Opinion ID: 1441929
Heading Depth: 3
Heading Rank: 1

Heading: Hearing Department Findings.

Text: The referee found that until July 26, 1986, when a settlement was reached in the dissolution proceeding, the money held for Red in petitioner's trust account was the community property of Beverly Red and William Red. The referee was impressed with petitioner's credibility, and had serious doubts as to the credibility of Ms. Red in the conflicting testimony regarding the existence of an agreement that petitioner's fees could be paid from the trust funds. He concluded, nonetheless, that the existence of the disputed agreement was not material to culpability because there was clear and convincing evidence that petitioner had begun taking money from the trust funds and applying it to her fee prior to time that agreement was, allegedly, made. In addition, because the trust funds were community property, they could not be used for any purpose other than that agreed upon by Mr. Red and his attorney. The referee accordingly found that during the six-month period in which the house was rented, petitioner collected and placed in her trust account $8,872.43 of money belonging to the Reds, and that there were expenses of approximately $2,740.36. Of the remaining funds, petitioner sent Ms. Red only the $2,000 in security deposits; on August 1, 1986, when that check was sent, there was under $1,000 in the account. Petitioner had been withdrawing money for herself since in or about February 1986, and on or about August 4, 1986, and August 29, 1986, petitioner had replaced money into the trust account. The accounting sent to Ms. Red on August 29, 1986, did not include the amounts petitioner had been withdrawing between February 1986 and August 1986. Ms. Red had requested an accounting several times prior to August 1, 1986, and petitioner had failed to provide one. Although petitioner had agreed to provide an accounting of the trust moneys to opposing counsel on final disposition of the case, none was provided. It was logical to assume that this subject became moot when the case was settled. The referee concluded that in committing these acts petitioner misappropriated funds in her trust account, and was in willful violation of former rule 8-101(B)(4), regardless of her state of mind at the time.