Case Title: Disciplinary Counsel v. Pace

Citation: 2004-Ohio-5465

Docket Number: 

State: ohio

Court: Ohio Supreme Court

Date: 2004-10-27T00:00:00Z

Document:
[Cite as Disciplinary Counsel v. Pace, 103 Ohio St.3d 445, 2004-Ohio-5465.] 
 
 
DISCIPLINARY COUNSEL v. PACE. 
[Cite as Disciplinary Counsel v. Pace, 103 Ohio St.3d 445,  
2004-Ohio-5465.] 
Attorneys at law — Conduct involving dishonesty, fraud, deceit, or 
misrepresentation — Conduct adversely reflecting on fitness to practice 
law — Two-year suspension with credit for time already served under 
suspension. 
(No.  2004-0824 —  Submitted June 29, 2004 — Decided October 27, 2004.) 
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and 
Discipline of the Supreme Court, No. 03-067. 
_______________________ 
 
Per Curiam. 
{¶1} 
Respondent, Don Haywood Pace of Sedona, Arizona, Attorney 
Registration No. 0025708, was admitted to the practice of law in Ohio in 1964.  
On September 15, 2003, relator, Disciplinary Counsel, filed an amended 
complaint charging respondent with violations of the Code of Professional 
Responsibility.  A panel of the Board of Commissioners on Grievances and 
Discipline considered the cause on the parties’ consent-to-discipline agreement.  
See Section 11 of the Rules and Regulations Governing Procedure on Complaints 
and Hearings Before the Board of Commissioners on Grievances and Discipline 
(“BCGD Proc.Reg.”).  The board agreed with the panel’s recommendation to 
accept the agreement, including the stipulated misconduct and suggested sanction. 
{¶2} 
The board found, consistent with the parties’ agreement, that 
respondent had incorporated American Insurance Group, Inc. (“American”), an 
insurance holding company, in 1988.  Respondent was originally the only 
financial investor and shareholder of American, but the company gradually drew 
SUPREME COURT OF OHIO 
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other investors, and by September 1992, American’s shares were being publicly 
traded.  At that time, respondent owned more than 19 percent of the outstanding 
shares and was the largest investor in the company. 
{¶3} 
American Bonding Company (“ABC”), a wholly owned subsidiary 
of American, provided surety bonds to construction contractors on federal, state, 
and local government projects.  From approximately 1988 until 1994, respondent 
served as president and chief executive officer of American, which was renamed 
Pace American Group, Inc., in 1993, and vice president of ABC. 
{¶4} 
In 1991, ABC entered into a reinsurance treaty whereby ABC 
would reinsure and share the risks of a certain class of bonds issued by a surety 
company headquartered in Mexico.  Pursuant to the terms of the treaty, the 
Mexican surety company collected and retained control of all premiums until the 
bond was exonerated or a claim made.  If no claim was made under the bond after 
the expiration of its term, a percentage of the premium was transmitted to ABC. 
{¶5} 
At some point, respondent, Mauricio Madero O’Brien, the owner 
and chairman of the Mexican surety company, and other executives of both ABC 
and the surety company agreed that a greater return could be obtained while the 
premiums were held by the surety company if the funds were transferred and 
deposited into a securities brokerage firm in Mexico.  Thus, in 1991, two accounts 
were opened in a securities brokerage firm in Mexico: one in the name of ABC, 
the other in the name of American. 
{¶6} 
During 1991 and 1992, at O’Brien’s request, respondent advanced 
funds in excess of $38,000 to the Mexican surety company and O’Brien.  In May 
1992, while traveling abroad with O’Brien for business, respondent reminded 
O’Brien that he needed to repay the money that respondent had advanced.  
O’Brien assured respondent that upon his return to Mexico, he would arrange for 
transfer of the funds due respondent. 
January Term, 2004 
3 
{¶7} 
Respondent was out of his office traveling on business from the 
end of April 1992 to the end of September 1992, including trips abroad.  During 
this time, respondent’s assistant handled all of his banking.  In May and June 
1992, the surety company wire-transferred a total of $36,659.28 from the 
securities brokerage accounts in Mexico to respondent’s personal bank account in 
Cleveland, Ohio.  Respondent was advised in October 1992 that these deposits 
came from Mexico, but he did not realize until March 1994 that the funds had 
come from the American and ABC securities brokerage accounts. 
{¶8} 
In 1992, respondent told his accountant that he did not have any 
personal income from, financial interest in, or signatory authority over any 
foreign bank accounts.  The accountant included this representation in 
respondent’s 1992 federal tax return, and respondent signed the return as accurate. 
{¶9} 
On or about April 6, 1997, a federal grand jury filed an 81-count 
indictment against respondent, charging him with conspiracy to commit mail 
fraud, mail fraud, wire fraud, money laundering, subscribing a false tax return, 
and forfeiture.  Respondent was acquitted of 78 counts, and his conviction was 
vacated on appeal on two counts.  See United States v. Pace (C.A.9, 2002), 314 
F.3d 344.  As to Count 81, respondent was convicted of failing to disclose on his 
1992 personal tax return that he had an interest in or signature authority or other 
authority over a financial account in a foreign country, such as a bank account, 
securities account, or other financial account.  On April 21, 2003, after his appeal, 
respondent was sentenced to a two-month term at a minimum-security facility and 
one year of supervised release. 
{¶10} On October 4, 2001, we suspended respondent’s license to practice 
law for an interim period, pursuant to Gov.Bar R. V(5)(A), based on his having 
been convicted of a felony.  In re Pace (2001), 93 Ohio St.3d 1440, 755 N.E.2d 
903. 
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{¶11} While the criminal case was pending, respondent and the IRS 
litigated in federal tax court the validity of deficiency notices he had received for 
tax years 1990 through 1994, including the government’s claim that the 
$36,659.28 transferred to respondent from Mexico in 1992 was unreported 
income.  On April 26, 1999, the tax court held that respondent was entitled to a 
substantial refund of the taxes he had paid in the years 1991, 1992, and 1994. 
{¶12} The board found, as submitted by the parties, that respondent had 
violated DR 1-102(A)(4) (a lawyer shall not engage in conduct involving 
dishonesty, fraud, deceit, or misrepresentation) and 1-102(A)(6) (a lawyer shall 
not engage in conduct that adversely reflects upon his fitness to practice law). 
{¶13} In recommending a sanction for this misconduct, the board 
considered the stipulated mitigating features of respondent’s case.  The board 
found that respondent had practiced law for more than 35 years and has no prior 
disciplinary record, BCGD Proc.Reg. 10(B)(2)(a), and that respondent cooperated 
completely in the disciplinary process, BCGD Proc.Reg. 10(B)(2)(d).  The board 
also took into account that by the time the parties executed the consent-to-
discipline agreement, respondent’s license to practice law had already been 
suspended for 28 months.  BCGD Proc.Reg. 10(B)(2)(f).  The board did not find 
any aggravating factors.  BCGD Proc.Reg. 10(B)(1). 
{¶14} For this misconduct, the parties suggested that respondent’s law 
license be suspended for a period of two years but that he be given credit for the 
suspension he has been under since October 4, 2001.  The parties acknowledged 
that acceptance of this recommendation would make respondent eligible to apply 
for reinstatement immediately upon the entry of a final order of discipline in this 
case.  The panel recommended this sanction, and having found the cited 
misconduct, the  board also recommended a two-year suspension with credit for 
time already served under suspension. 
January Term, 2004 
5 
{¶15} Upon review, we agree that respondent violated DR 1-102(A)(4) 
and (6) and that a two-year suspension with credit for suspension time served is 
appropriate.  A two-year suspension from the practice of law is a significant 
penalty, and respondent’s license has already been suspended for more than two 
years for his  misconduct.  Accordingly, respondent is hereby suspended from the 
practice of law in Ohio for two years; however, we allow credit for the suspension 
he has been under since our order of October 4, 2001.  Costs are taxed to 
respondent. 
Judgment accordingly. 
 
MOYER, C.J., RESNICK, F.E. SWEENEY, PFEIFER, LUNDBERG STRATTON, 
O’CONNOR and O’DONNELL, JJ., concur. 
_________________________ 
 
Jonathan E. Coughlan, Disciplinary Counsel, and Lori J. Brown, First 
Assistant Disciplinary Counsel, for relator. 
 
Don Haywood Pace, pro se. 
__________________