Opinion ID: 1304454
Heading Depth: 4
Heading Rank: 1

Heading: Diversion of Funds

Text: (6) Petitioner admitted at the hearing that he used funds from loans secured by the Eagle Pass and Bonsall properties for purposes unrelated to the joint ventures. He provides no evidence to support his assertion that the parties agreed he was free to divert funds to his own use because he was earning no salary while he managed development of the properties. Amicus points to John T.'s testimony that he owned various properties and had leveraged them to finance development of the parcels, as well as to pay for his living expenses. But the fact that John T. pursued such a practice with regard to his own parcels does not indicate that he agreed to allow petitioner to do the same with regard to funds secured by joint venture property. Furthermore, there is no merit in amicus's claim that the State Bar's accounting of the $120,000 loan is unfair to petitioner. Apparently, petitioner used these funds to pay off a loan encumbering his property on Big Rock Drive. Amicus claims this use of the $120,000 directly benefitted John T. because he had contracted to perform construction services on the site, and that it indirectly benefitted him to the extent that any development at Big Rock would enhance the value of the neighboring Eagle Pass property. But no work was ever started at Big Rock, apparently because the relationship between petitioner and John T. had disintegrated. Thus, John T. never realized even the speculative benefit from this loan urged by amicus.