Title: Columbus Bar Assn. v. Sterner

State: ohio

Issuer: Ohio Supreme Court

Document:

Columbus Bar Association v. Sterner. 
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[Cite as Columbus Bar Assn. v. Sterner (1996), ____Ohio St. 3d _____.] 
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Attorneys at law -- Misconduct -- Permanent disbarment -- 
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Misappropriating funds and neglecting to safeguard the 
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interests of clients over a five-year period. 
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(No. 96-436 - - Submitted September 24, 1996 -- Decided December 18, 
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1996.) 
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On Certified Report by the Board of Commissioners on Grievances 
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and Discipline of the Supreme Court, No. 95-46. 
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On September 6, 1995 the Columbus Bar Association (“relator”) filed 
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an amended complaint charging in eight counts that James M. Sterner of 
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Columbus, Ohio, Attorney Registration No. 0034047 (“respondent”), 
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violated various Disciplinary Rules of the Code of Professional 
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Responsibility.  Count One of the complaint concerned respondent’s 
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representation of Gregory M. Sabbato during 1991 in the purchase of a 
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business.  Respondent did not inform Sabbato that he not only had previous 
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business dealings with the seller of the business but also had shared office 
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space with and was otherwise affiliated with the seller’s attorney.  
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Following respondent’s advice, Sabbato paid $70,000 to the seller, who was 
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to pay off the liens on the business.  The money, however, was used for 
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other purposes, the liens were not paid off, and the creditors foreclosed on 
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the business and took it from Sabbato.  When Sabbato sued respondent for 
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malpractice, respondent refused to notify or cooperate with his insurance 
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carrier, and as a result Sabbato obtained a judgment against respondent for 
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$208,000.  Respondent then transferred assets out of his name to avoid 
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attachment by Sabbato and other creditors. 
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Count Two of the complaint was based on respondent’s 
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representation in 1993 of John Malhalic, who had agreed to sell a liquor 
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license to John Scimone.  As part of the transaction, respondent told 
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Scimone that the license was free and clear of liens and received $7,500 
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from Scimone to be held  in escrow until the completion of the sale.  
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Scimone later learned that there were tax liens against the license, that the 
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license had been revoked, and that  in a contemporaneous negotiation 
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respondent had received funds from a third party who wished to purchase 
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the same license.  The license was never transferred to Scimone, and 
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respondent both failed to return the escrow funds to Scimone and refused to 
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account for them. 
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Count Three involved respondent’s receipt of $24,000 from Mary 
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Lavelle in 1991 to be held by him as escrow agent and used for the payment 
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of  Ohio sales tax and for payments to the Ohio Bureau of Employment 
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Services in connection with Lavelle’s purchase of Norton Road Beverage, 
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Inc., a company represented by respondent.  The transfer of the Norton 
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assets to Lavelle was delayed by respondent’s failure to expeditiously 
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perform his duties as escrow agent.  Respondent settled  Lavelle’s suit 
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against him for breach of his fiduciary duty for $3,000, but he has never 
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accounted for the funds in the escrow account. 
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As to Count Four, respondent represented the seller of a bar business, 
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and received $10,000 from James Flax, a potential purchaser, to be held in 
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escrow pending the transfer of the liquor permit.  The permit was not 
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transferred and Flax was entitled to the return of the escrow money on and 
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after July 1, 1994.  Despite requests from Flax, respondent did not return the 
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escrow money until February 28, 1995, with no interest and no explanation 
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for the delay. 
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As to Count Five, Robert and Delores Ruzendall in 1991 and 1992 
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retained respondent to reinstate their liquor license and entrusted respondent 
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with over $20,000 to pay delinquent taxes related to the license.  
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Respondent told the Ruzendalls that he paid the funds for the intended 
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purpose.  However, the state of Ohio placed two tax liens totaling over 
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$25,000 on the Ruzendalls’ property.  Respondent has refused to account 
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for and document the disposition of the funds entrusted to him, and partly as 
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a result the Ruzendalls filed under Chapter 13 in the bankruptcy court. 
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As to Count Six, respondent in 1991undertook to act as a fiduciary at 
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the closing of a real estate sale by Deborah Shirey to Network, Inc. and 
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received $10,000, which was to be paid by him to release federal and state 
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tax liens on the property.  As a result of respondent’s failure to pay over the 
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money, the federal government foreclosed on the property.  Respondent has 
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refused to account for the funds. 
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Underlying Count Seven was respondent’s representation in 1995 to 
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Tony Canale that  respondent could secure a liquor license for Canale’s bar 
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business upon payment of $6,000 in back taxes.  Canale gave respondent a 
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certified check in that amount payable to the state of Ohio.  Respondent 
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endorsed the check, “not used for purpose intended,” signed Canale’s name, 
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cashed the check, and received the funds.  Respondent did not pay the taxes 
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and refused to account to Canale for the funds. 
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Count Eight was added to the complaint because respondent failed to 
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provide adequate responses and to cooperate with relator in its investigation 
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when he was notified of the charges. 
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Respondent failed to file an answer to the amended complaint and on 
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December 13, 1995, relator moved for an entry of default.  Respondent filed 
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no response to the motion for default. Based upon the complaint, the default 
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motion, and supporting affidavits and documentation, a panel of the Board 
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of Commissioners on Grievances and Discipline of the Supreme Court 
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(“board”) found that respondent had violated DR 1-102(A)(3) (engaging in 
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conduct involving moral turpitude) with respect to Count Three; 1-
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102(A)(4)(engaging in conduct involving dishonesty, fraud, deceit, or 
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misrepresentation) with respect to Counts One, Three, Five, Six, and Seven; 
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1-102(A)(6) (engaging in conduct adversely reflecting on fitness to practice 
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law) with respect to Counts One through Eight; 5-101(A) (not refusing 
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employment when the interest of the lawyer may impair independent 
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professional judgment) with respect to Count One; 6-101(A)(3) (neglecting 
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a legal matter entrusted) with respect to Counts Two, Four, Five, Six, and 
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Seven; 7-101(A)(1) (failing to seek the lawful objectives of a client) with 
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respect to Counts One, Five, Six, and Seven; 7-101(A)(2) (failing to carry 
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out a contract of employment) with respect to Counts Five, Six, and Seven; 
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7-101(A)(3) (prejudicing or damaging a client during the course of 
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representation) with respect to Counts One, Five, Six, and Seven; 9-
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102(B)(3) (failure to maintain records of client funds) with respect to 
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Counts Five and Seven; and 9-102(B)(4) (failure to promptly pay over client 
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funds) with respect to Counts Five, Six, and Seven. 
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The panel recommended that the respondent be permanently 
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disbarred because of the length, breadth and egregious nature of his 
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conduct, his failure to participate in the disciplinary process, and the lack of 
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any mitigating circumstances.  The board adopted the panel’s findings, and 
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recommended permanent disbarment and that costs be taxed to respondent. 
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Respondent filed objections to the board’s findings, conclusions of 
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law and recommendations, and requested oral argument before this court.  
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In respondent’s objections and in oral argument, counsel for respondent 
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sought to introduce evidence that respondent’s activities are explained by 
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his psychological condition and that he had made restitution. 
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_______________________________ 
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Bruce A. Campbell, James E. Davidson and Janice M. Bernard, for 
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relator. 
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Charles W. Kettlewell, for respondent. 
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___________________________ 
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Per Curiam.  The respondent misappropriated funds and neglected to 
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safeguard the interests of his clients over a five-year period.  The rules of 
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our Code of Professional Responsibility are mandatory; they state the 
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minimum level of conduct below which no lawyer can fall without being 
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subject to disciplinary action.  As the board found, respondent’s conduct 
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clearly violated a number of these rules.  We have said many times that the 
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appropriate sanction for misappropriation of client funds and continued 
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neglect of duty is disbarment.  See, e.g., Mahoning Cty. Bar Assn. v. 
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Michaels (1996), 75 Ohio St.3d 645, 647,  665 N.E.2d 676, 677; 
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Disciplinary Counsel v. Connaughton (1996), 75 Ohio St.3d 644, 645, 665 
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N.E.2d 675, 676; Lake Cty. Bar Assn. v. Ostrander (1975), 41 Ohio St.2d 
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93, 70 O.O.2d 173, 322 N.E.2d 653.  These  previous disbarment cases 
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involved one or two incidents over a limited time. Respondent’s course of 
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action involved a series of similar infractions extending over a five-year 
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period. 
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Respondent has attempted in his brief and in oral argument to 
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introduce in mitigation evidence of his alleged attention deficit disorder, a  
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psychological condition which respondent did not connect to his five-year 
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pattern of neglect of duty.  We decline to accept such evidence at this late 
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date. 
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Disciplinary matters are original actions.  Rule V of the Rules for the 
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Government of the Bar of Ohio, setting forth detailed procedures for such 
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matters, is promulgated pursuant to our constitutional power to oversee all 
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phases of the conduct of the bar.  S. High Dev., Ltd. v. Weiner, Lippe & 
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Cromley, L.P.A. (1983), 4 Ohio St.3d 1, 4, 4 OBR 1, 3-4, 445 N.E.2d 1106, 
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1109.  Under Rule V, the time for the production of evidence is at the 
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formal hearing before a panel appointed by the Secretary of the Board of  
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Commissioners on Grievances and Discipline.  After the board issues its 
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findings and recommendations  based on the certified report of the panel, 
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this court issues an order to show cause to the respondent who then has the 
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opportunity to object and to support that objection with a brief.  Rule V has 
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no  provision for the introduction of evidence in the brief filed in this court 
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or in the oral argument to this  court. Only in the most exceptional 
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circumstances would we accept additional evidence at that late stage of the 
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proceedings. 
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If respondent has any objection here, it  must be to the  findings and 
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recommendations of the board.  The entire record sent to us from the board 
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consists of  the pleadings, the default motion, the affidavits, and other 
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material filed in support of the motion, and the findings of fact and 
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recommendations of the board after respondent failed to answer, otherwise 
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plead, or appear before the panel.  Matters in excuse and mitigation do not 
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appear in that record, nor do exceptional circumstances exist that would 
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allow such evidence to be introduced for the first time by way of brief or 
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oral argument in response to the order to show cause. 
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Respondent is hereby disbarred from the practice of law in Ohio.  
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Costs taxed to respondent. 
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Judgment accordingly. 
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MOYER, C.J., RESNICK, F.E. SWEENEY, PFEIFER, COOK and KLINE, JJ., 
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concur. 
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DOUGLAS, J., not participating. 
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ROGER L. KLINE, J., of the Fourth Appellate District, sitting for 
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STRATTON, J. 
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