Opinion ID: 1936513
Heading Depth: 1
Heading Rank: 7

Heading: conflict of interest and misappropriation

Text: A. PURCHASE OF JEEP FROM A.D. AND ASSOCIATES, INC. 34. In or around November 1992, respondent indicated to Groth [a client] that he had a corporation which had a 1989 Jeep and that he needed to get it out of the name of the corporation. Respondent requested Groth do him a favor and purchase the Jeep for $6,000.00, which would be titled in her name. 35. The discussion between Respondent and Groth regarding the Jeep took approximately two or three minutes. He told her that she was getting the Jeep at a price far less than what it was worth, and she relied on his representation. 36. Respondent did not provide Groth with an appraisal of the Jeep which indicated its fair market value or the mechanical condition of the vehicle. He testified that he did not suggest Groth have a mechanic look at the Jeep to determine its condition and that she did not care what condition it was in as she was purchasing the Jeep as a favor to him. Moreover, Respondent was to retain use and possession of the Jeep and repurchase it at some point. 37. Respondent contends that Groth was to allow him to buy back the Jeep for $6,000.00 and that he would repay her in credit for legal fees. Respondent testified that Groth agreed to this. However, Groth denied there was ever such an arrangement. 38. Groth agreed to purchase the Jeep from the corporation and respondent wrote check number 1023, dated November 19, 1992, for $6,000.00 payable to John L. Maynard, trustee from the funds he still maintained in his law firm trust account on her behalf. 39. The Jeep was owned by A.D. and Associates, Inc., in which Respondent had an interest. At the time of the purchase by Groth, Respondent was president of the corporation. 40. Groth maintains that prior to his corporation selling the Jeep to her, Respondent did not disclose to her his interest in A.D. and Associates, Inc. Respondent urges that they had discussed that he and Donnie, his wife, owned the corporation. 41. Respondent's trust account client ledger indicates that he attributed the $6,000.00 to A.D. and Associates, Inc., and not to his operating account. According to his client ledger record for A.D. and Associates, Inc., between November 19, 1992 (the date of the loan), and December 23, 1992, he disbursed a portion of said funds to pay his personal debts. 42. After the sale, Respondent retained control and possession of the Jeep. 43. Respondent did not advise Groth to seek independent legal advice about the transaction nor did he obtain her consent in writing to the transaction as required by R.Regulating Fla.Bar 4-1.8. He did not put the terms of the transaction regarding the Jeep in writing or ensure that the terms were fair and reasonable to her. 44. During the hearing, Respondent noted that at the time he sold the vehicle to Groth it was worth between $11,000.00 and $12,000.00 and that he only repaid her $6,000.00. 45. Respondent attempted to sell the Jeep to several persons. In 1993, he received payments on the Jeep from Mr. John Garlic and relinquished possession of the Jeep to him. At the time he relinquished the Jeep to Garlic, Respondent had not repaid Groth. Garlic later returned the Jeep as he could not pay for it. 46. Respondent later proposed leasing or selling the Jeep to Equity Funding Sources, Inc., a corporation which was owned by Stephen Woerner. Respondent gave possession of the Jeep to Woerner and received a payment from Woerner. 47. By letter dated November 24, 1993, Groth's attorney, Harry Anderson, asked Respondent to give Groth possession of the Jeep. Respondent refused to turn over the Jeep to Groth and testified that he had paid her back for the Jeep by subtracting his legal fees from the amount owed for the Jeep. 48. Respondent's client ledger for the Groth Sale to Levy indicates that on January 1, 1993, he wrote check no. 1069 in the amount of $532.85 from funds held on Groth's behalf in his general law office trust account with the notation to Earl K. WoodGroth (Jeep). In his reconciliation statement of his law office trust account, Respondent refers to said amount as Transfer Taxes. 49. Sometime after November 1993, Groth filed a stolen vehicle report, and in March 1994, the Jeep was recovered by the police from Stephen Woerner. 50. Woerner agreed that he or his corporation had sought to purchase the Jeep from Respondent and that he or his corporation had made a payment on the Jeep to the Respondent. He testified that at the time Respondent delivered the Jeep, Respondent had explained that it was owned by Groth. 51. When he was contacted by the Maitland Police Department regarding ownership of the Jeep, Woerner filled out a statement and indicated that Respondent had told him that Respondent still owed Groth $8,000.00 on the Jeep. Woerner had a copy of Groth's license and registration as evidence that he was authorized to have possession of the Jeep. Respondent testified that what he said to Woerner was that he had paid a cumulative value of $8,000.00 for the Jeep and that the Jeep was his. B. LOAN TO A.D. AND ASSOCIATES DEVELOPMENT, INC. 52. About February of 1993, Respondent discussed with Groth a transaction wherein his corporate client A.D. and Associates Development, Inc., had a contract to sell a home it owned in west Orlando to a third party for $35,000.00. He suggested Groth invest $20,000.00 in the deal. 53. A.D. Development was a development company which Respondent incorporated and envisioned he would one day own. At the time of this transaction, the corporation was owned by his brother as trustee for his mother, and Respondent was the president. 54. Respondent told Groth the money would be repaid by A.D. Development upon the sale of the west Orlando property and that the corporation would split the net proceeds with her. Alternately, she would receive 12% interest on her money if the deal fell through. 55. Respondent did not provide Groth with an appraisal of the property, but claims he provided her with something better, an executed contract. 56. Respondent testified that he reviewed the A.D. Developments sales contract with Groth and that he explained to her that he needed $20,000.00 for living expenses. He also claimed Groth knew he had filed for bankruptcy in January 1993. 57. Groth disputes Respondent's testimony that he told her the $20,000.00 would actually be used by him as a personal loan. She testified that Respondent recommended she invest certain funds from her Trust by loaning $20,000.00 to his corporate client, A.D. Development. Her understanding was that it would either be a loan to the company at an interest rate of 12% for a period of ninety days or she would share in the profits. She really wasn't sure which. 58. Groth testified that she was reluctant to enter into this transaction, but that Respondent indicated she would be crazy not to take part in the deal since she could make a substantial profit. Groth testified that based upon Respondent's advice and representations, she authorized him taking $20,000.00 from her Intervivos Trust. 59. Respondent on February 12, 1993, had $20,000.00 transferred from the Money Market Account into his law office trust account, rather than to his own personal banking account or his operating account for the law firm. 60. Respondent testified that after the contract fell through, Groth wanted him to guarantee the debt and pay her 12 percent. He agreed to do this, and it was at that point that the transaction turned from being an investment by Groth into a loan. 61. In his accountings presented at the hearing, the transaction is characterized as a loan to A.D. Development. 62. Respondent testified that he assigned A.D. Development's sales contract to Groth as security for the money. Groth disputes Respondent's contention. In any event, the monies were repaid in full with interest. 63. Respondent did not put the terms of the A.D. Development transaction in writing nor did he advise Groth to seek independent legal advice about the transaction. He did not obtain Groth's consent in writing to the transaction. Further, he did not ensure that the terms of the transaction were fair and reasonable to her. The referee recommended that Maynard be found guilty of violating rules 4-1.7(b) and 4-1.8(a) of the Rules Regulating The Florida Bar. He recommended a ninety-day suspension to run concurrently with the suspension in case number 83,918. The referee also assessed all costs against Maynard, which the Bar's counsel has calculated to be $1,835.50. In this appeal the Bar contends that the respondent was guilty of misconduct as charged in count VIII. The referee's findings with respect to this count were as follows: