Title: Cincinnati Bar Assn. v. Powers

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Cincinnati Bar Assn. v. Powers, 119 Ohio St.3d 473, 2008-Ohio-4785.] 
 
 
 
CINCINNATI BAR ASSOCIATION v. POWERS. 
[Cite as Cincinnati Bar Assn. v. Powers, 119 Ohio St.3d 473, 2008-Ohio-4785.] 
Attorneys at law — Misconduct — Disbarment. 
(No. 2008-0396 — Submitted May 21, 2008 — Decided September 25, 2008.) 
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and 
Discipline of the Supreme Court, No. 06-012. 
__________________ 
Per Curiam. 
{¶ 1} We must determine in this case the appropriate sanction for a 
lawyer who (1) as part owner, oversaw operations of a title company that 
defrauded various financial institutions and (2) then pleaded guilty to two felonies 
for his part in the scheme.  Despite the breadth of the underlying fraudulent 
conduct, the Board of Commissioners on Grievances and Discipline 
recommended only the indefinite suspension of the lawyer’s license to practice 
law.  For these egregious violations of the Code of Professional Responsibility, 
we order his permanent disbarment. 
{¶ 2} Respondent, Donald M. Powers Jr. of Cincinnati, Ohio, Attorney 
Registration No. 0067728, was admitted to the practice of law in Ohio in 1997.  
On January 27, 2006, we suspended respondent’s license to practice law on an 
interim basis, pursuant to Gov.Bar R. V(5)(A)(4), upon receiving notice of his 
felony convictions for making a material false statement in a loan application, a 
violation of Section 1014, Title 18, U.S.Code, and filing a false income tax return, 
a violation of Section 7206(1), Title 26, U.S.Code.  See In re Powers, 108 Ohio 
St.3d 1424, 2006-Ohio-289, 841 N.E.2d 786.  Our decision in this case completes 
the disciplinary review process. 
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{¶ 3} Relator, Cincinnati Bar Association, charged respondent with three 
violations of the Disciplinary Rules: DR 1-102(A)(3) (prohibiting illegal conduct 
involving moral turpitude), 1-102(A)(4) (prohibiting conduct involving 
dishonesty, fraud, deceit, or misrepresentation), and 1-102(A)(6) (prohibiting 
conduct that adversely reflects on a lawyer’s fitness to practice law).  A panel of 
the board heard the case, found the cited misconduct, and recommended the 
indefinite suspension.  The board adopted the panel’s findings of misconduct and 
recommendation. 
{¶ 4} Relator has objected to the board’s report, arguing in the main that 
the board unduly minimized the gravity of respondent’s convictions and the 
fraudulent conduct that precipitated them.  Relator claims that in adopting the 
panel report, the board relied too much on respondent’s exculpatory testimony 
and too little on the wrongdoing to which he admitted both in stipulations for the 
hearing and in pleading guilty to his crimes.  We sustain these objections. 
Misconduct 
{¶ 5} To describe the scope of the fraudulent conspiracy in which 
respondent engaged, the parties stipulated: 
{¶ 6} 1. 
“Respondent and his wife operated Premier Land Title 
Agency in Glendale, Ohio, from September 2000 to July 2003.” 
{¶ 7} 2. 
“During this period, Respondent was a participant (along with 
several others) in a scheme involving ‘flipping’ low value homes in the greater 
Cincinnati, Ohio area.” 
{¶ 8} 3. 
“The ‘flipping’ scheme involved buying a piece of real estate 
for a low value, recruiting a buyer for the property who may not otherwise be able 
to afford property, and creating false documents, including pay stubs,W-2 forms, 
bank statements and employment verification for the potential buyer.  Next, a 
falsely inflated appraisal of the property would be obtained, and a false loan 
January Term, 2008 
3 
package would be submitted to the bank or lender in order to obtain a highly 
inflated loan.” 
{¶ 9} 4. 
“Premier Land Title Agency, of which Respondent was an 
owner, participated in the closing of 310 loans involved in this scheme.  
Respondent was aware of some of the fictitious and/or fraudulent appraisals that 
were submitted to financial institutions in furtherance of this scheme.” 
{¶ 10} 5. 
“Additionally, Respondent and/or Premier Land Title Agency 
took part in acts which defrauded various federally insured financial institutions 
in the execution of the ‘flipping’ scheme by knowingly submitting false Housing 
and Urban Development (HUD) forms to the financial institutions in support of a 
loan application.  In signing numerous HUD forms, Respondent falsely certified 
that the buyer had brought a down payment to the closing, which he knew not to 
be true.” 
{¶ 11} 6. 
“Respondent further participated by acting as both the title 
agent and the seller in connection with five properties involved in the ‘flipping’ 
scheme. Respondent purchased one such property located at 1794 Carll Street in 
Cincinnati for $37,000 and sold it three months later for $78,000.  Also, in 
furtherance of the conspiracy, Respondent purchased property located at 2283 
Loth in Cincinnati for $6,000 and sold it six months later for $110,000.  In both of 
these transactions, Respondent signed HUD statements certifying that the buyers 
brought over $11,000 to each of the closings as down payments, but in fact, the 
buyers did not provide any funds as down payments.” 
{¶ 12} 7. 
“Respondent has admitted that due to his and Premier’s 
fraudulent activity, various financial and lending institutions have suffered an 
actual or intended loss of $3,492,217.59.” 
{¶ 13} 8. 
“Respondent additionally willfully filed false individual 
income tax returns with the Internal Revenue Service for the years 2001 and 2002.  
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He failed to report portions of the payments received from the fraudulent loan 
proceeds and from others involved in the ‘flipping” scheme.” 
{¶ 14} 9. 
“On February 1, 2005, Respondent pled guilty in United 
States District Court, Southern District of Ohio, Western Division, to making a 
material false statement in a loan application in violation of 18 U.S.C. §1014, and 
to filing a false income tax return, in violation of 26 U.S.C. §7206(1).” 
{¶ 15} 10. “On October 31, 2005, Respondent was sentenced to 
imprisonment for 28 months on the first count and 36 months on the second 
count, to be served concurrently * * * .” 
{¶ 16} Respondent was paroled from prison in August 2007.  His release 
allowed him to testify before the hearing panel.  At that time, he was living in a 
halfway house in Cincinnati. 
{¶ 17} By overseeing an operation that fabricated closing documents on 
over 300 loans, causing lenders to lose nearly $3.5 million, and then filing false 
income tax returns that concealed his profit, respondent unquestionably violated 
DR 1-102(A)(3), (4), and (6). 
Sanction 
{¶ 18} Respondent has filed nothing in opposition to relator’s request for 
permanent disbarment, and the board, in adopting the panel’s report, offered little 
support for the recommendation to indefinitely suspend.  As relator argues, the 
board largely understated the proportions of respondent’s misconduct, depicting a 
far less objectionable scenario than the one to which he admitted.  Of the entire 
enterprise, the board summarized: 
{¶ 19} “Respondent, along with other persons, did partner in the purchase 
of two residential properties in Cincinnati.  Those homes were purchased for 
fairly low cost and sold within just a few months at a rather large profit.  
Respondent failed to accurately report the income obtained from these sales to the 
Internal Revenue Service.” 
January Term, 2008 
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{¶ 20} Respondent, as the licensee and part owner of the title company in 
each transaction, facilitated as many as 310 real estate closings in which agents 
supplied fictitious appraisals, some of which respondent specifically knew to be 
fabricated.  Pay stubs, W-2 forms, bank statements, and records that verified a 
buyer’s employment were routinely falsified to close these deals.  Respondent 
personally signed numerous HUD forms, certifying that the buyer had remitted 
the required down payment, a certification that he knew to be false.  Moreover, 
the “rather large” profit that respondent realized in two of five transactions, 
during which he acted as title agent and seller of exceedingly overvalued 
property, totaled $41,000 in one case and $104,000 in the other.  Through these 
devices, respondent’s real estate flipping scam garnered a colossal return. 
{¶ 21} The board exercised lenience in this case, relying on the panel’s 
trust in respondent’s “extremely compelling and credible” testimony, in which he 
acknowledged wrongdoing while insinuating his “limited involvement in the 
criminal and fraudulent conduct.”  This, however, is not the time to defer to a 
panel’s credibility determination, as is our usual practice.  Cf. Cincinnati Bar 
Assn. v. Statzer, 101 Ohio St.3d 14, 2003-Ohio-6649, 800 N.E.2d 1117, ¶ 8.  We 
are the ultimate arbiters in disciplinary proceedings, Disciplinary Counsel v. 
Furth (2001), 93 Ohio St.3d 173, 181, 754 N.E.2d 219; Ohio State Bar Assn. v. 
Reid (1999), 85 Ohio St.3d 327, 330, 708 N.E.2d 193, and we do not accept 
respondent’s asserted inattention to what he claims were the machinations of 
others at the direction of his ex-wife and a former business associate. 
{¶ 22} Long before his stipulations, respondent pleaded guilty in October 
2004 to his crimes and admitted other improprieties in federal court to obtain 
favorable sentencing terms.  As relator observes, respondent cannot now deny the 
extent of his culpability to evade our strictest sanction in the disciplinary 
proceeding ensuing from those convictions.  Disciplinary Counsel v. Margolis, 
114 Ohio St.3d 165, 2007-Ohio-3607, 870 N.E.2d 1158, ¶ 23.  “[A] guilty plea is 
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not a ceremony of innocence, nor can it be rationalized in a subsequent 
disciplinary proceeding.”  Disciplinary Counsel v. Mesi (1995), 72 Ohio St.3d 45, 
49, 647 N.E.2d 473. 
{¶ 23} The statement of facts respondent signed in pleading guilty 
confirmed the facts we have already enumerated, albeit with one addition.  
Beyond his falsifications of HUD-1 settlement statements, respondent also knew 
that buyers were paid financial kickbacks for their participation.  Though HUD-1 
settlement statement forms indicated that the buyer had brought the down 
payment to closing, the statement of facts from the plea agreement revealed the 
following: 
{¶ 24} “Mr. Powers knew that the buyer did not bring the down payment, 
but rather someone else involved in the scheme brought the down payment.  
Moreover, Mr. Powers was aware that the buyer often received a ‘kickback’ 
outside of the closing, which was not disclosed to the lender.  Thus, Mr. Powers 
aided others in a scheme to defraud financial institutions.” 
{¶ 25} Misconduct of this magnitude warrants disbarment.  In 
Disciplinary Counsel v. Bein, 105 Ohio St.3d 62, 2004-Ohio-7012, 822 N.E.2d 
358, ¶ 13-14, we disbarred a lawyer convicted of felonies for conspiracy to 
engage in the interstate transportation of stolen property and conspiracy to 
conduct financial transactions for stolen goods.  The lawyer had conspired with 
others in an illegal commercial enterprise involving the interstate transportation 
and sale of stolen over-the-counter pharmaceuticals, health and beauty aids, and 
sundry items such as film and batteries. 
{¶ 26} As here, mitigating factors such as the lawyer’s lack of a prior 
disciplinary record, admission to wrongdoing, and imposition of other penalties 
existed in that case, and the lawyer also attempted to minimize his role in the 
illegal conspiracy leading to his convictions.  Bein, 105 Ohio St.3d 62, 2004-
Ohio-7012, 822 N.E.2d 358, ¶ 9.  But given the lawyer’s longtime commitment to 
January Term, 2008 
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and profit from the criminal conduct, we were not dissuaded from ordering his 
permanent disbarment.  We wrote:  
{¶ 27} “An attorney who turns to crime and is convicted of theft offenses 
should be disbarred.  See Cincinnati Bar Assn. v. Blake, 100 Ohio St.3d 298, 
2003-Ohio-5755, 798 N.E.2d 610, ¶ 7.  To be sure, respondent contends that he 
was not solely responsible for the financial losses incurred by the retail businesses 
that were the victims of his crimes, but he cannot deny that he continued to 
participate in those crimes over several years and that the total losses from the 
conspiracy reached into the hundreds of thousands of dollars. 
{¶ 28} “A lawyer who engages in the kind of criminal conduct committed 
by respondent violates the duty to maintain personal honesty and integrity, which 
is one of the most basic professional obligations owed by lawyers to the public. 
Respondent's misconduct was harmful not only to the businesses affected but also 
to the legal profession, which is and ought to be a high calling dedicated to the 
service of clients and the public good.”  Bein at ¶ 12-13. 
{¶ 29} Because respondent’s ethical breaches are at least as damaging to 
the legal profession and public as those committed in Bein, disbarment is 
appropriate.  We therefore permanently disbar respondent from the practice of law 
in Ohio.  Costs are taxed to respondent. 
Judgment accordingly. 
 
MOYER, 
C.J., 
and 
PFEIFER, 
LUNDBERG 
STRATTON, 
O’CONNOR, 
O’DONNELL, LANZINGER, and CUPP, JJ., concur. 
__________________ 
Franklin A. Klaine Jr. and E. Hanlin Bavely, for relator. 
Hardin, Lazarus, Lewis & Marks, L.L.C., and Edward G. Marks, for 
respondent. 
______________________