good morning if please the court counsel my name is stephen split and i represent the administrator of the attorney registration and disciplinary commission in this proceeding we asked his board today to reverse the report of the review board panel in this case and recap respondents father died in february of two thousand on the day that he died he executed a will and a trust he named his son ted the respondent as the executor of the willing named in the successor trustee of the trust under the will respond it was supposed to deliver his father's personal property to his mother and then put the remainder of the estate and two trusts a family trust and then a marital trust for the support of his mother respondent took an oath to act as the executor of the estate naperville of two thousand at that point the estate was opened beginning in august of two thousand respondent started taking funds from the estate between the beginning of august and the beginning of december of two thousand he took over one hundred fifty thousand dollars from the estate and we started making repayments to the estate in february of two thousand and ten off and they did not and that's what the hearing board found and that's what we're in and that's what part of our quick look that would stand with we're looking at the finding of the jury at that there was no intent to deceive or no dishonesty at all that would generally be a manifest weight type of question but mean the hearing board made a finding that respondent did not act dishonesty and we did not challenge that finding and review and in fact were not challenging it before this court the what the hearing board found was that was found and converted the find and that respondent breached his fiduciary duty as executor of his father's estate those are the the issues that you challenge challenging the intent no no there's no intent no i mean did the we charged respondent initially with having acted dishonest the evidence did not turn out to support of finding the hearing board found and did not act dishonest we did not challenge th finding before the review board so what the what the hearing board recommended that respondent be sanctioned for was breach of do sherry duty by virtue of self dealing with his father's estate assets and converting the four hundred forty eight thousand dollars that he took from the a state that's what the hearing board found that respondent was he had been liable for now debt yes he was and he was he was not acting as an attorney in this matter he did not draft the trust he did not represent the state he was appointed the executor or he agreed to act as executor of the estate and our contention was that thereby he o duty to the estate he was also appointed as successor trustee to the trust if the trust would have been funded he would but there is no attorney client relationship and that is that that's the graph i'm in of the review boards decision according to the review board because respondents actions did not arise out of an attorney client relationship then the administrator essentially had no business charging him with breach of fiduciary duty or conversion the review boards take on what the disciplinary law in illinois should be is that absent an attorney client relationship we shouldn't charge an attorney with conversion we should not charg attorney with breach of fiduciary duty the administrator submits that that view of the law by the review board is incorrect under longstanding disciplinary precedent with regard first to the  board seemed to say was that if an attorney is functioning as a trustee of an estate or an executor of an estate you might have a of do sherry duty but if you breaches that fiduciary duty that's something for the civil courts and that's not something that the administrator should get involved in our position is that they at decision by the review board goes against longstanding disciplinary precedent in into regards first of all this court has disciplined attorneys for decades for attorneys who are acting as executors as trustees they were not beneficiaries this court has disappointed tourney's who preached do sherry duties as alderman as trust officers at a bank as escrow agents but the fact of the matter is it's shouldn't matter that respondent was a beneficiary for a couple of reasons first of all respondent was not a beneficiary of the estate what the will says and what the expert opinion was in this case was that the only beneficiary of the estate was respondants mother to whom the respondents father's personal effects were to be given at that point the remainder of the estate was to be put into trusts and trusts were to be funded so the expert testified in the hearing board found that respondent was not a beneficiary the estate but from which he could take funds now if you look at it trust documents there's a couple problems for respondent with that also first of all the trust was never funded responded just kept the estate open and he never he never funded the trust never created the trust accounts and so the hearing board found that therefore the trust excuse me documents were not at issue you can't have distributions of trust they assets funded first with six hundred seventy five thousand dollars and then the remainder was supposed to go into a marital trust now if you look at the trust documents respondent was authorized as trustee to make distributions to himself as a trustee beneficiary respondent wants to paint his his authority to make those distributions as as almost on fatter for example respondent as i noted beginning in august of two thousand and two thousand to the beginning of december of two thousand respondent took one hundred fifty thousand dollars of state assets now under the trusts he could have made distributions to himself but he would have been limited the trust said that he could he could take income from the family trust he could invade the principal of the family trust for his health education or support if the distributions he was going to make to himself were consistent with his other resources also the trust document stated that with regard to trust distributions the care of respondents mother was to be given primary concern so it's the administrators position that  and could not have just gone unfettered into the trust assets and paid himself all the money that he ended up taking from the estate he would have been constricted i'm sorry as the fact that this was an independent administration give the attorney any solace any defen to what was done in this case well he wouldn't or he wouldn't have to go to the court to make distributions he would have to make an accounting to the court and to the beneficiaries when he closed the estate but it's really something that's i mean perhaps if it w have been an independent administration and he would have had to have had these distributions checked by the court i would imagine that this would not have gone on for five years and would not have told the four hundred and fifty thousand dollars so well the damages were less than then concrete the estate was repaid in october of two thousand and five and the administrators position is that this is more of a risk of harm case then a harm case now this court said and disappear that risk of harm is something that the court takes into consideration when determining whether what kind of sanctions are put into place and the thing that you should remember here is that when respondent took these withdrawals from the state that he characterized as loans they were not documented in any sort of fashion there were no promissory notes there were no interest rates there was no collateral there were no repayment terms repayment time so the thing of it was that the estate was supposed to on a number of things including his loans from the estate and she was successful in helping him a move as executor but as of the time of the disciplinary hearing which was twenty eleven the estate had been open for eleven years and might i mean certainly if if were sponsored would have approached mr hayes who had drafted the trustee who was representing him in the in the estate matter and said to mr hayes this is what i want to do with the estate assets can i do this and mr hayes would have said yes of course you can do that then you'd have a much harder time blaming respondent for what happened here but the what the hearing board found was was two things on that point first of all that john hayes wasn't aware of these transactions when they were it was was was getting bankrupt or bank records from the two securities accounts and he was forwarding them to mr hayes but the bank records did not show who these withdrawals were going to so mr hayes testified in the hearing board found that when respond it was making these withdrawals mr hayes was not aware of what he was specifically doing and the hearing board also found that respondent never went to mr hayes and specifically asked him i want to loan myself money so that i can keep my law firm a flow oh and i want to use the state funds and can i do that mr hayes testified that he didn't know that this was going on until two thousand and six when they when after responded sister had  moved to to have responded step down as executor they were preparing an accounting it was a bad point that mr hayes said that i learned that a lot of these withdrawals from estate funds were going to respond to that it was in his advice that the trust not be funded until the stay closed that's correct that that that's my understanding also and then also mr rose the ex distribution and before a trust was created was not authorized by the will i don't know if he said bad what he said was that the distributions that responded made for example to  was which was an aspect of the estate which was not doing too well and i think it's arguable belled that respondent in his in his capacity as protecting the assets of the estate was probably all right in making sure that that asset was not just going to to go into bankruptcy or or deplete it so that mr hayes was receiving the bank accounts that showed a lot of money going out and a lot of money going he was yes and there were a lot of there were a lot of stocks in the security sick ounce he testified that that even seeing those bank records he did not make a connection that respondent was taking out money for his own benefit he didn't and the hearing well i think the conduct that was the was the hearing board looked at as being prejudicial to the administration of justice was once his sister filed the action to get him removed they had that drag down for a while there but there was take a loan approaching the other beneficiaries looking for counsel as to whether that kind of thing was appropriate rather than just doing it and then having a lawsuit filed which he which he ended up losing that's what i think the administer the hearing board was looking at to say this is the part of this scenario that was prejudicial to the administration of justice because it engendered a lawsuit between the between respondent and that's accurate but the way this court has has defined what it means to be prejudicial to the administration of justice it's when other misconduct somehow has an adverse effect on the judicial system and  as far as the eight point four five as far as their conduct prejudicial count yes she would have to go and what she alleged was that that he was that i don't know if she alleged that he was defrauding the estate but she alleged that he had taken almost a half a million dollars from the state without notice to the state without authority to take those funds so with regard to the review board panel's decision here it's the administrators position that the review boards decision ignores disciplinary law it and in attempts to restrict the administrators ability to bring cases before discord in a way that would not be consistent with what this court has done historically  now if this court were to adopt the review boards decision and say that preacher to sherry duty charges should only be brought when there is an attorney client relationship there are going to be certain types of cases that just fall outside those parameters not a review board seem to say and yet not acted dishonest lee so it's the administrative position that if this court would would like to continue to see the case is that it now seems that the review boards decision should be rejected there's a couple of cases right now in the pipeline there's there's a case called mckenzie in which the the attorney for the family was made the trust of a family trust he was a beneficiary along with his brothers he was given power to invest the trust assets he told his brothers that he wanted to invest the assets in his own start up business and the brother said well that's fine he did invest them but he didn't there was no documentation he did not make an investment in the company and then get a share of the company for the trust it was very loose there was no documentation what happened was he essentially lived off the trust assets for a year and a half while he tried to get the business going he was unsuccessful the trust lost dollars say assets now he did not  and he did not have a fiduciary duty arising outside of an attorney client relationship or he did it was outside it was just he was trustee he didn't he wasn't representing the trust or anything that would be a case that would fall outside of the parameters of the review boards decision there's a couple of other cases like that and in fact the review board panel a different panel yesterday set out a report in the mckenzie case it was argued last month and the review board came out with a report yesterday that said that the findings of conversion and breach of duty that were made by the hearing board in that case were consistent with this court's precedent but if this court were to uphold  board decision then the review board would want to revisit the sanction decision because there was another charge in that case of conduct prejudicial because the respondent had engaged in some foot dragging with  that his conduct at all times complied with appropriate act in the terms of the will and the trust is that fair that's fair the balkan i think of mr splits argument and what goes on beyond this case is whether the review board was correct in indicating that for purposes of disciplinary proceedings both breach of fiduciary duty and conversion require an attorney client relationship it does mr kirby just agree with the review board on that or is the focus going to be on whether or not he complied with the  kerik our position is this that the review board made two alternative decisions as to why they did it one was what you state and the other they said alternatively just given the facts of this case mr kirby this did not violate the rules this case and it's the court's purview to make the decisions on how it affects other cases here so that our position is that he didn't commit breach of fiduciary duty he did not commit conversion based upon the facts of this case in the law right and you're not you're really not going to touch much on the review boards that are finding that there has to be an attorney client relationship i mean i'm not going to get into that that's the review board has been here in many cases and they've addressed that issue with this court and  i'm not going to get into that i'm here from you see the reasons horton if we disagree on and the bulk of your argument very hard mary you see where it's important if if this court would find for example mr kirby this is incorrect that he did you see the importance i do understand that and but the court can accept either one of the review boards reasonings behind it and how it affects other cases or how to fix this case ok all right thank you just bang back to the facts a little bit or you just are claiming that trust was funded or do you agree that it was not formally funded during it and while all your client was acting as the executor what happened was when mr care of it is prepared to will what mr hayes prepared to his firm prepared the will and the trust and the will provided that personal property when he died goes to his wife and the other goes into the george care vivus trust which was funded there is a george could have done whatever he wanted to from george kirby distrust and as i'm going to point out to you if you look at the documents mr ted care he does a successor trustee that could do everything his father could do including a loan to himself so so you you're going to go over a couple of those provisions with you but hopefully before i get done i would like clear to a couple things counsel said that mr hayes was not aware of the loans or any distribution to the sister or the mother and that's not accurate and i would refer you to the hearing board page knowing of the was aware responded made payments totaling more than one hundred twenty thousand from the state funds for the benefit his mother including payments of real estate taxes health insurance and purchase of an automobile and payments of more than twenty thousand for the benefit of the sister and that's can be important my arguments later run because mr rhodes their expert said no distribution including those to the mother in sr were allowed until he funded the family trust the point being is that mr kirby just hired mr hayes immediately to handle the estate mr hayes specifically said he was aware that these things were happening in clothing getting statements every month watching the that it's ok to do it by mr hayes mr hayes disagrees with what mr rhodes says i'll get to the documents i'd like to get to that but one other thing that was talked about the sister did file a action against him lawsuit filed it was just a dispute between him and sister now i would like the court to briefly review the documents that are contained in our brief the will and the trust specifically we start with the will it's council said paragraph one says it goes to the mother personal but paragraph two says i give the remainder of my stake to the successor trustee of the  that trust was created and that was in existence i'd like to point out to article five of the will the will now there's the will gives the executor the power to without any thought of court and it also says the will and ted kennedy's executor to distribute my estate undivided interests me he could give what he wanted to to each one of the beneficiaries including the fact that he was  beneficiary even though he was the executor mr kirby just had was the executor is a fiduciary and even though he had an interest so the will specifically gives him the power to act like his father did and then if you go fiduciary so we disagree with mr rhodes and it's clear language that he could use the money from the trust george care of the distrust to make loans to himself even though he's the beneficiary in the trustee and then the discretions and duties given to imposed upon the original trustee mean that george curvy just had the right to do what he did with the trust you could loan his son money ted is now the successor trustee there is money in the george  it just was never transferred to the family in marital trust so gives him the power to do that the documents are clear and your can read that document just declare again there was there was executed  will order over into the cross correct trust was not funded prior to death correct ok so all of the assets were in the state correct and he had control of those as the executor until such time as he is it your position that because he could have funded at any time he had all the powers that the trust set out or was it as he as the administrator here argues until that trust is funded he had none of those are family trust first the family trust was to be fun six seventy five and then the remainder to the marital trust but again just to clarify i get some letters standing at the time of his death george curvy distrust was not funded well that when mr hayes was retained as the household help on all this was there eight in your discovery but in this case together was there a letter from mr hayes you know i'm going to represent you and here's what you're supposed to do member given any information but he was to fund the marital family trust before he acted so that's all i know there's no letters in the evidence or anything but what he did or didn't tell him  transparent nobody didn't know me no nobody said that he was hiding any of the stuff everything went through u s b bank all the statements showed the transactions were there nothing one into his personal accounts everything was open and that's why they found no dishonesty no deceit no misrepresentation let's talk about the conversion itself that's one charge it's our position that you can't be guilty of conversion of money that it's yours to use he had a hundred executor i mean where there are a holding money in a special account for real estate and the warriors are using the money for their skin the attorney client relationship there's also some cases like the workman case where he was treasurer of a bar association he was using the money all those conversion cases in every case that they've cited in both their brief and reply i will attorneys were not entitled to the use of the money mr kerry fetus wasn't tied up to the just states that conversion is unauthorized which deprives a man of his property permanently or wrongful deprivation but deprivation of one who has the right to immediate possession of the object  in addition administrators are claims that he had no authority to use the funds and was guilty of conversion that's what they're saying is he had no authority to use the funds but mr roll specifically says that had the he funded the family trust he had authority to make distributions in undivided accounts with no accounting so when they say he didn't have the authority mr rose agrees he did have the authority to do that he just didn't transfer the money from one part of the trust to a family trust so the authority was there so the nexus with thebus isn't fair in this case so he could distribute an equal shares he did have to distribute everything and that pay it back that's what he said he would have to do we could have done as i said earlier mr rhodes said distributing to his sister and mother was not authorized either so he said he wasn't able to do that as i pointed out earlier that mr hayes knew he was doing this and he never said or there's no evidence they said hey you can't do that he was getting statements i think mr hayes and one of his statements says when they asked them was the family trust or the marital trust fund i think it's page night in the in the hearing boards he says that the family trust of both trusts had to be funded before the estate was closed he never said he had a fund it immediately was never that question to h we believe that the review board or was correct and found no conversion when you get to breach of fiduciary duty but claim that the responded was self dealing and the basis for their decision was they act he converted funds so if this court finds there is no conversion then bet too must fall the very nature of mr clear he just putting his son as the executor trustee and beneficia any time he distributed to himself self dealing any time he did that you'd be saying it's conflicts of feeling we know that so let's talk about the duties of a fiduciary his duties of loyalty  unless someone requested an is no evidence that there was a request for that so there's no issue members ringing up an issue of the accountability both the hearing board and review board found there was no dishonesty so there's no breach of his fiduciary duty for the dishonesty kiri out the intentions of his father to make distributions for the health support and education of his wife his sister who self let's review his conduct he gave one hundred twenty thousand dollars to his mother brought her  mercedes he gave twenty thousand dollars to his sister he gave three hundred thirty nine thousand dollars to marie's where his sister was the manager katie salary and her mother was the whole state's benefit to both of them and none of that was paid big what he do for himself he used at the most any time one hundred fifty two thousand dollars which is less than one third of the six hundred seventy five thousand dollars to use in his business to practice of law to support his family what did he do if he paid it back to the state could continue to use it what did he do to bre about the case where there's a conflict and they said  we're a creator of the trust creates an undivided loyalty no only places the trustee in a position which might conflict with the interests of the beneficiaries that we're not here to punish an attorney i think mr kirby just did what his father carried out his father's duties and we don't believe that there was a violation of any rules and just his lack of knowledge of funding or transfer money from one trust another as a review board suggests should not have been brought in the first place and it's not a basis for an action by either the administrator and we escort to a from the decision thank you you thank  few points on rebuttal if you would the administrator disagrees that there was a funded trust in existence respondent testified at the hearing that he never funded the trusts mr rhodes understood that he never funded the trusts that what the trust document calls for is that upon mr care of us is that that the money was supposed to go into a family trust and a marital trust so he created a trust when he signed the trust documents right what he directed his executor to do was upon his death which turned out to be the same day the executor was supposed to fund to separate trust that's correct the money was in the estate they were there were in two accounts that were looked at by everyone as being part of mr care of you this is a state not not part of the trust so responded admitted at the hearing that he never funded these trusts and when and when he wants to to quote to you from from articles of the trust that supposedly give him the power to loan funds to him so he's quoting from deep into the trust after it's already been assumed that there's been the marital and the family trust created mr rhodes testified if you don't have assets in a trust you can't do anything with the assets in a trust so that the trust provisions are just out or just irrelevant at this point respondants position at the hearing was that he was  beneficiary of his father's estate and that he could do these things under the terms of the will and even if he wasn't a beneficiary of the estate then he was going to get this money as a beneficiary of the trust and so there really given that there's no harm the should be no no foul it seems to be kind of a turnaround of position for respondent before this court the hearing board's findings both with regard to preacher fiduciary and with regard to conversion are consistent with the law that is currently in place in illinois conversion has been defined by this court since the early ninety's is the unauthorized use of property they a unauthorized taking of property either prominently or for an indefinite amount of time it hearing board found in this case that respondent did not have authority to take this money from the estate either by the will by the only probate act our view of the actual time it's certainly this court is free to interpret the trust and will documents it as it as it sees fit that would be a good no photo that would be at an overall review with this court would read the trust documents and the will documents as different from how the hearing board and mr rhodes read them then it is certainly free to do so our contention is that if was found and would have would have been serious about a differing interpretation of those documents he would have brought someone to trial to testify that the document should be interpreted differently by habit than just saying well i had this but forty one respondent disclaimed any expertise in the area  of trusts in the states now i'd like to in the remainder of my time just the sanction if i could the hearing board of the review board in this certainly was was critical of the fact that  the administrator was seeking a sanction against respondent for three reasons first of all this was a family kind of dispute it was not an attorney client kind of relationship that respondent did not act dishonesty and because respondent eventually paid the trust back of the funds that he took and these are not an important factors the administrators contention is is twofold first of all that these things matter but they matter to the sanction they don't matter to whether there was a preacher f duty in the first instance or whether there was conversion of these funds in the first instance and the administrator submitted that these are important mitigating factors but the administrators contention is if respondent would have done this with an attorney client relationship if he would have acted dishonest fully and if he would not if we paid the trust funds of the four hundred fifty thousand dollars this would be a despondent case if you look at the precedent that that the hearing board cited there are two cases that are  substantially on point here are the by our case and the crowdy case the power case was an individual whose whose brother set up a trust for the brother's children funded it with one point two million dollars made the respondent the trustee he gave the respondent the ability to take a loan from the trust and the respondent took a one hundred thousand dollars loan he then defaulted and he didn't pay it back and then while his brother wasn't paying attention the respondent took one hundred ninety seven thousand dollars now mr bauer did not act dishonest lee he  arrangements to repay the trust he came forward with evidence of good character and community service and he was suspended for nine months now the administrator submits that this case is pretty close to power but what you have in this case is a much more significant amount of money that would move the sanction up from nine months to something more you have the crowdy case that was a situation in which a lawyer did create a trust so it was within an attorney client relationship he was named trustee of the trust he loaned fifty thousand dollars of trust funds to various people one hundred thousand dollars of that money was paid back thirty one was not mr crowder he also avoided speaking to the beneficiaries of the trust for a period of time when they were trying to call him and find out what was going on and mr cried he was suspended for five months for essentially a thirty thousand dollars loss he were paid that funds he put he repaid with interest he gave the beneficiaries back attorney fees he offered up and said good character he had not been previously disciplined and at the time he was caring for four children while his wife was fighting a terminal disease this was serious medication in the crowded case he was suspended for five months so even if one looks at this case and looks at the fact that there is no dishonesty replenish ment and no attorney client relationship you might think to yourself well your seems kind of harsh but you look at power you look at karate those attorneys were  pretty substantial suspensions in very certain very similar types of situations so what the administrator a asks this court to do is to reject the review boards new definition of conversion and its new definition of creature could do sherry duty as being on the rise as being something that would put it beyond this court or could be on the administrator the ability to bring certain actions to the attention of this court to affirm those findings of conversion a