THE STATE OF NEW HAMPSHIRE

Transcription

1 THE STATE OF NEW HAMPSHIRE SUPREME COURT LD IN THE MATTER OF Grenville Clark, III, Esquire BRIEF FOR THE NEW HAMPSHIRE SUPREME COURT PROFESSIONAL CONDUCT COMMITTEE New Hampshire Supreme Court Professional Conduct Committee By its counsel: James L. Kruse, Esquire Assistant Disciplinary Counsel NH Bar ID No Chenell Drive, Suite 102 Concord, New Hampshire (Oral Argument by James L. Kruse)

2 TABLE OF CONTENTS Pasefs) Table of Authorities ii I. QUESTION PRESENTED 1 II. STATEMENT OF THE CASE 2-3 III. STATEMENT OF THE FACTS 4-9 IV. SUMMARY OF ARGUMENT 10 V. ARGUMENT A. MR. CLARK IGNORED FEDERAL LAW AND SOUGHT TO DECEIVE THE COURT 11 B. MR. CLARK'S MISCONDUCT WARRANTS DISBARMENT 16 VI. CONCLUSION 21 VII. APPENDIX Text of Authorities 23-32

3 TABLE OF AUTHORITIES CASES Page(s) Bernhardt v. Radloff fin re Radloff), 418 B.R. 316 (Bankr. Minn. 2009)... 17, 18 In re Boatright. 414 B.R. 526 (Bankr. W.D. Mo. 2009) 13 In the Matter of Grenville Clark, III. LD (2010) 4, 20 Cohen's Case. 143 N.H. 169, 172(1998) 20 In re Stanley. No , 2010 Bankr. LEXIS 2792, at *8-10 (Bankr. M.D. N.C. Aug. 19, 2009) 12 Wolterbeek's Case. 152 N.H. 710, 716 (2005) 19 Young's Case. 154 N.H. 359, 369 (2006) 20 BOOKS, TREATISES, AND REFERENCE MATERIALS 8 Collier on Bankruptcy. fu 1322, 1325 (2011) 11, 12, 13 RULES OF PROFESSIONAL CONDUCT Rule Rule Rule Rule 1.5(b) 2 Rule 1.15(b) 20 Rule 3.3(a)(1) 2, 10, 16, 20, 23 Rule 3.4(c) 2 Rule 8.1(b) 20 Rule 8.4(a) 16, 23 BANKRUPTCY CODE 11 U.S.C , 13,24 11 U.S.C , 12, U.S.C , 11, 12, 13, 25, ABA STANDARDS Section , 30 Section , 30 Section Section , 31 u

4 QUESTION PRESENTED Whether the Professional Conduct Committee reasonably concluded, based on the record, that the Respondent submitted false documents to the U.S. Bankruptcy Court with the intent to conceal his client's husband's income, under circumstances warranting disbarment.

5 STATEMENT OF THE CASE On April 5, 2010, the Attorney Discipline Office (ADO) issued a Notice of Charges in this case, alleging that the Respondent, Grenville Clark, III, Esq., violated New Hampshire Rules of Professional Conduct 1.5(b), 3.4(c), and 3.3(a)(1). PCC 31. Mr. Clark filed a timely Answer to the Notice of Charges. PCC 4. The parties entered into a partial Stipulation of Facts (PCC 7) and, on September 24, 2010, a hearing was held before a Hearing Panel. Mr. Clark appeared pro se. PCC 13. The Hearing Panel issued a Preliminary Hearing Panel Report on October 14, 2010 (PCC 14), followed by a Supplemental Hearing Panel Report, on December 20, 2010 (PCC 17). While the Hearing Panel found no violation of Rules 1.5(b) and 3.4(c), it found clear and convincing evidence that Mr. Clark violated Rule 3.3(a)(1) by filing false documents with the United States Bankruptcy Court with the intent to conceal his client's spouse's income. PCC 17, pp The Hearing Panel recommended that Mr. Clark be disbarred. PCC 17, pp Following a review of the record and oral argument (Mr. Clark appearing pro se), and after undertaking a sanction analysis under the ABA Standards for Imposing Lawyer Sanctions (1992) (Standards), the Professional Conduct Committee (Committee) issued its Recommendation for Disbarment, dated 1Citations to the record are as follows: "PCC" denotes the entire record (consisting of three volumes with a total of 20 tabbed entries) before the Committee in this matter. For instance, "PCC 3" denotes tab 3 within the record. In accordance with Supreme Court Rule 37(16)(a), the record of proceedings before the Committee is filed herewith.

6 April 4, PCC 20. The Committee directed Disciplinary Counsel to petition this Court for Mr. Clark's disbarment. Id. at p. 14. The Committee's Petition for Disbarment (Petition) was filed with this Court on May 12, Mr. Clark, through counsel, filed an Answer dated June 6, 2011, in which he denied violating any of the New Hampshire Rules of Professional Conduct.

7 STATEMENT OF THE FACTS Mr. Clark has been practicing law in New Hampshire since his admission to the Bar in September Mr. Clark is currently subject to a two-year suspension from the practice of law, effective April 28, 2010, pursuant to this Court's Order ofjanuary 29, 2010, In the Matter of Grenville Clark. III. LD In September 2008, Heidi L. Gaudreau retained Mr. Clark to seek bankruptcy protection under Chapter 13 of the United States Bankruptcy Code. Ms. Gaudreau wanted approval of a personal financial reorganization plan to allow payment of her debts over a specified period of time and to obtain a stay of a replevin action pending in Rockingham Superior Court. Hearing on the replevin action was scheduled for September 24, PCC 20, pp At the time of his engagement, Mr. Clark had extensive experience in bankruptcy practice; he was aware of the statutory prescriptions associated with Chapter 13 filings; and he had encountered the various schedules and forms associated with such filings "thousands" of times over the years. See PCC 13, p. 189; PCC 20, p. 6. Mr. Clark met first with Jay C. Davey, Ms. Gaudreau's brother, who had made the initial contact with Mr. Clark on Ms. Gaudreau's behalf. PCC 20, p Mr. Clark prepared and filed a "skeleton petition" on September 24, 2008, which effectively imposed an automatic stay of all proceedings against Ms. Gaudreau as debtor, subject to timely filing of various forms and schedules to complete the Chapter 13 petition. PCC 20, p. 3; PCC 13, pp

8 Mr. Clark met in person with Ms. Gaudreau on October 7, 2008, to prepare the necessary additional paperwork to file in support of a Chapter 13 plan of reorganization. Three of the additional forms included the Statement of Financial Affairs; Schedule I Current Income of Individual Debtor(s) (Schedule I); and a Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Form 22C) (Chapter 13 Statement), each of which required disclosure of information about Ms. Gaudreau's income, as well as her husband's income. PCC 13, p. 122; PCC 7, Exs. 9A, 9J, 90. Mr. Clark was aware that Ms. Gaudreau had been married in August 2008 and was still married at the time of filing. He was also aware that Ms. Gaudreau's husband had a significant amount of income. PCC 20, p. 5; PCC 13, pp. 45, With respect to the disclosure of income on the bankruptcy forms and schedules, Mr. Clark testified that Ms. Gaudreau was "emphatic" that "she did not want her husband's income involved in this...." According to Mr. Clark, "[t]hat gave some difficulty, but we, I think, tried to figure a way around it." PCC 13, pp. 46, 126; PCC 20, p. 6. During the course of the disciplinary investigation, Mr. Clark undertook to explain how he chose to accommodate Ms. Gaudreau. Mr. Clark told former Disciplinary Counsel, Landya B. McCafferty (now U.S. Magistrate Judge McCafferty), that he entered zeros on Schedule I under the column for spouse's income, but tried to "put the Court on notice" elsewhere on the form that Ms. Gaudreau's husband had income and was contributing to her household

9 expenses. Mr. Clark acknowledged to Ms. McCafferty that this was a "tricky situation" and that "it was a fine balance because she (Ms. Gaudreau) couldn't have too much money, but she had to have enough money to be able to qualify for Chapter 13." PCC 13 p See PCC 8, Exs. 10, 11. Mr. Clark prepared the Statement of Financial Affairs. Instructions appearing at the top of the form provide that "[i]f the case is filed under chapter 12 or chapter 13, a married debtor must furnish information for both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed." At paragraph 1, requiring disclosure of income from employment or operation of business, the petitioner was further instructed as follows: "(Married debtors filing under chapter 12 or chapter 13 must state income of both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)" PCC 7, Ex. 9A. Mr. Clark completed the form without including Ms. Gaudreau's husband's income. Mr. Clark prepared the Schedule I. Instructions appearing at the top of the form provided that "[t]he column labeled 'Spouse' must be completed in all cases filed by joint debtors and by every married debtor, whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed." PCC 20, p. 6-7; PCC 7, Ex. 9J. Schedule I required a series of financial disclosures under the general heading: "INCOME: (Estimate of average or projected monthly income at time case filed.)" In the column for "Debtor," Mr. Clark entered amounts for Ms. Gaudreau's monthly gross wages, salary and commissions, net take-home pay, and other sources of income. At line 13, JMlW^i

10 "Other monthly income," Mr. Clark entered $2,195, which he described as "Contributions from spouse." In the column for "Spouse," Mr. Clark entered zeros on every line. PCC 20, p. 6-7; PCC 7, Ex. 9J. The Chapter 13 Statement had a Column A for "Debtor's Income" and a Column B for "Spouse's Income," and directed a married petitioner to "Complete both Column A ('Debtor's Income') and Column B ('Spouse's Income') for Lines 2-10." (Emphasis in the original). Further instructions included the following: "All figures must reflect average monthly income received from all sources, derived during the six calendar months prior to filing the bankruptcy case...." PCC 7, Ex. 90. Mr. Clark disclosed Ms. Gaudreau's average monthly income in detail, as required under Column A on the Chapter 13 Statement. At line 7 of Column A, he entered zero for "any amounts paid by another person... on a regular basis, for household expenses of the debtor...." Under Column B, Mr. Clark entered zeros, representing that Ms. Gaudreau's husband had no income. At line 7 of Column B, Mr. Clark entered $ for "any amounts paid by another person... on a regular basis, for household expenses...." Id. Under Part II of the Chapter 13 Statement, Calculation of 1325(b)(4) Commitment Period, line 13 permits a "Marital adjustment." (Emphasis in the original). The adjustment may be available to a married debtor not filing jointly who contends that calculation of the commitment period under 1325(b)(4) does not require inclusion of the income of the debtor's spouse disclosed under Column B. In support of the marital adjustment, the debtor is asked to

11 disclose the amount of the spouse's income not paid on a regular basis for household expenses. Mr. Clark entered zeros. PCC 7, Ex. 90; PCC 13, pp On October 17, 2008, Mr. Clark filed these and other schedules and statements with the U.S. Bankruptcy Court, signed under oath by Ms. Gaudreau. PCC 7, Exs. 7, 9A, 9D, 90. See PCC 8, Ex. 11. On November 4, 2008, a meeting of creditors was convened before the Chapter 13 Bankruptcy Trustee, Lawrence P. Sumski, Esq., serving as Hearing Officer. Ms. Gaudreau appeared with Mr. Clark. The Hearing Officer asked Ms. Gaudreau about income received in addition to her salary. Ms. Gaudreau testified that she received help with the mortgage and other expenses from a "friend" who lived with her. PCC 7, Ex. 27, pp Mr. Clark understood that Ms. Gaudreau was actually referring to her husband when she represented that a "friend" was helping her with the mortgage and other expenses. Mr. Clark did not correct Ms. Gaudreau's misleading representation, notwithstanding his acknowledged ethical duty to do so. PCC 13, pp ; PCC 17, p. 13; PCC 19, pp Ms. Gaudreau later admitted in response to the Hearing Officer's further inquiry that her husband made "40-something thousand dollars a year." However, she denied that her husband shared any income or expenses, claiming, for example, that she alone paid the mortgage. PCC 7, Ex. 27, pp Following the meeting, Trustee Sumski issued a report recommending against confirmation of Ms. Gaudreau's Chapter 13 plan. Among other things, 8

12 the Trustee found that the amount of disposable income had not been established. PCC 7, Ex. 11, p On or about March 3, 2009, Ms. Gaudreau converted her Chapter 13 case to a Chapter 7 case. PCC 20, p. 5. On June 3, 2009, Assistant U.S. Trustee, Geraldine Karonis, Esq., filed a motion to dismiss Ms. Gaudreau's Chapter 7 case. PCC 7, Ex. 22. Ms. Karonis testified in the instant proceeding that under Chapter 7, Ms. Gaudreau was obliged to make the same disclosures pertaining to disposable income that were contemplated in the Schedule I and Chapter 13 Statement previously filed. The motion to dismiss was grounded in part on the Trustee's findings that Ms. Gaudreau's household income was reported as below the median and that, while Ms. Gaudreau reported a contribution from her husband, she did not disclose her husband's gross income, with appropriate deductions for his own debts. PCC 13, pp. 66, 68-69, 71-77; PCC 7, Ex. 22. At the termination of the Chapter 13 case, Trustee Sumski filed an Interim Report and Account, detailing how he had disposed of Ms. Gaudreau's plan payments. PCC 20, p. 5; PCC 8, Ex. 22. On June 3, 2009, Ms. Gaudreau, pro se, filed a Motion for Withdrawal of Bankruptcy Petition, alleging ineptitude and misconduct on the part of Mr. Clark. PCC 7, Ex. 24. By order dated July 1, 2009, the Court dismissed Ms. Gaudreau's case. PCC 7, Ex. 25.

13 SUMMARY OF ARGUMENT Mr. Clark deceived the U.S. Bankruptcy Court by filing false statements of fact in support of his client's Chapter 13 plan of reorganization and by failing to correct the record when his client made additional misrepresentations regarding household income. Mr. Clark knew that his client's husband had substantial income and that federal law required disclosure of such income in connection with a Chapter 13 plan. Notwithstanding such knowledge, Mr. Clark acted with a conscious design to comply with his client's demand that her husband's income not be disclosed. The Committee reasonably found clear and convincing evidence that Mr. Clark violated Rule 3.3(a)(1), and that he acted intentionally and caused substantial actual and potential harm. The Committee correctly identified a baseline sanction of disbarment and, considering significant aggravating factors, properly determined that disbarment is the only sanction that adequately addresses the goals of attorney discipline in this case. 10

14 ARGUMENT A. MR. CLARK IGNORED FEDERAL LAW AND SOUGHT TO DECEIVE THE COURT Applicable provisions of federal law leave no doubt that in order for a reorganization plan to be confirmed under Chapter 13 of the United States Bankruptcy Code, a married debtor living with his or her spouse must disclose all income of both the debtor and the debtor's spouse. 11 U.S.C. 1322; 1325(b)(1). Having practiced in this field for many years and encountered forms and schedules associated with Chapter 13 plans "thousands" of times, Mr. Clark was fully cognizant of the law. PCC 13, pp Nevertheless, in pursuit of his client's resistance to disclosing her husband's income, the Committee reasonably found that Mr. Clark devised a plan to circumvent the requirements of the Bankruptcy Court. PCC 20, p U.S.C of the United States Bankruptcy Code sets forth the required contents of a Chapter 13 plan. It allows for partial payments to creditors over certain "commitment periods" of three to five years, depending on whether "the current monthly income of the debtor and the debtor's spouse combined" is above or below the state median family income thresholds. 11 U.S.C. 1322(d)(1)(2); 8 Collier on Bankruptcy. \ [a][b] (16th ed. 2011). Accordingly, as the Committee properly found, the Bankruptcy Code contemplates disclosure of the monthly income of both the debtor and debtor's 11

15 spouse in order to determine what commitment period might apply in a reorganization plan. PCC 13, pp ,153-54; PCC 20, p U.S.C. 1325(b)(1) sets forth the conditions under which Chapter 13 plans are confirmed. Under this provision, the Court may not approve a Chapter 13 plan to which the U.S. Trustee or holder of an unsecured claim objects unless the debtor has property equal to the claim or unless "the plan provides that all of the debtor's projected disposable income to be received in the applicable commitment period... will be applied to make payments to unsecured creditors under the plan." 11 U.S.C. 1325(b)(l)(A)(B). As reflected in Section 1322, the "applicable commitment period" is three to five years, depending upon whether "the current monthly income of the debtor and the debtor's spouse combined" is above or below the state median family income thresholds. 11 U.S.C. 1325(b)(2),(3),(4)(A)(i)(ii). 8 Collier on Bankruptcy. K ll[d] (16th ed. 2011). Accordingly, as the Committee properly found, confirmation of Ms. Gaudreau's Chapter 13 plan required disclosure of Ms. Gaudreau's income, as well as her husband's income. PCC 13, p ; PCC 20, p. 5-6; In re Stanley. No , 2010 Bankr. LEXIS 2792, at *8-10 (Bankr. M.D. N.C. Aug. 19, 2009) (copy at PCC 12, Ex. 40). Mr. Clark argues that he could properly avoid disclosing the husband's income because "current monthly income" is defined in the definitions section oftitle 11 as "the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor's spouse receive)." 11 U.S.C According to Mr. Clark, this suggests that disclosure of income 12

16 of both spouses is required in connection with a Chapter 13 plan only in instances where a joint petition is filed. PCC 13, pp , 201. Mr. Clark's reliance on Section 101 is misplaced. Federal courts have determined that, for purposes of confirming a Chapter 13 plan under 11 U.S.C 1325, a non-debtor spouse's income is included in the debtor's current monthly income, as defined by Section 101, to the extent that it is regularly paid for household expenses of the debtor. 8 Collier on Bankruptcy. ^ llfd): see In re Boatright. 414 B.R. 526, (Bankr. W.D. Mo. 2009) (copy at PCC 12, Ex. 40). However, while not all of the spouse's income might ultimately be included in the assessment of the debtor's means for purposes of a Chapter 13 plan, the language of Section 1325 anticipates consideration of the combined income, with the rebuttable presumption that the debtor benefits from the entirely of the non-debtor spouse's income. The marital adjustment at line 13 of the Chapter 13 Statement affords the debtor an opportunity to rebut the presumption by showing that the spouse's income (disclosed in Column B) is not regularly contributed to household expenses of the debtor and should not be considered in determining the plan commitment period. In re Boatright. 414 B.R. at ; 8 Collier on Bankruptcy, t , note 115. Mr. Clark must concede, despite his reluctance under cross-examination at trial, that the Bankruptcy Code contemplates consideration of the current monthly income of both the debtor and the debtor's spouse in determining the debtor's eligibility for a commitment period and to confirm a Chapter 13 plan. 13

17 See PCC 13, pp ; PCC 12, Exs. 35, 36. Mr. Clark also concedes that the instructions appearing on Schedule I filed on behalf of Ms. Gaudreau stated that disclosure of the debtor's and debtor's spouse's income is required, and that entering the husband's purported "contribution" was not the same as disclosing the husband's income. PCC 13, p ; PCC 19, p Notwithstanding the law and specific instructions on Schedule I and the Chapter 13 Statement of which Mr. Clark was aware, Mr. Clark apparently decided that he could satisfy his client's demand not to disclose her husband's income by somehow "putting the Court on notice" of the husband's income without reporting any. This, according to Mr. Clark, was accomplished by inserting a financial "contribution" to Ms. Gaudreau's household expenses at line 13, Schedule I, under the column for debtor's income. Mr. Clark apparently undertook a similar approach in completing the Chapter 13 Statement, although he actually included a contribution under Column B for the spouse's income rather than under Column A. PCC 7, Ex. 90. Significantly, Mr. Clark was unable to make use of the martial adjustment at line 13 of the Chapter 13 Statement, where claims to limit consideration of spousal income are properly articulated, because he had ignored the law and instructions requiring that the spouse's income first be fully disclosed. Mr. Clark's position that he could "place the Court on notice" of Ms. Gaudreau's income without disclosing any of her spouse's income is untenable, at best. It is disingenuous, considering the fact that Mr. Clark entered zeros on 14

18 the schedules and forms, in effect representing that Ms. Gaudreau's husband had no income of any kind. Mr. Clark's further efforts at avoiding disclosure of the husband's income are reflected in his conduct at the November 2008 meeting of creditors. Mr. Clark failed to correct Ms. Gaudreau's misrepresentation that a "friend" helped her with the mortgage and expenses, knowing that the "friend" was actually Ms. Gaudreau's husband. Mr. Clark also neglected to address apparent inconsistencies in Ms. Gaudreau's representations that surfaced later at the meeting. Ms. Gaudreau was forced to admit to the Hearing Officer that her husband made approximately $40,000 in income, but she was quick to deny that he (a/k/a her "friend") contributed to the mortgage and expenses. Ms. Gaudreau had, of course, authorized Mr. Clark to claim a contribution from her husband on Schedule I and the Chapter 13 Statement (See PCC 13, p ) as part of the plan to address the income disclosure issue. The obvious question remains: if Mr. Clark honestly believed that he had legitimate legal grounds not to disclose Ms. Gaudreau's husband's substantial income, why did he not make his position clear in preparing and filing the Chapter 13 forms and schedules? Mr. Clark tried instead to create the illusion that he and his client intended to disclose that her husband had income, while, at the same time, affirmatively representing that her husband had none. Mr. Clark explains that his conduct was the product of "tyranny of the software," imposed by a software package which gave him only limited options. PCC 13, pp ,

19 The Committee was more than justified in rejecting Mr. Clark's answer. As Mr. Clark was forced to admit: "[Ijt's not much of an excuse. I could have just typed the form and edited it separately, I suppose...." PCC 13, pp , 201, 203. B. MR. CLARK'S MISCONDUCT WARRANTS DISBARMENT. The Committee undertook a four-part sanction analysis contemplated under the American Bar Association Standards for Imposing Lawyer Sanctions (1992) ("Standards"). It also made clear its recognition that the purpose of the Court's disciplinary power "is to protect the public, maintain public confidence in the bar, preserve the integrity of the legal profession, and prevent similar conduct in the future." PCC 20, p. 10. New Hampshire case law and the Standards support the Committee's conclusion that, in light of Mr. Clark's violation of Rules 3.3(a)(1) and 8.4(a), Mr. Clark should be disbarred from the practice of law. Under the first prong of the sanction analysis, the Committee found that Mr. Clark violated his duty of candor to the tribunal by making false statements of fact to the Bankruptcy Court regarding Ms. Gaudreau's spouse's income. PCC 20, pp Mr. Clark not only submitted documents falsely representing that Ms. Gaudreau's husband had no income, but he failed to correct the record before the Hearing Officer when his client falsely testified at a meeting of creditors. PCC 20, p. 13; PCC 19, p The second prong of the three-part test requires analysis of Mr. Clark's mental state. Mr. Clark acted with the intent to deceive the Bankruptcy Court. 16

20 PCC 20, p. 11. Mr. Clark submitted the false statements in pursuit of his client's demand that her husband's income not be disclosed. Mr. Clark knew that his client's position in this regard "gave some difficulty" and the situation was "tricky," but he "tried to figure a way around it." PCC 13, pp , 126. Indeed, as the Committee properly found, Mr. Clark "devised a plan to circumvent the requirement of the Bankruptcy Court." PCC 20, p. 9. He did so with the intent to induce the Court to rely on false information and to approve the Chapter 13 plan as submitted. PCC 20, pp. 9, 11. The evidence in this case stands in contrast to that considered by the U.S. Bankruptcy Court in Bernhardt v. Radloff (In re Radloffl, 418 B.R. 316, 324, (Bankr. Minn. 2009) (copy at PCC 12, Ex. 40). In In re Radloff. the U.S. Bankruptcy Court for the District of Minnesota considered a creditor's claim that the debtor fraudulently omitted financial information in a Chapter 7 filing. (As in Chapter 13 cases, petitioners seeking protection under Chapter 7 are required to file a Schedule I and a Statement of Current Monthly Income and Means Test Calculation. See PCC 13, pp ) Among other alleged omissions, the debtor left blank all entries under which he should have disclosed his wife's income. The Court was puzzled by the debtor's attorney's admitted routine failure to heed the instructions printed on Schedule I that unequivocally required a married debtor to complete the column for the spouse's income, whether or not a joint petition is filed. However, the Court found that the debtor "did not intend to secrete the fact of his wife's income generation" because the amount of the wife's income was disclosed on the 17

21 Chapter 7 Statement of Current Monthly Income and Means Test Calculator and was fully factored into the analysis. In re Radloff. 418 B.R. at pp In the present case, there is clear and convincing evidence that, in response to his client's demands, Mr. Clark devised a plan to "figure a way around" the income disclosure requirement. In the course of implementing the plan, Mr. Clark obviously did far more than leave blank spaces on Schedule I. By entering zeros on both forms, Mr. Clark affirmatively undertook to ensure that Ms. Gaudreau's husband's income would not be factored into the reorganization plan analysis. Under the third prong of the analysis, Mr. Clark caused serious actual and potential harm to the reputation and integrity of the legal profession. PCC 20, p. 11. He also caused irreparable harm to his attorney-client relationship and placed his client at risk of being denied bankruptcy protection and of federal prosecution for filing false statements. With the foregoing in mind, the Committee found that Standards 6.11, False Statements, Fraud, and Misrepresentation, most aptly described Mr. Clark's conduct, as follows: 6.11 Disbarment is generally appropriate when a lawyer, with the intent to deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious or potentially serious injury to a party, or causes a significant or potentially significant adverse effect on the legal proceeding. Accordingly, the Committee determined that the baseline sanction was disbarment. PCC 20, pp

22 In making its recommendation that this Court disbar Mr. Clark, the Committee also considered mitigating and aggravating factors. The Committee found that Mr. Clark had cooperated with Disciplinary Counsel "up to a point," consistent with his duty as a member of the Bar. PCC 20, p It found no accompanying remorse or acceptance of responsibility for his misconduct that might be considered in mitigation. See Wolterbeek's Case, 152 N.H. 710, 716 (2005). There are a number of aggravating factors. When Mr. Clark was told by his client that she wanted to conceal her husband's income, Mr. Clark exhibited a dishonest motive in trying "to figure a way around it." Standards 9.22 (b). Mr. Clark has also refused to acknowledge the wrongful nature of his conduct. Standards 9.22(g). On the contrary, Mr. Clark has tried to minimize his misconduct with claims that he intended to "put the Court on notice" of the husband's income by disclosing a financial contribution (itself of questionable veracity); he had no choice but to represent that Ms. Gaudreu's husband had "zero" income because of "tyranny of the software"; and he found no need to correct the record at the creditors' meeting because his client's reference to her husband as a "friend" was "harmless" and represented only a "peculiar" choice of words for a recently married woman. PCC 19, p Mr. Clark has substantial experience in the practice of law (Standards Sect. 9.2(i)) which is accompanied by his extensive disciplinary record. PCC 20, pp ; Standards 9.22(a). 19 fflswswssbw

23 Mr. Clark's disciplinary record includes three reprimands, three public censures, and a two-year suspension currently in effect. The reprimands and a public censure issued during the period 1991 to 2006 involved violations of Rules 8.1(b), 1.1, 1.3, and 1.4. The most recent public censure was imposed in 2008 after Mr. Clark withheld client funds in violation of Rule 1.15(b). Significantly, the two-year suspension issued in 2010 arose out of a case in which Mr. Clark provided false information to his client about the status of a case, in violation of Rule 8.4(c). In the Matter of Grenville Clark. HI. LD Considering Mr. Clark's Rule 3.3(a)(1) violation in this case and the aggravating factors, including a currently imposed suspension for an act of deceit, the Committee reasonably determined that Mr. Clark should be disbarred. This Court has made clear that "[tjhe privilege ofpracticing law does not come without the concomitant responsibility of truth, candor and honesty. Because no single transgression reflects more negatively on the legal profession than a lie, attorney misconduct involving dishonesty justifies disbarment." Young's Case. 154 N.H. 359, 369 (2006) (quoting Cohen's Case. 143 N.H. 169, 172 (1998)). 20 e^toje

24 CONCLUSION The Committee respectfully submits that it has undertaken the proper analysis contemplated by the Standards and that its recommended sanction is in accord with the purposes of attorney discipline as described by this Court. Accordingly, this Court should adopt the Committee's recommendation. Respectfully submitted, New Hampshire Supreme Court Attorney Discipline Office James L. Kruse, Esquire NH Bar ID No Chenell Drive, Suite 102 Concord, New Hampshire (603) Dated: August 12, 2011 Bv^ -^W~^^ ^f, Jd... jjame's L. Kruse Assistant Disciplinary Counsel CERTIFICATION I, James L. Kruse, as counsel for the New Hampshire Supreme Court Professional Conduct Committee, certify that two copies of the aforesaid Petitioner's Brief is being mailed on this IJ day of August, 2011, to counsel for Grenville Clark, III, Russell F. Hilliard, Esquire, at Upton 85 Hatfield, LLP, 159 Middle Street, Portsmouth, New Hampshire 03801, by first class mail postage prepaid. "5!. James L. Kruse Assistant Disciplinary Counsel 21

25 APPENDIX TO BRIEF FOR THE NEW HAMPSHIRE SUPREME COURT PROFESSIONAL CONDUCT COMMITTEE 22

26 New Hampshire Rules of Professional Conduct Rule 3.3(a)(1). Candor Toward the Tribunal (a) A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer; Rule 8.4. Misconduct It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) state or imply an ability to influence improperly a government agency or official; or (e) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules ofjudicial conduct or other law. 23 HW^UH^a

27 United States Bankruptcy Code 11 USCS S 101. Definitions In this title the following definitions shall apply: (10A) The term "current monthly income"-- (A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor's spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on~ (i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521{a)(l)(B)(ii)]; (B) or (ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(l)(B)(ii); and includes any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor's spouse), on a regular basis for the household expenses of the debtor or the debtor's dependents (and in a joint case the debtor's spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism (as defined in section 2331 of title 18 or domestic terrorism (as defined in section 2331 of title 18 on account of their status as victims of such terrorism. 11 USCS Contents of plan (a) The plan shall- (1) provide for the submission of all or such portion of future earnings or other future income of the debtor to the supervision and control of the trustee as is necessary for the execution of the plan; (2) provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title, unless the holder of a particular claim agrees to a different treatment of such claim; (3) if the plan classifies claims, provide the same treatment for each claim within a particular class; and (4) notwithstanding any other provision of this section, a plan may provide for less than full payment of all amounts owed for a claim entitled to priority under section 507(a)(1)(B) only if the plan provides that all of the debtor's projected disposable income for a 5-year period beginning on the date that the first payment is due under the plan will be applied to make payments under the plan. 24

28 (b) Subject to subsections (a) and (c) of this section, the plan may- (1) designate a class or classes of unsecured claims, as provided in section 1122 of this title, but may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims; (2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims; (3) provide for the curing or waiving of any default; (4) provide for payments on any unsecured claim to be made concurrently with payments on any secured claim or any other unsecured claim; (5) notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due; (6) provide for the payment of all or any part of any claim allowed under section 1305 of this title; (7) subject to section 365 of this title, provide for the assumption, rejection, or assignment of any executory contract or unexpired lease of the debtor not previously rejected under such section; (8) provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor; (9) provide for the vesting of property of the estate, on confirmation of the plan or at a later time, in the debtor or in any other entity; (10) provide for the payment of interest accruing after the date of the filing of the petition on unsecured claims that are nondischargeable under section 1328(a), except that such interest may be paid only to the extent that the debtor has disposable income available to pay such interest after making provision for full payment of all allowed claims; and (11) include any other appropriate provision not inconsistent with this title. (c) Notwithstanding subsection (b)(2) and applicable nonbankruptcy law~ (1) a default with respect to, or that gave rise to, a lien on the debtor's principal residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law; and (2) in a case in which the last payment on the original payment schedule for a claim secured only by a security interest in real property that is the debtor's principal residence is due before the date on which the final payment under the plan is due, the plan may provide for the payment of the claim as modified pursuant to section 1325(a)(5) of this title. 25

29 (d) (1) If the current monthly income of the debtor and the debtor's spouse combined, when multiplied by 12, is not less than (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner; (B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or (C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $625 per month for each individual in excess of 4, the plan may not provide for payments over a period that is longer than 5 years. (2) If the current monthly income of the debtor and the debtor's spouse combined, when multiplied by 12, is less than (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner; (B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or (C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $625 per month for each individual in excess of 4, the plan may not provide for payments over a period that is longer than 3 years, unless the court, for cause, approves a longer period, but the court may not approve a period that is longer than 5 years. (e) Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1325(a)(5) of this title, if it is proposed in a plan to cure a default, the amount necessary to cure the default, shall be determined in accordance with the underlying agreement and applicable nonbankruptcy law. (f) A plan may not materially alter the terms of a loan described in section 362(b)(19) and any amounts required to repay such loan shall not constitute 'disposable income'under section USCS Confirmation of plan (a) Except as provided in subsection (b), the court shall confirm a plan if (1) the plan complies with the provisions of this chapter and with the other applicable provisions of this title; (2) any fee, charge, or amount required under chapter 123 of title 28, or by the plan, to be paid before confirmation, has been paid; (3) the plan has been proposed in good faith and not by any means forbidden by law; 26

30 (4) the value, as ofthe effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date; (5) with respect to each allowed secured claim provided for by the plan (A) the holder of such claim has accepted the plan; (B) (i) the plan provides that (I) the holder of such claim retain the lien securing such claim until the earlier of (aa) the payment of the underlying debt determined under nonbankruptcy law; or (bb) discharge under section 1328; and (II) if the case under this chapter is dismissed or converted without completion of the plan, such lien shall also be retained by such holder to the extent recognized by (C) (ii) applicable nonbankruptcy law; the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim; and (iii) if- (I) (II) property to be distributed pursuant to this subsection is in the form of periodic payments, such payments shall be in equal monthly amounts; and the holder of the claim is secured by personal property, the amount of such payments shall not be less than an amount sufficient to provide to the holder of such claim adequate protection during the period of the plan; or the debtor surrenders the property securing such claim to such holder; (6) the debtor will be able to make all payments under the plan and to comply with the plan; (7) the action of the debtor in filing the petition was in good faith; (8) the debtor has paid all amounts that are required to be paid under a domestic support obligation and that first become payable after the date of the filing of the petition if the debtor is required by a judicial or administrative order, or by statute, to pay such domestic support obligation; and (9) the debtor has filed all applicable Federal, State, and local tax returns as required by section For purposes of paragraph (5), section 506 shall not apply to a claim described in that paragraph if the creditor has a purchase money security interest securing the debt that is the subject of the claim, the debt was incurred within the 910-day preceding the date of the filing of the petition, 27

31 (b) and the collateral for that debt consists of a motor vehicle (as defined in section of title 49) acquired for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during the 1-year period preceding that filing. (1) If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan (A) the value of the property to be distributed under the plan on (B) account of such claim is not less than the amount of such claim; or the plan provides that all of the debtor's projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan. (2) For purposes of this subsection, the term "disposable income" means current monthly income received by the debtor (other than child support payments, foster care payments, or disability payments for a dependent child made in accordance with applicable nonbankruptcy law to the extent reasonably necessary to be expended for such child) less amounts reasonably necessary to be expended (A) (i) for the maintenance or support of the debtor or a dependent of the debtor, or for a domestic support obligation, that first becomes payable after the date the petition is filed; and (ii) for charitable contributions (that meet the definition of "charitable contribution" under section 548(d)(3) to a qualified religious or charitable entity or organization (as defined in section 548(d)(4)) in an amount not to exceed 15 percent of gross income of the debtor for the year in which the contributions are made; and (B) if the debtor is engaged in business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business. (3) Amounts reasonably necessary to be expended under paragraph (2), other than subparagraph (A)(ii) of paragraph (2), shall be determined in accordance with subparagraphs (A) and (B) of section 707(b)(2), if the debtor has current monthly income, when multiplied by 12, greater than (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner; (B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or 28

32 (C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $625 per month for each individual in excess of 4. (4) For purposes of this subsection, the "applicable commitment period"- (A) subject to subparagraph (B), shall be (i) (ii) 3 years; or not less than 5 years, if the current monthly income of the debtor and the debtor's spouse combined, when multiplied by 12, is not less than- (I) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner; (II) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or (III) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $625 per month for each individual in excess of 4; and (B) may be less than 3 or 5 years, whichever is applicable under subparagraph (A), but only if the plan provides for payment in full of all allowed unsecured claims over a shorter period. (c) After confirmation of a plan, the court may order any entity from whom the debtor receives income to pay all or any part of such income to the trustee. 29

33 Section 3.0: Generally American Bar Association's Standards for Imposing Lawyer Sanctions In imposing a sanction after a finding of lawyer misconduct, a court should consider the following factors: (a) (b) (c) (d) the duty violated; the lawyer's mental state; the potential or actual injury caused by the lawyer's misconduct; and the existence of aggravating or mitigating factors. Section 6.1: False Statements, Fraud and Misrepresentation 6.11 Disbarment is generally appropriate when a lawyer, with the intent to deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious or potentially serious injury to a party, or causes a significant pr potentially significant adverse effect on the legal proceeding Suspension is generally appropriate when a lawyer knows that false statements or documents are being submitted to the court or that material information is improperly being withheld, and takes no remedial action, and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding Reprimand2 is generally appropriate when a lawyer is negligent either in determining whether statements or documents are false or in taking remedial action when material information is being withheld, and causes injury or potential injury to a party to the legal proceedings, or causes an adverse or potentially adverse effect on the legal proceeding Admonition3 is generally appropriate when a lawyer engages in an isolated instance of neglect in determining whether submitted statements or documents are false or in failing to disclose material information upon learning of its falsity, and causes little or no actual harm or potential injury to a party, or causes little or no adverse or potentially adverse effect on the legal proceeding. 2"Reprimand" under the Standards is equivalent to a public censure as defined in Rule 37(2)(g). 3"Admonition" under the Standards is equivalent to a reprimand as defined in Rule 37(2) (i). 30

34 Section 9.0: Aggravation and Mitigation 9.1 Generally After misconduct has been established, aggravating and mitigating circumstances may be considered in deciding what sanction to impose. 9.2 Aggravation 9.21 Definition. Aggravation or aggravating circumstances are any considerations or factors that mayjustify an increase in the degree of discipline to be imposed Factors which may be considered in aggravation. Aggravating factors include: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) prior disciplinary offenses; dishonest or selfish motive; a pattern of misconduct; multiple offenses; bad faith obstruction of the disciplinary proceeding by intentionally failing to comply with rules or orders of the disciplinary agency; submission of false evidence, false statements, or other deceptive practices during the disciplinary process; refusal to acknowledge wrongful nature of conduct; vulnerability of victim; substantial experience in the practice of law; indifference to making restitution; illegal conduct, including that involving the use of controlled substances. 9.3 Mitigation 9.31 Definition. Mitigation or mitigating circumstances are any considerations or factors that may justify a reduction in the degree of discipline to be imposed Factors which may be considered in mitigation. Mitigating factors include: (a) (b) (c) absence of a prior disciplinary record; absence of a dishonest or selfish motive; personal or emotional problems; 31