Title: FL Bar v. Draughon

State: florida

Issuer: Florida Supreme Court

Document:

Supreme Court of Florida 
 
 
____________ 
 
No. SC09-2056 
____________ 
 
THE FLORIDA BAR,  
Complainant, 
 
vs. 
 
RICHARD SCOTT DRAUGHON,  
Respondent. 
 
[June 28, 2012] 
 
PER CURIAM. 
 
We have for review a referee’s report recommending that Respondent 
Richard Scott Draughon be found guilty of professional misconduct and receive a 
public reprimand.  The Florida Bar has filed a petition for review of the report, 
challenging the referee’s recommended sanction.  Draughon has filed a cross-
petition for review.  We have jurisdiction.  See art. V, § 15, Fla. Const.  As 
discussed below, we approve the referee’s findings of fact, as well as the referee’s 
recommendation that Draughon be found guilty of violating Rule Regulating the 
Florida Bar 3-4.3 (Misconduct and Minor Misconduct).  However, we disapprove 
the referee’s recommended sanction, and instead impose a one-year suspension. 
 
 
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FACTS 
 
The Florida Bar filed a disciplinary case against Draughon alleging that he 
engaged in misconduct in violation of Rules Regulating the Florida Bar 3-4.3 
(Misconduct and Minor Misconduct) and 4-4.3(a) (Dealing with Unrepresented 
Persons).  A referee was appointed to consider the matter.  Following a hearing, the 
referee submitted his report for the Court’s review, in which he makes the 
following findings and recommendations. 
 
Draughon was first admitted to The Florida Bar in 1987.  The transactions 
giving rise to this disciplinary case began several years later in 1993, when 
Draughon was approached by a friend and client for help in purchasing residential 
property located in Johnstown, Pennsylvania, known as the ―Heather Lane 
property.‖  The client had been unable to secure traditional mortgage financing to 
buy the property from the property owner, Sylvia Onusic, and he asked Draughon 
to facilitate the transaction.  Draughon formed the National Lease Management 
Corporation (NLMC), an organization in which he was the sole shareholder.  
Indeed, the referee found that NLMC’s purpose was to purchase and manage the 
Heather Lane property, and lease it to Draughon’s client to use as a family 
residence.  Accordingly, Draughon, on behalf of NLMC, drafted and signed a 
 
 
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Letter of Intent (LOI) to purchase the Heather Lane property from Ms. Onusic.1  
According to the LOI, the total purchase price was $315,000.  Ms. Onusic received 
$7,500 as a down payment; the remaining balance would be financed through a 
promissory note which required NLMC to make monthly payments to Ms. Onusic 
over a period of several years.   
The first promissory note was executed in June 1993.  Several days later Ms. 
Onusic transferred the deed to the Heather Lane property to NLMC.2  At that time, 
Draughon’s client signed an agreement to lease the Heather Lane property from 
NLMC. 
 
The referee found that over the course of the next several years, NLMC 
made some payments to Ms. Onusic as required under the LOI and the first 
promissory note.  NLMC also executed a second and a third promissory note.  
Under the terms of the third promissory note, signed in January 2001, NLMC owed 
Ms. Onusic $110,000, plus interest.   
                                         
 
1.  It is undisputed that Draughon is not licensed to practice law in 
Pennsylvania.  The referee found that he had some degree of communication with, 
or assistance from, a Pennsylvania attorney in these transactions. 
 
2.  The referee found that Ms. Onusic signed over the deed with the 
understanding that Draughon would hold the deed in escrow and not record it until 
she received full payment under the first promissory note.  However, in December 
1997, Draughon recorded the deed.  
 
 
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Significantly, in September 2001, Draughon transferred the Heather Lane 
property from NLMC to himself, individually.  The referee found that Draughon 
did not pay NLMC any consideration for the transfer.  As a result, the referee 
found that the corporation was left without any significant assets.  Immediately 
after transferring the Heather Lane property, Draughon took out a mortgage against 
the property in the amount of $274,975.  The referee found that Draughon used the 
money to pay his personal tax liabilities; none of the funds were used to pay the 
$110,000 outstanding balance owed Ms. Onusic under the third promissory note.   
 
In 2003, Ms. Onusic hired a lawyer to pursue legal action against Draughon 
and NLMC.  However, while the case was pending in Pennsylvania state court, 
Draughon filed for bankruptcy in the United States Bankruptcy Court for the 
Western District of Pennsylvania, staying the state court action.  Ms. Onusic then 
filed a ―Complaint to Determine Dischargeability of Debt‖ in Draughon’s 
bankruptcy proceeding, seeking a determination that Draughon owed her a debt 
that was not dischargeable in bankruptcy.  The bankruptcy court held a full hearing 
on the motion, and entered a Memorandum Opinion on August 21, 2007.  In its 
opinion, the bankruptcy court identified the issue as whether Draughon and his 
wife committed ―actual fraud‖ such that the debt was excepted from discharge.  
See In re Draughon, No. 06-70405 BM, 2007 WL 7645346, at *5 (Bankr. W.D. Pa. 
Aug. 21, 2007).  The court found: 
 
 
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To alleviate their tax problem with the IRS, debtors Richard 
Draughon and Lynn McDaniel decided to take pre-emptive action 
against plaintiff [Ms. Onusic].  To have equity with which to obtain a 
loan and hold the IRS at bay, debtors decided that NLMC would 
covey the property to them without paying any consideration for the 
transfer before plaintiff took action and acquired a judgment lien 
against the property.  Although debtors’ residence in Florida had 
sufficient equity to secure such a loan, they obviously chose not to do 
so. 
By so doing, debtors undertook to cheat plaintiff by knowingly and 
intentionally depriving her of an opportunity to take action against 
NLMC to satisfy the amount owed under the third note.  Their 
machination succeeded.  Apart from real property, NLMC had assets 
of little or no value upon which plaintiff could levy to satisfy a 
judgment. 
 
Id. at *7.  The bankruptcy court concluded that NLMC’s conveyance of the 
property to Draughon, without consideration, ―unquestionably was fraudulent.‖  Id. 
at *8.  The referee in this disciplinary case considered much of the same evidence 
presented to the bankruptcy court and has independently arrived at substantially the 
same findings—that is, in fraudulently transferring the Heather Lane property to 
himself, Draughon acted with the actual intent to defraud Ms. Onusic, the sole 
creditor of NLMC. 
 
Based on these facts, the referee recommended that Draughon be found 
guilty of violating Bar rule 3-4.3 (the commission by a lawyer of any act that is 
unlawful or contrary to honesty and justice, whether the act is committed in the 
course of the attorney’s relations as an attorney or otherwise, whether committed 
 
 
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within or outside the state of Florida, and whether or not the act is a felony or 
misdemeanor, may constitute a cause for discipline).3  Although it is clear that 
Draughon was not acting in a formal attorney-client relationship, the referee 
concluded that Draughon was bound by the Bar’s ethical rules.  Moreover, the 
referee found that Draughon’s actions in transferring the Heather Lane property to 
himself, without consideration, constituted a fraudulent transfer under both federal 
and state law, and was done with the actual intent to hinder or delay Ms. Onusic as 
a creditor of NLMC.  The referee concluded that this action was not only unlawful, 
but also contrary to honesty and justice, in violation of Bar rule 3-4.3.   
 
The referee found five aggravating factors: (1) Draughon had a dishonest or 
selfish motive; (2) he has refused to acknowledge the wrongful nature of his 
conduct; (3) Ms. Onusic was vulnerable to Draughon’s control over their financial 
transactions; (4) Draughon had substantial experience in the practice of law; and 
(5) until recently, Draughon had shown an indifference to making restitution.  The 
referee also found several mitigating factors, including: (1) the absence of a prior 
                                         
 
3.  The referee also recommended that Draughon be found not guilty of 
violating Rule Regulating the Florida Bar 4-4.3(a) (―In dealing on behalf of a client 
with a person who is not represented by counsel, a lawyer shall not state or imply 
that the lawyer is disinterested.  When the lawyer knows or reasonably should 
know that the unrepresented person misunderstands the lawyer’s role in the matter, 
the lawyer shall make reasonable efforts to correct the misunderstanding.‖).  The 
Bar does not challenge the referee’s findings of fact or recommendations as to guilt 
in this regard, and we approve them without further discussion. 
 
 
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disciplinary record; (2) the fraudulent transfer occurred while Draughon was 
suffering extreme economic pressure; (3) he consulted with an attorney in 
Pennsylvania in these transactions; and (4) his expert witnesses were able to 
advocate a defense for certain of his actions, although the referee found that their 
explanation was a ―strained and aggressive interpretation‖ of the facts.  Ultimately, 
based on the recommendation of guilt, as well as his findings in aggravation and 
mitigation, the referee recommended that Draughon receive a public reprimand.  
Further, the referee recommended that the Court award costs to the Bar. 
 
As noted, the Bar has filed a petition seeking review of the referee’s 
recommended sanction.  Draughon has also filed a cross-petition for review.  He 
challenges the referee’s findings of fact, recommendation as to guilt, and findings 
in aggravation and mitigation.   
ANALYSIS 
The Referee’s Recommendation as to Guilt 
In his cross-petition for review, Draughon argues that the referee’s 
recommendation that he be found guilty of violating Bar rule 3-4.3 is not 
supported.  To the extent Draughon disputes the referee’s findings of fact, the 
Court’s standard of review for evaluating a referee’s factual findings is as follows: 
this Court’s review of such matters is limited, and if a referee’s findings of fact are 
supported by competent, substantial evidence in the record, this Court will not 
 
 
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reweigh the evidence and substitute its judgment for that of the referee.  Fla. Bar v. 
Frederick, 756 So. 2d 79, 86 (Fla. 2000); see also Fla. Bar v. Jordan, 705 So. 2d 
1387, 1390 (Fla. 1998).  To the extent he challenges the referee’s recommendation 
as to guilt, the Court has repeatedly stated that the referee’s factual findings must 
be sufficient under the applicable rules to support the recommendations as to guilt.  
See Fla. Bar v. Shoureas, 913 So. 2d 554, 557-558 (Fla. 2005). 
 
Draughon first contends that rule 3-4.3 cannot serve as an independent basis 
for imposing discipline.  We do not agree.  Rule 3-4.3 provides: 
 
The standards of professional conduct to be observed by 
members of the bar are not limited to the observance of rules and 
avoidance of prohibited acts, and the enumeration herein of certain 
categories of misconduct as constituting grounds for discipline shall 
not be deemed to be all-inclusive nor shall the failure to specify any 
particular act of misconduct be construed as tolerance thereof. The 
commission by a lawyer of any act that is unlawful or contrary to 
honesty and justice, whether the act is committed in the course of the 
attorney's relations as an attorney or otherwise, whether committed 
within or outside the state of Florida, and whether or not the act is a 
felony or misdemeanor, may constitute a cause for discipline. 
 
Thus, the rule expressly contemplates that the enumerated categories of 
misconduct—specifically the Rules of Professional Conduct contained in Chapter 
4 of the Rules Regulating the Florida Bar—are not intended to be an exhaustive list 
of unethical conduct that may provide grounds for imposing discipline.  Rather, the 
commission by a lawyer of any act that is ―unlawful or contrary to honesty and 
justice‖ may be cause for discipline.  Consistent with this reading of the rule, we 
 
 
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have previously imposed discipline where the sole ethical violation was of rule 3-
4.3.  See Florida Bar v. Cocalis, 959 So. 2d 163, 166 (Fla. 2007) (holding that 
Cocalis’s conduct while representing a client in a personal injury suit was 
unprofessional and unethical and finding no need to address ―whether the referee 
erred in concluding that Cocalis’s conduct did not violate rules 4-3.3(a)(1), 4-
3.4(a), and 4-8.4(a)(c) and (d), because [it] violated 3-4.3‖).  
 
Draughon next argues that, even if rule 3-4.3 does provide a basis for 
discipline, in this case the referee’s recommendation of guilt is not supported.  We 
disagree, and we approve the referee’s recommendation of guilt.   
The primary basis for the referee’s recommendation is Draughon’s transfer 
of the Heather Lane property from NLMC to himself, individually.  Draughon 
transferred the Heather Lane property without consideration, leaving NLMC 
without sufficient assets to satisfy its obligations to Ms. Onusic.  His actions were 
knowing and intentional, and deprived Ms. Onusic of the opportunity to take action 
against NLMC to satisfy the amount owed under the third promissory note.  
Although Draughon has pointed to evidence in the record, particularly the 
testimony from his expert witnesses, to support his contention that NLMC did have 
some assets to cover its debt to Ms. Onusic, the referee rejected this testimony as 
not credible.  This Court has long held, ―The referee is in a unique position to 
assess the credibility of witnesses, and his judgment regarding credibility should 
 
 
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not be overturned absent clear and convincing evidence that his judgment is 
incorrect.‖  Fla. Bar v. Tobkin, 944 So. 2d 219, 224 (Fla. 2006) (quoting Fla. Bar 
v. Thomas, 582 So. 2d 1177, 1178 (Fla. 1991)).  Simply stated, Draughon has 
failed to present clear and convincing evidence to support his contention that the 
referee’s credibility assessments are incorrect. 
It is notable that the United States Bankruptcy Court for the Western District 
of Pennsylvania also concluded that Draughon’s transfer of the Heather Lane 
property was fraudulent.  As set forth in the excerpts from the bankruptcy court’s 
Memorandum Opinion, quoted above, that court found that Draughon ―undertook 
to cheat plaintiff by knowingly and intentionally depriving her of an opportunity to 
take action against NLMC to satisfy the amount owed under the third note.  Their 
machination succeeded.‖  In re Draughon, No. 06-70405 BM, 2007 WL 7645346, 
at *7.  The referee did not accept these findings as established facts.  Instead, he 
considered much of the same evidence and testimony and arrived at substantially 
the same conclusion—in fraudulently transferring the Heather Lane property to 
himself, Draughon acted with the actual intent to defraud Ms. Onusic as a creditor 
of NLMC.  Accordingly, we approve the referee’s recommendation that Draughon 
be found guilty of violating rule 3-4.3. 
The Referee’s Recommendation as to Discipline 
 
 
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With regard to the referee’s recommended sanction, Draughon challenges 
the referee’s findings in aggravation and mitigation.  However, we approve those 
findings without further discussion. 
 
In its petition, the Bar urges the Court to disapprove the referee’s 
recommended discipline, a public reprimand, and impose a one-year suspension 
from the practice of law.  In reviewing a referee’s recommended discipline, this 
Court’s scope of review is broader than that afforded to the referee’s findings of 
fact because, ultimately, it is our responsibility to order the appropriate sanction.  
See Fla. Bar v. Anderson, 538 So. 2d 852, 854 (Fla. 1989); see also art. V, § 15, 
Fla. Const.  However, generally speaking this Court will not second-guess the 
referee’s recommended discipline as long as it has a reasonable basis in existing 
case law and the Florida Standards for Imposing Lawyer Sanctions.  See Fla. Bar 
v. Temmer, 753 So. 2d 555, 558 (Fla. 1999). 
 
There is little case law from this Court addressing the appropriate sanction 
when an attorney is found guilty of violating only rule 3-4.3.  In Cocalis, the 
referee found that the respondent engaged in ―unprofessional, inappropriate, and 
sharp practice‖ while representing a client in a personal injury case.  See Cocalis, 
959 So. 2d at 164.  Although the referee recommended that Cocalis be found not 
guilty of violating of any Bar rules, and that he be referred to the Bar’s practice and 
professionalism program, the Court rejected this recommendation.  The Court 
 
 
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noted that Cocalis’s actions were not minor misconduct warranting diversion.  
Indeed, the Court was particularly troubled by Cocalis’s failure to advise opposing 
counsel of certain facts, as well as his submission into evidence of medical records 
that he knew were different from the medical records produced during discovery.  
Id. at 167.  Based on this conduct, the Court found Cocalis in violation of rule 3-
4.3 and imposed a public reprimand. 
Draughon’s misconduct in this case is significantly more egregious than that 
in Cocalis.  Draughon transferred the Heather Lane property to himself with the 
actual intent to hinder or delay Ms. Onusic as a creditor of NLMC.  Although 
Draughon was acting on behalf of his own corporation, and not as a lawyer 
representing a client in a transaction, he is nonetheless a member of The Florida 
Bar and subject to the disciplinary authority of this Court.  See R. Regulating Fla. 
Bar 3-4.1.  The Court expects members of the Bar ―to conduct their personal 
business affairs with honesty and in accordance with the law.‖  Fla. Bar v. Hall, 49 
So. 3d 1254, 1261 (Fla. 2010) (quoting  Fla. Bar v. Baker, 810 So. 2d 876, 882 
(Fla. 2002)).  Moreover, we have consistently stated that basic fundamental 
dishonesty is a serious flaw, one which cannot be tolerated by a profession that 
relies on the truthfulness of its members.  Fla. Bar v. Rotstein, 835 So .2d 241, 246 
(Fla. 2002) (citing Fla. Bar v. Korones, 752 So. 2d 586, 591 (Fla. 2000)).  Thus, 
considering the serious nature of Draughon’s misconduct, and the aggravating and 
 
 
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mitigating factors found by the referee, we find that a one-year suspension is the 
appropriate sanction. 
CONCLUSION 
 
Accordingly, Richard Scott Draughon is hereby suspended from the practice 
of law in Florida for one year.  The suspension will be effective thirty days from 
the filing of this opinion so that Draughon can close out his practice and protect the 
interests of existing clients.  If Draughon notifies this Court in writing that he is no 
longer practicing and does not need the thirty days to protect existing clients, this 
Court will enter an order making the suspension effective immediately.  Draughon 
shall fully comply with Rule Regulating the Florida Bar 3-5.1(g).  Further, 
Draughon shall accept no new business from the date this opinion is filed until the 
suspension is completed and respondent is reinstated. 
 
Judgment is entered for The Florida Bar, 651 East Jefferson Street, 
Tallahassee, Florida 32399-2300, for recovery of costs from Richard Scott 
Draughon in the amount of $12,150.21, for which sum let execution issue. 
 
It is so ordered. 
CANADY, C.J., and PARIENTE, LEWIS, QUINCE, POLSTON, LABARGA, 
and PERRY, JJ., concur. 
 
 
THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER THE 
EFFECTIVE DATE OF THIS SUSPENSION.  
 
 
 
 
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Original Proceeding – The Florida Bar 
 
John F. Harkness, Jr., Executive Director and Kenneth L. Marvin, Staff Counsel, 
The Florida Bar, Tallahassee, and Frances R. Brown-Lewis, Bar Counsel, The 
Florida Bar, Orlando, Florida, 
 
 
for Complainant 
 
John A. Weiss of John A. Weiss, P.A., Tallahassee, Florida, 
 
 
for Respondent