Opinion ID: 2098735
Heading Depth: 1
Heading Rank: 2

Heading: Transaction of August 5, 1992

Text: On August 5, 1992, Weck went to respondent's office to discuss her legal matters. Weck and respondent discussed Weck's finances. Weck had approximately $142,000 in liquid assets. She had deposited this money in a bank account. Respondent suggested that Weck invest money in FRM so that she would receive a better rate of return. Respondent told Weck about FRM's favorable earnings projections. FRM was located near prospective sand buyers, and there were estimates of significant sand reserves on FRM's site. Respondent told Weck that his wife was planning to invest in FRM. Respondent's wife did in fact later invest approximately $16,000 in FRM. Although respondent did not inform Weck of FRM's debts, Weck was advised that the company was in the start-up phase, had significant start-up expenses, and needed a loan to meet operating expenses. Weck loaned FRM $15,000. David Remy signed a promissory note, which was prepared by respondent, stating that the note was due on October 1, 1992, and would bear interest of $2,500 for the period of the loan. As collateral for the loan, Remy executed a document that purported to assign to Weck 10% of Remy's unencumbered stock in FRM. This assignment recited that Remy owned 100% of the stock in FRM. It also stated that Remy had previously pledged or transferred 45% of the stock and owned 55% of the stock unencumbered. Respondent did not advise Weck that Remy had no unencumbered stock because of the earlier assignment of all of his shares to Joseph Thoesen as collateral for the $120,000 promissory note. Respondent testified that, although he knew of Remy's assignment of his shares to Thoesen, respondent thought that other unencumbered shares were available.