Opinion ID: 2776890
Heading Depth: 3
Heading Rank: 3

Heading: 24 Mills Road, Newcastle

Text: Approximate FMV: $325,000 Current Mortgages: $313,000 4. 7 Anchor Lane, East Boothbay [the family residence] Approximate FMV: $1,600,000 defendant’s interest in property that he or she owns as a joint tenant or as a tenant by the entireties. Respondent further notes that, in Maine, both real and personal property of the defendant are subject to attachment. 14 Panel E found as a fact that the claim of $75[,000]-[$]100,000 was for legal costs to redo the returns, while the Respondent had charged approximately $14,000 to produce them in the first instance. In like vein, the claim for $245,000 for interest and penalties was at least $100,000 greater than Respondent’s estimate and the amount referenced in the Panel D Report. 8 Current Mortgages: $1,300,000 Total Minimum Equity $411,000 I trust this is what you require, however, if not, please give me a call. The first three properties Respondent listed are commercial properties, the title to which, several days after he became aware of the Estate’s efforts to have his assets attached, Respondent transferred to WEOALOT, LLC. Respondent had established WEOALOT, held by him and his wife, on June 5, 2009. Respondent testified, without contradiction, that the creation of WEOALOT was in furtherance of his banker’s recommendation, at the time Respondent refinanced the three commercial properties in April 2009, that the three commercial properties be transferred to a single entity. Respondent established WEOALOT before he learned that the Estate would be filing suit against him and, on June 18, 2009, completed the conveyance of title to the commercial properties to WEOALOT. Our hearing judge in the present disciplinary proceeding expressly found that Respondent’s creation of WEOALOT was not a fraudulent conveyance done by Respondent in an effort to have the properties shielded from prejudgment attachment. Mr. Hull, with a copy to Respondent, forwarded this information in a letter to Mr. Nuzzi, counsel for Mr. Eisenstein in his role as personal representative of the Estate. Respondent was never asked by either Mr. Hull or Mr. Nuzzi who or what entity had title to the three commercial properties; neither man questioned the transfer to WEOALOT; and Respondent did not supply that information to Mr. Hull, opposing counsel, or the Maine Court. Mr. Eisenstein later learned of the conveyance of the commercial properties when he had a title search performed on the real estate Respondent had listed in his email. 9 On January 11, 2010, Respondent moved to resist attachment of the properties. Likely referring to Respondent’s real estate equity totaling $411,000, of which $300,000 was in his personal residence, Respondent argued that there was sufficient equity in those properties to cover the likely amount of any judgment. As noted, Respondent’s email to Mr. Hull and the latter’s letter to Mr. Nuzzi did not specify that Respondent and his wife held or had interests in WEOALOT. Yet, it was undisputed that, in 2009, the Estate readily could—and did—identify the owners of record title through online research of the land records, using the addresses that Respondent’s email and Mr. Hull’s subsequent letter to Mr. Nuzzi had provided. On February 3, 2010, Mr. Eisenstein, acting through his attorney, made an oral motion to join WEOALOT as a party in interest and approve a writ of attachment in the amount of $200,838.10, to include any property owned by WEOALOT. Respondent agreed that the attachment should include WEOALOT, LLC, and the court entered an order to that effect on February 3, 2010. A settlement was reached between the Estate and Respondent on June 2, 2010, and the document memorializing the agreement was signed by both parties on June 11, 2010. Respondent agreed to pay a total of $155,000, less the $50,000 he initially paid to the Estate. Respondent timely reimbursed the Estate, in full.15 15 Panel E found that “Respondent paid the Estate another $105,000, part immediately, and the balance within 30 days.” 10 In September 2010 the Board of Overseers of the Maine Bar filed a second disciplinary petition against Respondent, which led to the hearing before Panel E of the Maine Grievance Commission. The averments of that petition charged that Respondent had attempted to shield the three commercial properties from attachment. Following two days of evidentiary hearings, on January 6, 2012, Panel E issued its Order and Report of Findings. Panel E concluded that Respondent violated Maine Bar Rule 3.716 and Maine Rules of Professional Conduct 8.4(c)17 by misleading his attorney about his ownership of the commercial properties, and by failing to correct the information when he learned, upon having been open copied on the letter Mr. Hull sent to Mr. Nuzzi, that the information had been disseminated to opposing counsel or the court.18 16 This rule has since been abrogated and written into Maine Rules of Professional Conduct 3.3(a)(1). The text of the original rule is below: Me. Bar Rule 3.7: (e) Adversary Conduct. (1) In appearing in a professional capacity before a tribunal, a lawyer shall: (i) Employ, for the purpose of maintaining the causes confided to the lawyer, such means only as are consistent with truth, and shall not seek to mislead the judge, jury, or tribunal by any artifice or false statement of fact or law[.] 17 Me. Rules of Professional Conduct 8.4(c): “It is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation.” 18 Panel E’s Report stated, in pertinent part: [Respondent] knew, or should have known, that this information would be sent on to [Mr. Eisenstein’s attorney, Mr.] Nuzzi; and in fact it was, by Attorney Hull’s letter of July 15. He was a copy addressee to this letter, and 11 Our Hearing Judge’s Conclusions of Law Our hearing judge concluded, by clear and convincing evidence, that Respondent violated MLRPC 1.1 and 1.3 when he “failed to recommend timely payment of the federal estate tax due by the Estate, but not for the initial failure to file the return or request an extension.” Our hearing judge further concluded, by clear and convincing evidence, that Respondent also violated MLRPC 8.4(c). Our hearing judge explained her reasoning for that conclusion: The record shows, by clear and convincing evidence that [Respondent] knowingly misrepresented his ownership interests in the three parcels of land that were transferred to WEOALOT, LLC three days after he received the Motion for Attachment and Attachment of Trustee Process from the Estate. The email sent to Mr. Hull only indicated that the three parcels of land transferred to WEOALOT, LLC were in fact in his and his wife’s names, not under WEOALOT, LLC. Because of this misstatement, and because [Respondent] never corrected this misstatement after Mr. Hull represented it as true through an email to Mr. Nuzzi [counsel for Mr. Eisenstein], and through his Motion to Limit Attachment and Trustee Process, the properties transferred to WEOALOT, LLC were not initially he took no action to correct the misstatement. Attorney Hull in good faith repeated the misstatement to the Superior Court, when he based his Motion to Limit Attachment and Trustee Process dated January 11, 2010, on the misstatements in the July 15 letter. Whether the creation of WEOALOT, LLC, and the conveyances thereto arose innocently from a suggestion by the bank, or not, is a red herring. Whatever the Respondent’s motivation for the creation of WEOALOT and the conveyances, the effect on the litigation of Respondent’s misstatement to his attorney would be the same. If the conveyance had not been detected by Attorney Nuzzi, the attachment entered on October 29, 2009, would not have prevented the Respondent from conveying this real estate, which had considerable equity, through WEOALOT, free of the attachment. If the Estate then had to chase down the property through an action for fraudulent conveyance, it may have ultimately prevailed, but only after additional delay, risk, and expense. 12 subjected to the attachment entered on October 29, 2009. If not for a subsequent title search by Mr. Nuzzi, it is unlikely the property would have been attached and could have been conveyed freely by [Respondent] and his wife. This misrepresentation by [Respondent] was known to be false at the time it was made and [Respondent] took no steps to correct it. Our hearing judge pointed out that her “conclusion regarding [Respondent’s] violation of Md. Rule 8.4(c) is consistent with the Report of Findings and Order of Panel E of the Board of Overseers of the Maine Bar.” Then, citing Rule 16-773, our hearing judge noted that Panel E’s Report is conclusive evidence of that misconduct in the instant proceeding. In light of Panel E’s Report of Findings and in consideration of all evidence presented to this Court, [Respondent] by clear and convincing evidence violated Md. Rule 8.4(c). Our hearing judge further concluded, however, that, “although the Court ultimately finds that [Respondent] violated Rule 8.4(c) for the reasons stated above, the Court does not find that [Respondent] fraudulently conveyed real property to WEOALOT, LLC, in violation of Maine’s Uniform Fraudulent Transfer’s Act, as argued by Petitioner.” Our hearing judge also found that Petitioner had not established by clear and convincing evidence that Respondent violated MLRPC 8.4(d). Our hearing judge also concluded that, because Respondent violated 1.1, 1.3, and 8.4(c), he thereby also violated MLRPC 8.4(a). Mitigation Our hearing judge found that Respondent’s misconduct was mitigated by the facts that he self-reported his initial federal tax return error and expressed remorse for his errors. Our hearing judge further found that Respondent was forthright, cooperative, and honest 13 throughout both the Maine and Maryland proceedings. Moreover, Respondent made full restitution to the Estate for the additional expenses his misconduct occasioned.