DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY

Transcription

1 DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY In the Matter of: : : AMAKO N.K. AHAGHOTU, : : Respondent. : Board Docket No. 10-BD-069 : Bar Docket No : A Member of the Bar of the : District of Columbia Court of Appeals : (Bar Registration No ) : REPORT AND RECOMMENDATION OF THE BOARD ON PROFESSIONAL RESPONSIBILITY I. INTRODUCTION In a report filed with the Board on December 8, 2011, an Ad Hoc Hearing Committee ( Hearing Committee ) found that Respondent engaged in negligent misappropriation and seven related violations and recommended that he be suspended for one year with a requirement to prove fitness as a condition of reinstatement. Respondent has filed an exception to the sanction recommendation. Bar Counsel has excepted to the finding of negligent misappropriation and the recommended sanction, arguing that Respondent s misappropriation was at least reckless, warranting his disbarment. The charges arose from Respondent s handling of his escrow account (Count I) and his representation of Ms. Blanca Adams in a personal injury matter (Count II). The Board concludes that Respondent s misappropriation was reckless and thus recommends disbarment.

2 II. PROCEDURAL HISTORY On July 22, 2010, Bar Counsel filed a Specification of Charges against Respondent, alleging ten violations in two Counts: 1 Rule 1.15(a) (commingling and failure to maintain complete records of entrusted funds); D.C. Bar R. XI, 19(f) (failure to maintain records of entrusted funds); Rule 1.17(a) (failure to maintain entrusted funds in a properly designated account); Rules 8.1(a) and 8.4(c) (false statement in connection with a disciplinary matter) in Count I; and Rule 1.15(a) (intentional and/or reckless misappropriation and failure to maintain complete records of entrusted funds); D.C. Bar R. XI, 19(f) (failure to maintain records of entrusted funds); Rule 1.15(b) (failure to promptly deliver funds); Rule 1.17(a) (failure to maintain entrusted funds in a properly designated account); and Rule 1.3(c) (failure to act with reasonable promptness) in Count II. Respondent filed his Answer on August 17, 2010, through counsel, denying any violations of the disciplinary rules and requesting that the charges be dismissed. The Hearing Committee held a full day hearing on March 29, Bar Counsel called two witnesses. Respondent also testified. Bar Counsel s exhibits, BX 1A-1T and BX 2-5, 2 were admitted without objection. Respondent offered no exhibits. At the conclusion of the evidentiary 1 Violations of Rules 5.1 (responsibilities of partners, managers and supervisory lawyers) and 5.3 (responsibilities regarding non-lawyer assistants) were alleged in each count of the Specification of Charges, based on Respondent s alleged failure to supervise his son. However, based on Respondent s testimony at the hearing that actions taken by his law firm regarding his trust account were done with his knowledge and at his direction, Bar Counsel decided not to pursue the overlapping Rule 5.1 and 5.3 charges. See Bar Counsel s Proposed Findings of Fact, Conclusions of Law, and Recommendation as to Sanction ( OBC Brief to Hearing Committee ), filed May 9, 2011, at 3 n.1. There is an issue whether Bar Counsel has the authority to unilaterally elect not to pursue charges that have been approved by a Contact Member. See In re Drew, 693 A.2d 1127, (D.C. 1997) (per curiam) (suggesting that the Board should address charges not decided by a hearing committee); In re Reilly, Bar Docket No at 4 (BPR July 17, 2003) (concluding that Bar Counsel did not have the authority to dismiss charges approved by a Contact Member). Accordingly, we have examined the record and concluded that Bar Counsel failed to prove the alleged violations of Rules 5.1 and 5.3 by clear and convincing evidence. See Board Rule Bar Counsel s exhibits are designated as BX. 2

3 phase of the hearing, the Hearing Committee made a preliminary, non-binding determination that Bar Counsel had sustained its burden with respect to at least one of the charged ethical violations. Bar Counsel offered two exhibits reflecting prior discipline. The Hearing Committee filed its Report on December 8, Respondent filed a brief in support of his exceptions to the Hearing Committee Report on January 6, Bar Counsel filed its corrected brief on February 21, 2012, and oral argument was held before the Board on February 23, III. FINDINGS OF FACT A. Background A hearing committee s findings of fact and assessments of credibility will be accepted by the Board when supported by substantial evidence on the record as a whole. Board Rule 13.7; In re Micheel, 610 A.2d 231, 234 (D.C. 1992). The Board also is authorized to modify, or expand the findings based on clear and convincing evidence. Board Rule In this case, the Board adopts for the most part the findings of fact and credibility determinations of the Hearing Committee with some modifications and exceptions. We summarize the facts below with direct citations to the record to support the Board s additional or modified findings. Respondent has been a member of the District of Columbia Bar since FF 1. 3 He came to this country in 1957 and earned his B.S., M.S., and J.D. degrees from Howard University. 4 Tr. at After employment at the National Labor Relations Board ( The Hearing Committee s numbered findings of fact are designated as FF. 4 Respondent also obtained a Masters of Psychology from the University of the District of Columbia before obtaining his law degree. Tr. at The transcript of the March 29, 2011 hearing is designated as Tr. 3

4 1987) and a two-year hiatus when he returned to Nigeria, Respondent commenced his private practice of law as a personal injury lawyer. Id. at B. Count One (Escrow Account) Respondent s law firm, of which he was the sole principal, had a bank account in the District of Columbia at Riggs Bank, denominated as an escrow account (the Account ). FF 2-3. Respondent has always been the sole signatory on the Account. All actions taken by his firm in connection with deposits and disbursements were done with his knowledge and at his direction. Id. He also had a separate operating account. FF 5. As of May 31, 2004, the Account contained $ FF 4. On June 4, 2004, five checks presented for payment on the Account were returned for insufficient funds. Id. Four of the five checks were drawn to third-party medical provider Chukwuemeka Onyewu, M.D., totaling $4, BX 2-June 2004 Tab at The fifth check was drawn to another third-party medical provider, Takoma Chiropractic, in the amount of $2, FF 4. By the close of business on June 4, 2004, Respondent s Account had a balance of -$ Id. Respondent could not explain why there were insufficient funds to cover checks payable to various clients medical providers, but testified that he believed Riggs had failed to credit deposits he had made. Id.; Tr. at The Hearing Committee credited Respondent s testimony that he maintains a double carbon check system for the Account and for his law firm operating account. FF 5; Tr. at 230. At the time of the incidents at issue, he did not reconcile the Account with bank statements he received, but he does so now. FF 5; Tr. at He checked his balance per his books before he wrote checks, (FF 5; Tr. at 234), and by his records, at least the first check that bounced in June 2004 should have been paid. FF 5; Tr. at

5 On or about June 5, 2004 (the day following the negative balance), Respondent deposited $7,000 into the Account from his law firm s operating account, bringing the balance to $6, FF 4, 6A. Respondent testified that he made the deposit because someone at Riggs had warned him that the balance in his escrow account had dropped precipitously for reasons that Respondent was never able to understand. FF 6A (citing Tr. at ) ( I tried to find out, and to date I have not been able to find out what happened. Why my own ledger, my own accounting in my office is not corresponding with what they are telling me. I couldn t predict. I didn t understand what happened to the money. ). On or about June 12, 2004, Respondent made an additional deposit into the Account of $12,707 in personal funds in the form of a United States Treasury check refunding Respondent s (and his wife s) federal taxes. FF 6B. The $12,707 was posted to the Account on June 14, Id. Respondent testified that he deposited the check as a further loan to the law firm to cover the shortage in the Account, about which Riggs had warned him on a second phone call (about three or four days following the first call): [I]t looks like you need more than the initial $7,000 deposit. FF 6B; Tr. at 221. As there were no further deposits to the Account that month, all the funds in the Account after June 14, 2004, were what remained of Respondent s two deposits ($7,000 and $12,707) of his personal and operating account funds. FF 6A-C. The closing balance on the June 2004 statement was $4, FF 6C. Respondent admitted that he was aware his own funds and entrusted funds were supposed to remain separate, but testified that he deposited the personal funds into the Account to protect the public. FF 7 (quoting Tr. at 222 [sic] actually at 223). While Respondent s own monies remained in the Account, the July 2004 bank statement for the Account reflects that a number of settlement and PIP checks i.e., 5

6 entrusted funds were also deposited into the Account, including a check in the amount of $3, on July 2, FF 7. The $4, remaining of Respondent s loan that constituted the opening balance reflected on the July 2004 statement, combined with the $3, deposit of a client PIP check, raised the Account s balance to $8, Id. The July 2004 bank statement for the Account reflects that the four non-sufficient funds checks to Dr. Onyewu were presented again and honored by the bank. FF 8. Although not mentioned in the Hearing Committee Report, the balance in the Account throughout July 2004 was also sufficient to cover the fifth check to Takoma Chiropractic. BX 2-July 2004 Tab at 2; FF 4. Bar Counsel does not charge misappropriation with respect to the five returned checks of June By May 2005, Riggs Bank had become PNC and the Account number had changed. FF 9. The September 2005 bank statement for the Account reflects two NSF check charges. 6 Respondent was unable to provide records or to identify for Bar Counsel the checks that resulted in these two charges. FF 10. In April 2006, Respondent applied for and received a business line of credit for his law firm. FF 11. This meant that there was overdraft protection for the Account containing entrusted funds, and that automatic payments were made from the Account containing entrusted funds when monies were advanced under the line of credit. Id. Respondent testified that he intended that the line of credit (and its features of overdraft protection and automatic loan repayments) attach to his firm operating account and that PNC erred in establishing the line of credit. FF 12; Tr. at The Hearing Committee found this 6 The bank statements show a balance of $26, on September 19, 2005, at the time the statement lists the two NSF charges. BX 3-Sept Tab at 2. The Board finds this evidence of only marginal value. See Tr. at

7 testimony to be credible: the line of credit documentation showed that it initially attached to Respondent s operating account. Id. In bank documents to which Respondent had no access, that number was stricken and the number for the escrow Account was inserted. Id. Also, advances from the line of credit went into the operating account. Id. From April 2006 through November 2007, payments on the line of credit were automatically debited from the Account, notwithstanding that the Account contained client and other entrusted funds. Id. While debits from the Account to pay the line of credit may have been a bank error, Respondent failed to correct the error for a year and a half, even though the loan payments were reflected on each bank statement he reviewed. Respondent testified that he did not notice that the loan payments were not being deducted from his operating account, the appropriate source of funds for those line of credit disbursements. Tr. at The Hearing Committee found Respondent s testimony with regard to his failure to detect the loan payments to be credible and to be consistent with a general state of inattention and confusion that was evidenced in his conduct and during his testimony. FF 12. Also, it is consistent with the evidence, cited above, that Respondent intended that the line of credit be attached to the operating account, which was the case initially in PNC s records. Id. The Account had been changed from an escrow account to a business checking account beginning in June 2005 as part of the transfer of accounts from Riggs Bank to PNC Bank. FF 13. This was apparently a bank error arising during the conversion. 7 Id. From 7 The testimony of Ms. Lisa Brooks, PNC Bank branch manager, on the change of Respondent s escrow account to a business account when PNC succeeded Riggs, was: Q: Would you assume that it was a bank mistake? A: Yes. Q: And why is that? A: A part of the conversion. Unfortunately, these are some of the things that do happen when there are changes of the guard. Tr. at 74. 7

8 that time forward, the statements for the Account described it as a Business Silver Checking 100. Id. However, the checks written on the Account always described it as an Escrow Account. Id. Despite the change in the name of the Account, Respondent continued to cause entrusted funds to be deposited into and disbursed from the Account. Id. Respondent did not reclassify the business checking account to an escrow account until after November 1, 2007, when Bar Counsel sought an explanation regarding why the Account s statements no longer contained the words escrow or trust. FF 14. Respondent testified that he never understood that the change had been made until Bar Counsel brought the fact to his attention. Id.; Tr. at As with the loan payments, the Hearing Committee found Respondent s explanation credible. FF 12, 14. Respondent is the only signatory on the Account and the only person signing Account checks. FF 3, 15. Respondent testified that he manually examines the bank statements monthly to ascertain that they accurately show all the deposits made and checks written during the period covered by the statements. FF 15; Tr. at , He testified that (other than at tax time) he does his own accounting. Id.; Tr. at The Hearing Committee found Respondent s testimony regarding his monthly review of his account statements to be credible, although it is clear, as Respondent testified, that he was not thorough enough. FF 16 (quoting Tr. at 305). C. Count Two (Respondent s Representation of Blanca Adams) In April 2004, Blanca Adams was involved in an automobile accident in Maryland. FF 17. She received medical treatment and Respondent represented Ms. Adams in her personal injury matter. FF By letter dated April 27, 2004, Respondent s son, Amaeshina Ahaghotu, wrote Local Government Insurance Trust (LGIT) advising that 8

9 Respondent s firm represented Ms. Adams. FF 19. LGIT insured the other driver involved in the accident. Id. By July 15, 2004, Ms. Adams had completed medical treatment in connection with the accident. FF 20. Amaeshina Ahaghotu sent LGIT a demand letter setting forth the following medical bills: Peninsula Regional Medical Center $ Emergency Services Associates Chukwuemeka Onyewu, MD 4, TOTAL Medical Bills to Date: $4, Id. While LGIT paid for Ms. Adams s car repairs, it denied her claim for bodily injury by letter dated July 28, 2004, refusing to pay her medical bills or any special damages. FF 21. Respondent did not pursue a claim against LGIT but obtained PIP funds from Ms. Adams s own insurance carrier, The Peninsula Insurance Company. FF 22. On July 19, 2004, Peninsula Insurance issued Ms. Adams a PIP check for $2, FF 23. The check was payable to Respondent and Ms. Adams, and was sent to Respondent s office. Id. The check was deposited in the Account, and the funds were posted to the Account on July 22, Id. At Respondent s direction, Amaeshina Ahaghotu wrote one of Ms. Adams s medical providers, Emergency Services Associates, enclosing a check drawn on the Account for services rendered $ FF 24; BX 1I at This check cleared the Account on August 5, FF 25. Although Ms. Adams s PIP check was deposited on July 22, 2004, 8 Although the demand letter listed $115.05, the amount reflected on the bill submitted by Respondent s firm was $ FF 20. 9

10 no distribution sheet showing disbursements was prepared until months later when Amaeshina Ahaghotu executed a disbursement sheet that contained his signature and a handwritten date of September 26, Id. The sheet also carried the date November 26, Id. It provided as follows: CLIENT PIP DISBURSEMENT FROM: TO: Amako N.K. Ahaghotu & Associates, PC Blanca Adams DATE: November 26, 2004 RE: PIP (Medical) Payment Regarding Your 04/12/2004 Automobile Accident TOTAL PAYMENT $2, LESS MEDICALS AMOUNT OF BILL AMOUNT PAID Emergency Medical Associates $ $ Chukwuemeka Onyewu, M.D. $ 4, $ 1, TOTAL MEDICALS $ 4, $ 1, TOTAL DEDUCTIONS $ 1, BALANCE TO CLIENT $ TOTAL DISBURSEMENT $ 2, Id. The disbursement sheet made no reference to the $ bill for Peninsula Regional Medical shown on the demand letter sent to LGIT. FF 20, 25. According to Respondent, [t]he copy of Ms. Adams s disbursement sheet is accurate and reflects ALL of the monies received for Ms. Adams and all checks issued in her case. FF 25 (quoting BX 1T at

11 (emphasis in original)). Respondent took no fee for handling Ms. Adams s matter. BX 1I at Respondent testified that he persuaded Dr. Onyewu, his wife s nephew, to accept a reduced payment on his charges so that $ could be made available to Ms. Adams to meet pressing financial needs. FF 26; Tr. at Her check was sent on December 7, 2004, and cleared the Account on December 15, Id. In discussions over the reduction of his fee to permit $ to be paid to Ms. Adams, Dr. Onyewu also deferred payment of his reduced bill of $1, until Ms. Adams decided if she would file suit to recover additional sums for her personal injuries. FF 27. There is evidence in the record that the statute of limitations ran in April 2007, with Ms. Adams opting not to pursue the matter in court. BX 1I at 80. Respondent then forgot to make the payment to Dr. Onyewu until September 2007 after Bar Counsel sought proof of Respondent s disbursement of entrusted funds. FF 27, 30. Respondent deducted $1, from Ms. Adams s PIP payment to do so. FF 28. Dr. Onyewu had never asked for payment. FF 27. By letter dated September 5, 2007, Amaeshina Ahaghotu wrote Dr. Onyewu enclosing the check. FF 30. The letter stated that Dr. Onyewu had agreed to accept a reduced payment of $1, Id. It also stated: BX 1I at 80. You ll also recollect that by our agreement the disbursement of the remainder of the PIP money to you was to be put in abeyance pending the outcome of the proposed suit by Blanca Adams against the other driver. Unfortunately, Ms. Adams opted not to pursue the matter in court and the statute of limitation ran this last April, and then it escaped our minds to send you the balance of the PIP money, until yesterday when we received a DC Bar letter on Ms. Adam s [sic] claim. 9 The Hearing Committee made no finding as to whether Respondent took a fee, nor did Bar Counsel address the matter in its Proposed Findings of Fact. Respondent s correspondence with Bar Counsel during the investigation states he received no legal fee in the Blanca Adams matter (BX 1I at 70), which comports with the Disbursement Sheet shown above. 11

12 Respondent was required to hold in trust, at a minimum, the $1, due to Dr. Onyewu until he was paid. FF 29. Not only did he delay paying this sum, but he failed to maintain that escrowed sum in the Account, and on July 28, 2005, the balance in the Account was $ Id. Three days prior to the date on which the balance in the Account dropped below the amount due to Dr. Onyewu, the balance in the Account was $6, BX 3-July 2005 Tab at 1. On July 29, 2005, the day after the balance in the Account dropped below the amount due to Dr. Onyewu, the balance in the Account was up to $17, Id.; FF 29. By the time Respondent finally paid Dr. Onyewu in September 2007, Ms. Adams s PIP funds had been dissipated from the Account, although by then the Account contained other client and entrusted funds. FF 31. Respondent told Bar Counsel and testified at the hearing that he deposits all checks relating to clients in the Account and makes disbursements from this pool of funds. Id.; Tr. at There is no record that Respondent ever paid Peninsula Regional Medical Center its $ FF 25, 32. He speculated that a third party may have paid the bill (which, as stated by the Hearing Committee, would explain why it was on the claim to LGIT but not the disbursement sheet). FF 32. However, Respondent failed to maintain records sufficient to reconstruct the activity in the Account. FF 33. D. Additional Factual Findings by the Hearing Committee Respondent s testimony revealed that he was very hard of hearing, confused at times, and unable to follow questions. FF 34. The Hearing Committee found that his testimony regarding the handling of the Account evidenced an inattention to detail that was consistent with his demeanor at the hearing. Id. 12

13 E. Respondent s Disciplinary History In a case docketed in 2002, Respondent received an informal admonition for failing to promptly notify and pay a client s third party provider (violating Rule 1.15(b)) and failing to supervise the non-attorney staff members to whom he had delegated the accounting functions at his law firm (violating Rule 5.3(b)). FF 35. Respondent claimed he had failed to promptly pay the medical provider through inadvertence, the same claim he makes in the instant Count II. In re Ahaghotu, Bar Docket No D343 (B.C. Oct. 15, 2009) (letter of informal admonition); BX 6; Tr Respondent had previously received another informal admonition for violating the identical Rules in a case docketed in FF 36. There, Respondent failed to notify and pay a client s third-party medical provider (violating Rule 1.15(b)) and failed to supervise his non-attorney staff members, failing to make reasonable efforts to ensure that their conduct was compatible with his professional obligations as a lawyer (violating Rule 5.3(b)). Id.; In re Ahaghotu, Bar Docket No D315 (B.C. Feb. 2, 1993) (letter of informal admonition); BX 7. IV. CONCLUSIONS OF LAW The Board adopts portions of the Hearing Committee s analysis in our Conclusions of Law, but relies upon our own analysis with respect to the misappropriation issue. The Board owes no deference to a hearing committee s finding of negligent misappropriation, since the resolution of negligence or recklessness is a determination of ultimate fact i.e., a conclusion of law. Micheel, 610 A.2d at 235. A. Commingling in Violation of Rule 1.15(a) In June 2004, Respondent deposited $19, in operating and personal funds into the Account containing entrusted funds. He did this when told by Riggs Bank that there were insufficient funds to pay checks as presented. While Respondent s motive may have been 13

14 laudable, as noted by the Hearing Committee (H.C. Rpt. at 14), his conduct was an ethical violation. Moreover, Respondent apparently had no records sufficient to show how the shortage arose or that he had made deposits that were misdirected, as he claims. The undisputed facts provide clear and convincing evidence that Respondent committed commingling for a brief time period in June 2004, in violation of Rule 1.15(a). Further, Respondent has not excepted to the Hearing Committee s finding of a violation of this Rule. B. Maintaining Adequate Records of His Account Containing Entrusted Funds, in Violation of Rule 1.15(a) and D.C. Bar R. XI, 19(f) Rule 1.15(a) and D.C. Bar R. XI, 19(f) require an attorney to maintain complete records of the entrusted funds held in an appropriate account and to preserve the records for a period of five years after termination of the representation. Here, Respondent repeatedly testified that he could not explain how or why there were insufficient funds to pay four checks to Dr. Onyewu and one check to Takoma Chiropractic in June Respondent also could not explain how the Account fell to only $92.99 on July 28, We agree with the Hearing Committee that violations of Rule 1.15(a) and D.C. Bar R. XI, 19(f) were proven. Again, Respondent has not excepted to the Hearing Committee s findings with respect to these violations. C. Failing to Deposit and Maintain Entrusted Funds in an Account Containing the Words Escrow or Trust, in Violation of Rule 1.17(a) 10 Respondent was obligated under Rule 1.17(a) to place the funds entrusted to him in an account that had the word escrow or trust in its title. The evidence was that the Account was so denominated until the transfer from Riggs to PNC, when PNC mistakenly 10 Rule 1.17(a), in effect at the time of Respondent s misconduct, was moved to Rule 1.15(b) in the 2007 amendments to the Rules of Professional Conduct. 14

15 changed the title on the statements to Business Silver Checking 100. Although Respondent s checks on the Account still bore the words Escrow Account, the monthly statements no longer did. Respondent attributed the inconsistencies with regard to the title of the Account to bank error. The bank conceded its error at the hearing. Tr. at 74. Be that as it may, Respondent admitted that for eighteen months he reviewed statements for the Account that described it as a business account. The substantial record evidence establishes that the Account was titled as Business Silver Checking 100, and not as a Trust or Escrow account (BX 3, June 2005 Tab) for this period and that Respondent had ample opportunity to know that fact. The Hearing Committee thus correctly found a violation of Rule 1.17(a), and Respondent has not excepted to this finding. D. Delayed Payment to Dr. Onyewu in Violation of Rule 1.15(b) 11 and Rule 1.3(c) Rule 1.3(c) requires a lawyer to act with reasonable promptness in representing a client, and Rule 1.15(b) requires, in relevant part, that [a] lawyer shall promptly deliver to [a] client or third person any funds... that the client or third person is entitled to receive.... See In re Anderson, 979 A.2d 1206, 1222 (D.C. 2009) ( Anderson II ) (quoting Rule 1.15(a)) (appended Board report). Under both Rules, Respondent was obligated to act promptly in delivering to Ms. Adams and her medical providers their respective shares of the PIP funds that Respondent had received on their behalf. Respondent waited four months to pay Ms. Adams her share of the PIP proceeds, and waited three years to pay Dr. Onyewu. With respect to the payment to Ms. Adams, the undisputed testimony 11 Respondent s conduct was charged as a violation of Rule 1.15(b), which was renumbered as Rule 1.15(c), as part of the April 20, 2011 amendments to Rule

16 was that the only reason she was able to receive any funds at all was because Respondent persuaded Dr. Onyewu to accept less than his full invoice and took no fee himself. Under these circumstances, the Hearing Committee found that the four-month delay in paying Ms. Adams did not violate Rule 1.15(b) or Rule 1.3(c). Bar Counsel takes no exception, and the Board agrees with the Hearing Committee s finding. The delay in paying Dr. Onyewu was much longer (three years), and payment was not made until after Bar Counsel brought the matter to the attention of Respondent. Respondent testified that Dr. Onyewu was his wife s nephew, and it is clear from the number of checks payable to the doctor that Respondent hired him frequently. Tr. at 241. There was no evidence to contradict Respondent s testimony that Dr. Onyewu agreed to defer his payment until Ms. Adams decided whether to file suit and that he never asked for payment. The documentary record also confirms this. See BX 1I at However, it is undisputed that Dr. Onyewu was owed a reduced fee of $1, per the Settlement Sheet from the PIP settlement and was not paid for over three years because Respondent forgot. Thus, the substantial record evidence showed that Dr. Onyewu was not paid promptly, in violation of Rule 1.15(b) and Rule 1.3(c). Respondent has not excepted to this finding. The Hearing Committee concluded that the evidence regarding payment of the Peninsula Regional Medical Center bill ($111.05) was murky at best. H.C. Rpt. at 18. Bar Counsel argues to the Board that its proof was clear and convincing that Respondent did not pay Peninsula Regional Medical Center at all. OBC Brief at 14. Evidence suggesting nonpayment in this case includes a copy of the bill attached to Respondent s Offer of 12 According to the letter sent by Respondent s son to Dr. Onyewu, Dr. Onyewu agreed to put in abeyance his disbursement until any lawsuit by Ms. Adams was resolved, the statute of limitations not running until April BX 1I at

17 Settlement and Demand to LGIT (BX 1E at 39), but not listed as paid on the disbursement sheet. BX 1I at 75. At the hearing, Respondent speculated that a third party paid the bill. See Tr. at 269 ( [m]aybe her own personal insurance paid for it. ). Further, when asked if it was his position that he d[id]n t know what happened with respect to Peninsula s bill, Respondent answered that he d[id]n t recollect. Id. There was no evidence that Peninsula ever requested payment, and Bar Counsel did not adduce evidence that the bill remained unpaid. The Hearing Committee concluded that Bar Counsel had failed to establish by clear and convincing evidence that Respondent failed to pay the Peninsula bill. H.C. Rpt. at 18. The Board finds that the substantial record evidence as a whole supports the Hearing Committee s finding. E. Misappropriation in Violation of Rule 1.15(a) Bar Counsel charged Respondent with misappropriation in his handling of the funds owed to Ms. Adams s medical providers (Count II), when the balance in the Account fell to $92.99 for one day on July 28, Bar Counsel further contends that the evidence is sufficient to prove that Respondent s misappropriation was at least reckless, thereby requiring his disbarment under In re Addams, 579 A.2d 190 (D.C. 1990) (en banc). After an analysis of the relevant facts and applicable law, the Hearing Committee concluded that the proven facts supported a finding of only negligent misappropriation. H.C. Rpt. at Misappropriation has been defined by the Court as any unauthorized use of client s funds entrusted to [an attorney], including not only stealing but also unauthorized temporary use for the lawyer s own purpose, whether or not [he] derives any personal gain or benefit therefrom. In re Pleshaw, 2 A.3d 169, 173 (D.C. 2010) (citation and footnote omitted); In re Harrison, 461 A.2d 1034, 1036 (D.C. 1983) (citation omitted). The burden of proof, by 17

18 clear and convincing evidence, is on Bar Counsel but proof of improper intent is not required. In re Anderson, 778 A.2d 330, 335 (D.C. 2001) ( Anderson I ) (quoting Micheel, 610 A.2d at 233). Misappropriation is essentially a per se offense. Harrison, 461 A.2d at In general, misappropriation occurs when the balance in [the attorney s] account falls below the amount due to the client. Micheel, 610 A.2d at 233 (citations omitted). When the record evidence shows that a misappropriation was intentional or reckless, disbarment will follow as the only appropriate sanction absent extraordinary circumstances that justify a lesser sanction. Addams, 579 A.2d at 191. Here, Respondent was obligated to hold at least $1, in trust to pay Dr. Onyewu. The balance in the Account dropped below that minimum, however, on July 28, Three days prior to the date on which the balance in the Account dropped below the amount owed to Dr. Onyewu, the balance in the Account was $6, BX 2-July 2005 Tab at 1. On July 29, 2005, the balance was back up to $17, Id.; FF 29. The Hearing Committee correctly concluded that misappropriation took place on July 28, 2005, in violation of Rule 1.15(a). H.C. Rpt. at 19. Respondent does not challenge this finding. The critical question is whether the misappropriation was intentional or reckless, or whether it is properly characterized as negligent within the meaning of Addams. As the Court held in Anderson I, the burden of proving that a misappropriation result[ed] from more than simple negligence always remains with Bar Counsel. Anderson I, 778 A.2d at 332 (quoting Addams, 579 A.2d at 191). If Bar Counsel is unable to prove that the attorney s conduct was deliberate or reckless, then Bar Counsel has established no more than simple negligence. Id. at 338 (quoting In re Ray, 675 A.2d 1381, 1388 (D.C. 1996)). 18

19 In determining whether a misappropriation involves recklessness, the central issue is: [H]ow the attorney handles entrusted funds, whether in a way that suggests the unauthorized use was inadvertent or the result of simple negligence, or in a way that reveals either an intent to treat the funds as the attorney s own or a conscious indifference to the consequences of his behavior for the security of the funds. Id. at 339 (citing Micheel, 610 A.2d at 236). Reckless misconduct requires a conscious choice of a course of action, either with knowledge of the serious danger to others involved in it or with knowledge of facts that would disclose this danger to any reasonable person. Id. (emphasis added) (citation omitted). In deciding whether Respondent was reckless, we may also consider whether he engaged in a pattern or course of conduct demonstrating an unacceptable disregard for the welfare of entrusted funds. In re Cloud, 939 A.2d 653, 660 (D.C. 2008). Bar Counsel argues that the misappropriation was at least reckless and that Respondent demonstrated a conscious indifference to the welfare of entrusted funds based on his poor recordkeeping, including the failure to reconcile bank records with his deposits and withdrawals, which led to the five overdrafts from his escrow account in June 2004, his failure to identify the cause of the overdrafts, and his deliberate deposit and commingling of personal funds ($19,707) into the Account to cover the overdrafts, thus making it impossible to determine the source of Dr. Onyewu s payment whether from personal funds commingled in the Account or entrusted funds intended for another purpose. We agree with Bar Counsel. We conclude that Respondent s continued use of the Account without making any effort to determine the reasons for the 2004 overdrafts reflected a conscious indifference to the consequences of his handling of entrusted funds, amounting to recklessness. Anderson I, 778 A.2d at 339 (citations omitted). While Respondent s 19

20 deposit of $19,707 in personal funds enabled the bank to honor the checks the next month, it merely covered up the problem with the Account; a reasonable fiduciary would have determined the cause of the overdrafts and reconciled the Account and, if unable to do so, should have stopped using the Account and opened a new one. Cf. In re Kline, 11 A.3d 261, 264 (D.C. 2011) (finding negligent misappropriation where the respondent, who was aware that the computer containing account records had crashed, took remedial measuresof setting up a new account at a different bank and leaving the old account dormant ). Moreover, the $19,707 deposit by Respondent had dwindled to $4, by July 2004 showing that something was terribly wrong with Respondent s record keeping and that his continued use of the Account was reckless. Our finding of recklessness is consistent with cases finding reckless misappropriation based on the willful disregard of notice of problems with an account. See, e.g., In re Gregory, 790 A.2d 573, (D.C. 2002) (per curiam) (finding reckless misappropriation where respondent failed to properly supervise an assistant and independently verify account records, after receiving notice that the assistant was writing unauthorized checks on an IOLTA account); In re Harris-Lindsey, 19 A.3d 784, (D.C. 2011) (recklessness may be found where a respondent takes funds from an estate account without court approval after being informed that such approval is necessary); Cloud, 939 A.2d at 661 (finding reckless misappropriation where Respondent unjustifiably refused to disgorge the fees with anything like reasonable promptness [(more than four years)] after he learned he was not entitled to keep them. ); In re Utley, 698 A.2d 446, (D.C. 1997) (although respondent made an honest mistake in taking a duplicate payment, her prolonged refusal to repay a duplicate fee after repeated notices was tantamount to recklessness. ). Here, the five overdrafts in June 20

21 2004 placed Respondent on notice that there was a problem with his escrow account. Yet, he did not stop using the escrow account or otherwise attempt to address the problem apart from depositing his own funds in the hope that they would cover the unquantified shortfall. Thus, his failure to address the problems with his escrow account once they were brought to his attention was reckless, because it reflected an unacceptable disregard for the welfare of entrusted funds. Respondent s misappropriation is distinguishable from cases of negligent misappropriation involving poor record keeping because it involved the disregard of a known risk when he continued to use the account after the 2004 overdrafts. 13 Cf. Anderson I, 778 A.2d at 333 (finding negligent misappropriation even though respondent had no separate escrow account, kept records of payments/disbursements in his head and saw his account fall too low on several occasions, where there was no clear and convincing evidence contradicting Respondent s testimony that he believed that he had paid the client s medical providers); In re Reed, 679 A.2d 506, 509 (D.C. 1996) (per curiam) (finding negligent misappropriation even though the respondent s record-keeping was practically non-existent and careless at best, where the respondent thought she had paid a medical provider); In re Chang, 694 A.2d 877, 880 (D.C. 1997) (per curiam) (appended Board report) (negligent misappropriation where respondent believed he had sufficient funds to cover checks); In re 13 Respondent s conduct is also distinguishable from that in In re Boykins, 999 A.2d 166, (D.C. 2010) (finding negligent misappropriation from a dishonored disbursement check where the low escrow balance resulted from the attorney overpaying himself in two personal injury matters. He also failed to pay a provider for over four years in a second matter, yet falsely claimed to Bar Counsel that he had.) Although a matter of degree, Respondent herein had two prior instances of discipline for mishandling escrow funds and the delayed payment of healthcare providers (Boykins had a single prior discipline), five overdrawn checks to healthcare providers that he could not explain, continued use of the escrow account in face of this unknown problem, commingled funds into the same account, a sixth overdrawn provider check within the year (which Respondent again could not explain), and delayed payment of the provider for three years. 21

22 Davenport, 794 A.2d 602, (D.C. 2002) (same); In re Edwards, 870 A.2d 90, 93 (D.C. 2005) (finding negligent misappropriation where mishandling of client funds was a product of confusion and disorganization within [respondent s] office. ). Importantly, although Anderson I did not find reckless misappropriation based on sloppy record-keeping, the Court warned that [i]f in fact Anderson ignored or willfully blinded himself to such reminders [that bills had not been paid], then we would have no difficulty sustaining the Committee s determination of recklessness. 778 A.2d at 341. Here, there is no question that Respondent ignored a serious problem with his Account, and that the Account balance later dipped below the amount that Respondent was required to hold for Dr. Onyewu. Respondent has a history of mishandling his trust account and delayed payment to his clients medical providers. It is less pronounced than the account misconduct in Anderson II, where the respondent failed to pay medical providers and had been using the funds for his own purposes for at least five years, while repeatedly and falsely assuring his client that they had been paid, and where he had been previously suspended for six months for negligent misappropriation, and had been reprimanded by the Board for failure to pay medical providers at his client s urging. Anderson II, 979 A.2d at Herein, there is no evidence that Respondent knew the health provider remained unpaid (indeed, there is evidence that the doctor did not pursue payment), facts that established that the misappropriation was reckless in Cloud, 939 A.2d at 661, and Anderson II, 979 A.2d at There is no evidence that the escrow account herein was in default for multiple days as in Micheel, 610 A.2d at 233, and Smith, 817 A.2d at 203; and no evidence that Respondent wrote personal checks on the account leading to the negative balances as in Anderson II, 979 A.2d at , and Smith, 817 A.2d at 199. However, Respondent was clearly on notice of 22

23 problems with his accounting practices and his escrow account, which he failed to address: (1) he had been disciplined twice based on the failure to promptly pay his clients health providers, FF 35, 36, (2) he knew that five checks to health care providers were returned for insufficient funds in June 2004, but failed to determine the cause of the shortfall, FF 4, and (3) his deposit of $19,707 of his personal money to stabilize the escrow account in early June 2004, which dwindled to $4, by July 2004, indicated a continued escrow accounting problem. FF 4, 6A, 6B. Despite notice of these problems, Respondent continued to use the Account without accurately accounting for the entrusted funds, as is demonstrated by the fact that he could not explain why misappropriation occurred in July 2005, just as he had been unable to explain why checks were returned for insufficient funds a year earlier. FF 4. This casual attitude in maintaining the security of his fiduciary funds is beyond negligence; it evidences casual indifference to his fiduciary duties. The Board concludes that Bar Counsel has proven the elements of reckless misappropriation by clear and convincing evidence. We therefore disagree with the Hearing Committee s finding that the misappropriation was negligent. F. Alleged Material Misrepresentations to Bar Counsel, in Violation of Rules 8.4(c) and 8.1(a) The Hearing Committee did not find clear and convincing evidence to sustain violations of Rules 8.4(c) and 8.1(a) (H.C. Rpt. at 24-25) and Bar Counsel has taken no exception. Based upon our independent review of the record, we agree with the Hearing Committee that the record lacks evidence sufficient to support a finding of violations of these rules. 23

24 VI. RECOMMENDED SANCTION Disbarment is the presumptive sanction for intentional or reckless misappropriation, absent extraordinary circumstances. Addams, 579 A.2d at 191. The Court has, however, mitigated the sanction where the misconduct was shown to be caused by a disabling addiction, such as chronic alcoholism (see In re Kersey, 520 A.2d 321, (D.C. 1987)), or mental illness (see In re Verra, 932 A.2d 503, 505 (D.C. 2007)). The Hearing Committee considered Respondent s age and forgetfulness in deciding that his conduct was not reckless. However, recklessness is judged under an objective standard. Further Respondent did not raise age and forgetfulness as mitigation under Kersey or in any other respect, or present evidence that he was impaired at the time of the misconduct. Rather, the Hearing Committee based its finding on its observations of Respondent at the hearing. Under these circumstances, Respondent s age and forgetfulness are insufficient to overcome the presumption of disbarment under Addams. Addams, 579 A.2d at 191. Only the most stringent of extenuating circumstances would justify a lesser disciplinary action than disbarment. Id. at 193; see, e.g., In re Thomas-Pinkney, 840 A.2d 700, 701 (D.C. 2004) (per curiam) (disbarred for reckless misappropriation notwithstanding the attorney s lack of any prior disciplinary record, the Board s finding that she did not act dishonestly, and her very considerable service to her community, for which she was praised both by the Hearing Committee and by the Board. ). Respondent failed to present any such circumstances here. Thus, because we find that Respondent engaged in reckless misappropriation, we recommend that he be disbarred. 24

25 VII. CONCLUSION The Board finds that Respondent violated Rules 1.15(a) (commingling, failure to maintain adequate escrow records, and misappropriation), D.C. Bar R. XI, 19(f), Rule 1.17(a) (improperly designated escrow account), and Rule 1.15(b) and Rule 1.3(c) (delayed disbursement of client funds). We also conclude that the misappropriation in violation of Rule 1.15(a) was reckless. We thus recommend that Respondent be disbarred. We further recommend that the period of disbarment run for purposes of reinstatement from the filing of the affidavit required by D.C. Bar R. XI, 14(g). See In re Slosberg, 650 A.2d 1329, (D.C. 1994). BOARD ON PROFESSIONAL RESPONSIBILITY By: /RSB/ Ray S. Bolze Chair Dated: July 20, 2012 All members of the Board concur in this Report and Recommendation. Ms. Jeffrey, the Board s Vice-Chair, participated in this decision but had resigned from the Board at the time this Report and Recommendation issued. 25