the impression that Bryers’s and Kent’s funds were maintained in the escrow account at the time Petitioner received their complaints. Respondent merely informed Petitioner that he had refunded the commitment fees. The Petitioner only became aware that the funds were not held in escrow after it subpoenaed the bank records. “MRPC 8.4 “Respondent has violated MRPC 8.4(a) because this Court has found by clear and convincing evidence that he violated more than one Rule of Professional Conduct through his use of the escrow account. This Court need not consider Respondent’s intent in finding that he violated Rule 8.4(a). “As set out below, this Court finds that Respondent violated Md.Code Ann., Bus.

Occ. & Prof. Sections 10-306 and 10-606 through his misuse of an attorney trust fund. Violation of these sections constitutes a misdemeanor. There is no requirement that the Respondent be charged with or prosecuted for a crime for him to be found in violation of MRPC 8.4(b).

Attorney Grievance Comm’n v. Garland, 345 Md. 383 , 692 A.2d 465 (1997). ²²⁶ “This Court finds that Respondent engaged in conduct involving dishonesty, fraud, deceit or misrepresentation in violation of MRPC 8.4(c). Respondent knew early in his representation of Stateline that depositors expected that their money would remain in the escrow account. In a February 12, 1999 letter to Ryan and Payne, Respondent expressed his concern as to the use of the escrow account. Respondent signed multiple escrow agreements, addenda and riders that led depositors to believe that the commitment fees remained in escrow.

In telephone calls and letters, he repeatedly assured depositors and their attorneys that their commitment fees were in the escrow account. At the hearing before this Court, Respondent testified that he ‘quibbled’ with the truth by not actually saying ‘your money is here,’ but that he never told them that the money was not in the account. This conduct is the very essence of misrepresentation and deceit. Respondent clearly violated MRPC 8.4(c). “Bus.

Occ. & Prof. §§ 10-306 and 10-606 “This Court finds by clear and convincing evidence that Respondent wilfully used trust money for a purpose other than that for which it was entrusted to him. ‘ “Trust money” means a deposit, payment, or other money that a person entrusts to a lawyer to hold for the benefit of a client or a beneficial owner.’ Md.Code Ann., Bus. Occ. & Prof. § 10-301(d) (2000 Repl.Vol.). Section 10-606 states that an attorney is guilty of a misdemeanor if he willfully violates Section 10-306. Respondent knew that the depositors believed the funds would be held in escrow until the loans had been funded and that the commitment fees would be returned if the loans were not funded. “Respondent testified at the instant hearing that he believed Stateline’s customers were aware that the funds would not remain in his account.

Kent, the Campbells, Carswell ... all testified in their depositions that they expected Respondent to hold the commitment fees in escrow until the loans were funded. The numerous escrow agreements, addenda, riders, telephone calls and written corre ²²⁷ spondence outlined in this Court’s findings of fact lend credence to the assertions of the depositors. Respondent knew that the depositors were sending their commitment fees to his account to be held in escrow. “When the depositors demanded refunds, Respondent failed to disclose that he no longer held the funds. In the case of the Carswell complaint, Respondent intentionally misrepresented to Hodge that commitment fees were being held in his escrow account.

Respondent went to great lengths to continue the ruse by depositing $100,000 from his friend Desmond Kramer into the account to raise the balance and satisfy Hodge. If, as Respondent suggests, Hodge’s clients were aware that the funds were not in the escrow account, this complicated deception would have been unnecessary. Likewise, Respondent also falsely represented to Kent in June or July 1999 that he still held Kent’s money in escrow. Such conduct is inconsistent with a belief that the customers were aware the funds were no longer in escrow. “Respondent clearly acted as escrow agent for his client, Stateline, as well as for the depositors.

At the hearing, Respondent argued that he only had an agency duty to his client and that he owned no duty to the depositors. [T]here is a fundamental difference between serving as a traditional agent and acting as an escrow agent or trustee. A traditional agent is one who consents to act on behalf of and is subject to the control of his principal, ... while an escrow agent, like a trustee, is a stranger to all parties in the sense that he is insulated from their dictates and acts subject only to the control of the conditions and specifications contained in the escrow or trust agreement. Campen v. Talbot Bank of Easton, 271 Md. 610, 616 , 319 A.2d 125, 129 (1974) (internal citations omitted). As the Court of Appeals has made abundantly clear, Respondent’s contention is incorrect.

It is clear to this Court that Respondent violated Section 10-306. Furthermore, his misuse of the escrow account was not accidental or negligent, it was willful. Respondent also violated Section 10-606. ²²⁸ “Maryland Rule 16-609 “Petitioner alleged that Respondent used funds that were required to be deposited into an attorney trust account for an unauthorized purpose in violation of Rule 16-609. This Court finds that the commitment fees were to be deposited in an escrow account and held there until the financing of the depositors’ loans!

An escrow account is an attorney trust account within the meaning of Rule 16-609. See Md. R. 16-602(c) (2002) (stating that ‘ “[attorney trust account” means an account, including an escrow account, maintained in