Attorney Grievance Commission v. Zuckerman

DALE R. CATHELL Judge (retired, specially assigned). Pursuant to Maryland Rule 16-751, 1 the Attorney Grievance Commission (the “Commission” or “Bar Counsel”), acting through Bar Counsel, filed a petition for disciplinary action or remedial action against Charles Zuckerman (“respondent”) on April 26, 2007. He is charged with professional misconduct, as defined by Maryland Rule 16—701(i), 2 through violations of the Maryland Rules of Professional Conduct (“MRPC”), specifically, Rule 1.1 (Competence), 3 1.3 (Diligence), 4 1.15(d) (Safekeeping Property), 5 5.3 (Responsibilities Regarding Nonlawyer ⁶⁹⁸ Assistants), 6 and 8.4(d) (Misconduct). 7 He is additionally charged with violating Maryland Code (1989, 2004 Repl. Vol.), § 10-806 of the Business Occupations and Professions Article (“BOP”). 8 Pursuant to Maryland Rule 16-752(a), 9 we referred the matter to Judge John N. Prevas, of the Circuit Court for Baltimore City, for an evidentiary hearing and to make findings of fact and conclusions of law in accordance with Mary ⁶⁹⁹ land Rule 16-757(c). 10 On September 10, 2007, Judge Prevas held a hearing and, on October 24, 2007, issued findings of fact and conclusions of law, in which he found by clear and convincing evidence that respondent had violated MRPC 1.1, 1.3, 1.15(d), 8.4(d) and Md. BOP, § 10-306.

Neither respondent nor petitioner filed exceptions to these findings. The Hearing Judge’s findings of fact and conclusions of law are as follows: “The respondent has been a member of the Maryland Bar since June 20, 1974. He served for about five and a half years as an Assistant State’s Attorney in Baltimore City and as an Assistant Attorney General assigned to the Public Service Commission for about a year and a half. For the last twenty-four years the respondent has conducted a private law office in Baltimore City.

His cases consisted of a high volume of small personal injury cases (settlements averaging under $10,000) and few family law and criminal cases as well. “This is the second instance in which such a violation has taken place. During the September Term of 2004, the Maryland Court of Appeals held that respondent violated Maryland Rules of Profession Conduct 1.1, 1.3, 1.4(a), 1.15(a), 5.3(a) and (b), 8.4(d), BOP [Business Occupations and Professions Article of the Maryland Code] § 10-306, and § 10-307, and Maryland Rules 16-604 and 16-607. Attorney Grievance Commission v. Zuckerman, [ 386 Md. 341 ,] 872 A.2d 693 (Md.2005). This decision arose from events that transpired beginning in the spring of 2002 onward. “In April of 2005, the respondent was suspended indefinitely for these violations.

The Court of Appeals found the respondent violated Maryland Rules of Professional Conduct 1.1, 1.3, 1.4(a), 1.15(a), 5.3(a) and (b), 8.4(d), Business ⁷⁰⁰ Occupations and Professions Article § 10-304 and § 10-306 and Maryland Rules 16-607. Id. After respondent was suspended, he was given the right to apply for reinstatement within thirty days. Respondent subsequently applied for reinstatement and was reinstated on June 2, 2005. “I. Rule 5.3(a) and (b) (Responsibilities Regarding NonLawyer Assistants). “A. Findings of Fact “In May of 2002, respondent hired a new employee, Shannon Becker, as an office assistant.

Within a couple days of hiring her, respondent gave Ms. Becker signatory authority over his trust account. Shortly after she was hired, Ms. Becker devised a scheme to steal money from respondent’s trust account by writing checks to friends who would then cash them for her and give her the money while concealing her actions by creating fictitious check stubs. In less than two months, she was able to steal approximately $144,000 from respondent’s trust account. “During Bar Counsel’s investigation of the initial matter, respondent explained that he had allowed this money to accumulate in his trust account over a period of years because he was not paying medical providers in personal injury settlement cases. He retained the money because he thought that the clients’ personal injury protection policy would pay the money.

However, he never followed up to see if that had occurred. The result was that he paid restitution of approximately $144,000 to various medical providers and clients over a two-year period. When Bar Counsel reviewed respondent’s trust account in that investigation, Bar Counsel’s office learned that respondent had routinely failed to deposit personal injury settlement checks in a timely fashion, although he disbursed funds in the settlements on a timely basis. On one occasion his trust account had a negative balance as a result of respondent’s practice of advancing payments that he had not deposited in his trust account.

Respondent learned of Ms. Becker’s ⁷⁰¹ thefts when he received an anonymous telephone call in the middle of July, 2002.... “Respondent subsequently brought in another employee, Ms. Rhonda Elkins, in an attempt to straighten out the fraud committed by Ms. Becker. Ms. Elkins was a certified paralegal that had obtained her paralegal degree from Baltimore County Community College, Dundalk Campus. Upon recommendation of Baltimore County Community College, Ms. Elkins was brought into the respondent’s office to replace Ms. Becker, originally as an unpaid intern, where she assisted Ms. Kohler, another paralegal on PIP claims.... “In 2002, when an opening became available for a paralegal position, Ms. Elkins was offered the position and accepted it. Ms. Elkins had a prior felony theft conviction, which Mr. Zuckerman claimed to be unaware of.

Out of the five days a week Ms. Elkins worked, she would spend approximately one to two days dealing with the prior theft by Ms. Becker and three to four on her other duties. During the course of her employment, Ms. Elkins was able to steal approximately $124,000 from the respondent’s trust account. “It became Ms. Elkins’ job to manage the day-to-day operations of respondent’s trust account.... Ms. Elkins devised a scheme in March of 2003 to steal funds respondent was placing in his trust account to repay the individuals whose funds Ms. Becker had stolen. After she had written out checks and respondent had signed the checks, she or her husband forged the payee’s endorsement and her husband cashed the check after placing his endorsement on it....

Respondent did not detect this theft because he never looked at the backs of the checks to see if the payee had endorsed them____ When Ms. Elkins stopped stealing money from the clients whom respondent was attempting to repay, she started stealing from respondent’s trust account by making out checks to the estate of James Hilling, for which she had been personal representative, Anthony Elkins, her husband, or herself---- In January, 2006, respondent learned that Ms. Elkins had taken out a credit card in ⁷⁰² his name.... When he spoke to her about it, she admitted that she had done so. “Respondent told her that she could work through the rest of the pay period----A few days later, Ms. Elkins admitted that she had been stealing from respondent’s trust account. Respondent immediately terminated her employment---- Respondent then reviewed his trust account and found out about the forgeries and checks she had written to herself, her husband, and the estate.... Respondent concluded that he had not detected the checks that Ms. Elkins had made out to herself or somebody associated with her because she had removed them from the statements....

On March 21, 2006, respondent, through counsel, reported Ms. Elkins’ thefts from [his] trust account to Bar Counsel---- Respondent calculated the total amount of the thefts to be $124,041.20____ Of this amount, $16,804.54 were client funds, $69,118.43 were respondent’s fees and approximately $38,000 was for medical providers____ John DeBone, petitioner’s trust account paralegal, calculated that $43,262.13 belonged to clients from whom Shannon Becker had also stolen____ “B. Conclusions of Law “Respondent violated Rules 5.3(a) and 5.3(b). Maryland Rule of Profession Conduct 5.3(a) provides that ‘a partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person’s conduct is compatible with the profession obligations of the lawyer.’ Rule 5.3(b) provides that ‘a lawyer having direct supervisory authority over the non-lawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.’ “Respondent violated Rule 5.3(a) by failing to have in place procedures to ensure Ms. Elkins’ compliance with the Rules of Professional Conduct and Rule 5.3(b) by failing to supervise her activities. The fact that he continued the practice of failing to disburse funds promptly shows that he did not put into place any system to make sure that funds ⁷⁰³ were promptly disbursed. It was this failure, which allowed Shannon Becker to steal over $140,000 from his trust account. “Respondent cannot claim that Ms. Elkins’ theft of checks made out to clients led him to believe that he had disbursed funds when he really had not.

Petitioner’s exhibit 14 shows that only three of the checks Ms. Elkins stole can be connected with clients who had funds in his trust account at the time of the theft. The remaining positive balances would have been discovered had respondent conducted a proper reconciliation of his account even if he had not detected the forged endorsements. The total of positive balances which cannot be directly connected to any check written by Ms. Elkins is $104,811.37. The continuation of the practice of advancing funds, while it occurred on a much smaller scale than in the time period before Shannon Becker, also shows that respondent did not have proper procedures in place to safeguard client funds as required by Rule 1.15(a).

Likewise, it is clear that respondent did not supervise Ms. Elkins adequately. She initially was able to accomplish her thefts by forging endorsements which respondent did not detect because he did not look at the back of the checks. She then became bolder and stole by making out checks to herself, an estate, and her husband. These checks were in round numbers and could not possibly have been related to any case under respondent’s care____ They would have been detected had respondent observed that the checks were removed.

He made the same mistake with Rhonda Elkins that he did with Shannon Becker. Many of these thefts were in the latter half of 2005 after he had returned from his suspension. “II. Violation of Md. Bus. Occ. & Prof.

Code Ann. § 10-306 (Advance Payments) “A. Findings of Fact “Over the course of almost three and a half years, between July, 2002 and November 2005, there were sixteen instances in which the respondent advanced client funds ⁷⁰⁴ from his trust account before corresponding deposits were placed in his trust account. Of those sixteen instances, however, five of them were as a result of the bank cashing post-dated checks and not the fault of respondent. Looking to petitioner’s exhibit 13, the list is as follows. “On July 29, 2002, a check payable to Marcus Baskerville in the amount of $653.75 was cashed against respondent’s trust account. On July 30, 2002, respondent deposited $1,250.00 into his trust account in connection with the settlement of Marcus Baskerville’s case.

This was the first deposit respondent made into his trust account in connection with this [Baskerville] case. “On July 29, 2002, a check payable [to] Willie Parrine in the amount of $1,403.00 was cashed against respondent’s trust account. On July 30, 2002, respondent deposited $2,500.00 into his trust account in connection with the settlement of Willie Parrine’s case. This was the first deposit respondent made into his trust account in connection with this [Parrine] case. “On October 15, 2002, a check payable to Arthur Brockington in the amount of $3,675.00 was cashed against respondent’s trust account. On October 17, 2002, respondent deposited $5,700.00 into his trust account in connection with the settlement of Arthur Brockington’s case.

This was the first deposit respondent made into his trust account in connection with this [Brockington] case. In this instance, the bank cashed a post-dated check. “On October 22, 2002, respondent wrote a check from his trust account payable to Tashia Smith in the amount of $1,655.00. On October 23, 2002, respondent deposited $5,000.00 into his trust account in connection with the settlement of Tashia Smith’s case. This was the first deposit respondent made into his trust account in connection with this [Smith] case. “On November 5, 2002, respondent wrote a check from his trust account payable to Judith McCoy in the amount of $624.05.

On November 6, 2002, respondent deposited $2,546.18 into his trust account in connection with the ⁷⁰⁵ settlement of Judith McCoy’s case. This was the first deposit respondent made into his trust account in connection with this [McCoy] case. “On November 19, 2002, respondent wrote a check from his trust account payable to Gloria Lawson in the amount of $1,816.40. On November 20, 2002, respondent deposited $6,000.00 into his trust account in connection with the settlement of Gloria Lawson’s case. This was the first deposit respondent made into his trust account in connection with this [Lawson] case. “On November 21, 2002, respondent wrote a check from his trust account payable to Taimika Hugley in the amount of $266.67.

On November 25, 2002, respondent deposited $400.00 into his trust account in connection with the settlement of Taimika Hugley’s case. This was the first deposit respondent made into his trust account in connection with this [Hugley] case. “On December 12, 2002, respondent wrote a check from his trust account payable to Ray Toulson in the amount of $2,100.10. On December 13, 2002, respondent deposited $2,154.55 and $3,800.00 into his trust account in connection with the settlement of Ray Toulson’s case. These were the first deposits respondent made into his trust account in connection with this [Toulson] case. “On December 20, 2002, respondent wrote a check from his trust account payable to Carol Walker in the amount of $1,461.68.

On December 23, 2002, respondent deposited $1,642.50 and $2,500.00 into his trust account in connection with the settlement of Carol Walker’s case. These were the first deposits respondent made into his trust account in connection with this [Walker] case. “On February 14, 2003, respondent wrote a check from his trust account payable to Rosita Inman in the amount of $1,250.00. On February 20, 2003, respondent deposited $4,050.00 into his trust account in connection with the settlement of Rosita Inman’s case. This was the first deposit respondent made into his trust account in connection with this [Inman] case. ⁷⁰⁶ “On March 11, 2003, respondent wrote a check from his trust account payable to Cindy Littlejohn in the amount of $1,611.67, when at that time only $77.00 was on deposit in the trust account in connection with Ms. Littlejohn’s case.

On March 12, 2003, respondent deposited $2,500.00 into his trust account in connection with the settlement of Cindy Littlejohn’s case. “On May 2, 2003, a check payable to Charmain Chisholm in the amount of $1,459.47 was cashed against respondent’s trust account. On May 6, 2003, respondent deposited $4,500.00 into his trust account in connection with the settlement of Charmain Chisholm’s case. This was the first deposit respondent made into his trust account in connection with this [Chisholm] case. In this instance, the bank cashed a post-dated check. “On April 29, 2003, a check payable to James White in the amount of $2,135.85 was cashed against respondent’s trust account.

On April 30, 2003, respondent deposited $4,500.00 into his trust account in connection with the settlement of James White’s case. This was the first deposit respondent made into his trust account in connection with this [White] case. In this instance, the bank cashed a post-dated check. “On December 7, 2004, a check account [sic] payable to Wesley Ross in the amount of $250.00 was cashed against respondent’s trust account. On December 8, 2004, respondent deposited $3,000.00 into his trust account in connection with the settlement of Wesley Ross’ case.

This was the first deposit respondent made into his trust account in connection with this [Ross] case. In this instance, the bank cashed a post-dated check. “On June 30, 2005, a check payable to Elizabeth White in the amount of $1,370.04 was cashed against respondent’s trust account, when there was only $269.02 on deposit in connection with Ms. White’s case. On July 5, 2005, respondent deposited $5,400.00 into his trust account. In this instance, the bank cashed a post-dated check. “On November 1, 2005, respondent wrote checks from his trust account payable to himself in the amount $209.00 and ⁷⁰⁷ $200.00 in connection with the bankruptcy case of Laquandra Malloy, when at the time there was only $200.00 on deposit in his trust account.

On January 24, 2006, respondent deposited $309.00 into his trust account in connection with Ms. Malloy’s case. “B. Conclusions of Law “The conduct described above violates Business Occupations and Professions § 10-306, which provides that ‘a lawyer may not use the trust money for any purpose other than the purpose for which the trust money is entrusted to the lawyer.’ “Respondent’s use of others’ funds to pay clients who had no money on deposit in his trust account is a misuse of trust money and a violation of BOP § 10-306. Attorney Grievance Commission v. Zuckerman, [ 386 Md. 341, 372-73 ,] 872 A.2d 693, 711-12 (2005). Discounting the five post-dated checks as a result of bank error, there were 11 instances of this conduct between July 2002 and November 2005. “III. Rules 1.1, 1.3, 1.15(d) and 8.4(d) (Failure to promptly pay) “A. Findings of Fact “A review of respondent’s trust account showed that as of January 30, 2006, there were 63 clients who had funds on deposit in his trust account, some of them dating back as far as 2002.

Petitioner’s exhibit 12 shows the breakdown of positive balances the respondent had each year between 2002 and 2006. In 2002 there were three positive balances, which increased the following year of 2003 to ten positive balances. In 2004 there were eighteen positive balances and then in 2005 there were twenty-six positive balances in respondent’s trust account. The number decreased in 2006 to six clients. “Respondent has represented that individuals who had positive balances have now been paid.

Respondent has now closed his practice. Bar Counsel has received no complaints concerning respondent’s failure to pay. ⁷⁰⁸ “B. Conclusions of Law “Rule 1.15(d) states: ‘Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or the third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or the third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or the third person, shall promptly render a full accounting regarding such property.’ “In Zuckerman , the Court of Appeals held that the practice of failing to promptly disburse funds from the trust account violated Rules 1.1 (competence), 1.3 (diligence), 1.15(b), which requires prompt payment of clients and third-parties and which became Rule 1.15(d) on July 1, 2005, and 8.4(d) (conduct prejudicial to the administration of justice).